Give and take

Even in the current climate, corporate philanthropy has not waned. But a more strategic approach to giving is adding greater business value to efforts.

Even in the current climate, corporate philanthropy has not waned. But a more strategic approach to giving is adding greater business value to efforts.

Corporations have long used philanthropy to demonstrate community goodwill; the marketing benefits of such altruism appearing obvious. Corporate charity has enabled CEOs to address pet projects and boost their personal stock as they bolster the company's image. For as long as big companies have dominated the community landscape, managers have been encouraged to support everything from Little League and scouting programs (supplying uniforms and equipment) to symphonies and major league sports (sponsoring arenas). Even in these strained economic times, corporate giving has not waned. According to Loren Renz, VP of research at The Foundation Center in New York, 65% of corporate foundations are either holding the line or increasing their giving. Renz reports that corporations gave an estimated $3 billion in 2001, up a full 10% over the previous year, and she says she expects a small but significant bump in 2002. That is double the giving reported in 1995. The old "if it feels good, do it" approach is no longer a sufficient qualifier for how they dole out the dollars. Most corporations now have foundations that manage their major giving, and a shadow industry of sorts has risen to facilitate the in-kind requests of material support by Fortune 500 companies. In a sense, corporate giving has gone, well, corporate. In the 1990s, "strategic giving," or "brand-centric giving," began to color the practice of corporate philanthropy. Now, the concept of corporate social responsibility (CSR) is being factored into giving strategies. Bob Kornecki, global leader of Edelman's corporate practice, has been out in front on this issue. He says a lot of corporate giving remains as prophylactic as it is proactive; a means of building brand equity during the good times to offset negative reports and occasional scandals. "Companies are slowly evolving toward integrating their corporate giving with CSR platforms that involve environmental responsibility, ethical conduct, community relations, employee relations, and ethnic diversity," says Kornecki. He believes the difference between fractured giving programs and CSR is the level of engagement across the company. When Marc Scott joined HomeBanc Mortgage Corporation five years ago as VP of marketing, he says the company had an indiscriminate policy of donating money. "We gave roughly $300,000 a year in the form of $1,000, $5,000, $10,000 per year to dozens of groups," says Scott. "I came from a nonprofit background. I knew that when you give $1,000 you don't really help an organization much, and you're not doing much to bring community awareness." Scott suggested cutting off the corporate trough and redirecting HomeBanc's resources to two major charities. The company selected Habitat for Humanity for its obvious brand-centric qualities, and the American Cancer Society (ACS) because of the pervasiveness of the issue and, according to Scott, because it touches all employees and customers to one degree or another. Employee involvement Scott's task then turned to determining how to create an engagement process for employees while making the programs interesting to the press. "We don't do this for publicity, but since we're going to do it anyway, we might as well get noticed for it." So the company went public with a very big commitment: to build 100 Habitat houses and raise $1 million for ACS, all by 2010. It was a large enough statement, says Scott, to excite employees and to inspire their commitment to spend at least one weekend per year building a Habitat house. In addition, employees participate in cancer walks and other grassroots efforts through ACS chapters where the company has a presence. HomeBanc also leverages its sponsorship of regional sports teams like the Miami Hurricanes and Georgia Bulldogs to increase awareness of its efforts. In late April and early May this year, in time for local news coverage of the summer football practice season, the players from these two popular teams are booked to build Habitat houses with local HomeBanc employees. In 1995, AFLAC, the supplemental insurance company known for its quirky duck ads, began its brand-centric approach to giving after a chance request from a local children's hospital. Buffy Swinehart, director of corporate giving, recalls, "They came to us with a long shot to sponsor a patient room, and our CEO asked what it would take for the cancer center to become our namesake." Since then, AFLAC has given over $14 million to develop children's cancer centers. The topic tugs on employees' heart strings, and inspires many to participate in monthly bingo games at the centers. The ads' popularity has also been leveraged to help raise funds through sales of the plush duck doll. Retailers like Rich's, Lazarus, and Goldsmith's agreed to sell special holiday versions with proceeds benefiting oncology centers in local pediatric hospitals. Swinehart says the company uses other commercial sponsorships, such as Atlanta Braves baseball and the Tara Lipinski "Hip Hop on Ice" show, to treat hundreds of pediatric patients and their families to special outings. Strategic approach AFLAC and HomeBanc exemplify how corporate giving is more strategically applied these days. They also show how philanthropy is being activated through employee ranks. Even the leveraging of the commercial sponsorships is to be lauded. But however significant it is to the community, this type of work barely scratches the surface potential of CSR whereby the altruism becomes a regular, systemic function. In fact, few companies appear to have figured out how to make this plausible. Verizon is one. And while the company has parlayed its activities for some press coverage, there has been no large-scale promotional fanfare. At the advent of telecom reform, Verizon (then BellAtlantic Mobile) began giving out wireless phones and services to women in domestic abuse shelters. "The stigma associated with putting down the phone number of a shelter on applications for housing or day care prevented many women from moving beyond the abuse to a new life," explains Andrea Linskey, executive director of corporate communications. The need aligned with the company's business charter and also dovetailed nicely with a marketing objective of that time. "In 1995, one of the things we tried to do was reach more women for wireless services," says Linskey. From that starting point, Verizon gradually embraced the cause of domestic violence at a more organic level. Linskey says company CEO Denny Strigl instituted lunch-and-learn seminars on the issue and encouraged call- center employees to volunteer at hotlines and shelters. Staffers responded with grassroots efforts to provide school supplies and toiletries for women and their children staying in shelters. Retail stores became, and remain, repositories for old cell phones in a program called Hopeline, which safely disposes of outdated phones and cycles new phones and services to local shelters. When new stores open, Verizon runs a Hopeline promotion offering $5 coupons to customers who donate old phones, which Linskey says drives traffic. "To date, one million phones have been collected, preventing 200 tons of waste from going into community landfills," says Linskey. "We've given products, services, and cash donations of over $1 million to the cause as well." She says Strigl does more than just talk about it. Recently the CEO spent a day on Capitol Hill discussing domestic violence with dozens of congressmen. He joined Rita Smith, executive director of the National Coalition Against Domestic Violence. Smith credits Strigl's appearance with motivating Attorney General John Ashcroft to make good on the assignment of a Department of Justice administrator on domestic violence reporting directly to his office. "Because [Verizon] is as committed as it is and talks about it as often as it does," says Smith, "a nonprofit could not afford to buy that visibility." ----- Measuring the value of corporate philanthropy In late 2001, the Council on Foundations (COF) collaborated with Walker Information (WI) to conduct the National Benchmark Study Measuring the Business Value of Corporate Philanthropy. The research was designed to validate the reliability of the COF/WI corporate philanthropy measurement program, which was developed and made available in the late 1990s. Separate samples were created to measure the perceptions, attitudes, and opinions of three distinct stakeholder groups - employees, customers, and shareholders. Findings The study found that corporate philanthropy programs that are viewed favorably by the three stakeholder groups contribute to business success. Employees One-third to two-thirds agree that:
  • A good giving record is a main reason for remaining with an employer
  • Corporate generosity is one of the factors that differentiates a company
  • A company that does good deeds gains their admiration Customers One-third say they would select a company on its giving record. Shareholders One third attest to the effect of corporate philanthropy programs on their investment decisions, and specifically say corporate generosity:
  • Affects bottom line
  • Positively affects stock performance
  • Affects where to invest Type of program Stakeholders rate companies highest for higher visibility efforts, such as providing sponsorship support for worthwhile nonprofit events and causes, and having employee volunteers. Fewer stakeholders rate companies positively for contributing cash or donating in-kind products and services. Recommendations Based on the results, COF/WI recommended the following actions: 1. Set out a strategic plan for corporate philanthropy that is both focused and consistent with your overall corporate goals. 2. Take stock of and quantify what the company does in the area of corporate philanthropy. 3. Realize that of all a company's stakeholder groups, the employees are likely to know best the company and what it does in philanthropy. 4. Ensure that the CEO and other senior leaders are aware of the significant role they play in how stakeholders form perceptions of a company's philanthropic programs. 5. Ensure that an effective and realistic external communications effort is a key element of your philanthropic program. 6. Develop and conduct a process to reassess the way the philanthropy function is delivered.

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