Your Business: Charity adds value to business

Integrate it into the marketing and advertising section. Do not treat philanthropy as an afterthought.

Center for Entrepreneurial Jewish Philanthropy 370 (photo credit: Oren Cohen)
Center for Entrepreneurial Jewish Philanthropy 370
(photo credit: Oren Cohen)
Business people often overlook advantages to their companies of charitable giving and corporate sponsorships.
I recommend building philanthropy into every business plan. Integrate it into the marketing and advertising section. Do not treat philanthropy as an afterthought.
Corporate giving builds name recognition and raises corporate profiles, brand awareness, good feelings and image enhancement. Gifts are tax deductible and influence legislators and opinion makers. Giving improves the quality of life in a community and betters relations with employees.
Doing good deeds scores points in Heaven, and even companies can benefit from a helping hand once in a while.
Top management initiates corporate philanthropy for altruistic reasons and out of self-interest, according to the Foundation Center. The most popular means are grants, direct donations of money and branded premiums such as clothing and pens, matching funds to employee donations, ads in NGO ad books, foundation support and event sponsorships.
Nonpublic companies hesitate to publicize their gifts due to fear of being inundated with requests. Good times raise public expectations. Lean economic times lead to disappointment, and some shareholders will resist corporate-giving programs when profits slim down. Good intentions can be punished with bad publicity for corporations funding controversial organizations and causes. Department store J.C. Penney withstood pressures to fire a very popular, lesbian entertainer as Penny’s spokesperson and took a lot of flak. Businesses need a corporate-responsibility plan to anticipate and exorcise downsides.
Rick Moyers, an expert on nonprofit organization management, cautions that management can be mislead without due diligence before associating with a charity. Vet potential recipients with the same effort you would use buying other businesses or expanding into new markets.
Engage recipients in conversation, and attend some events before making a commitment. It is not disrespectful to ask pointed questions for financial data and background information about board members and employees, to research for controversy surrounding the issue and the organization and for legal standing of the charity. Get feedback on the effectiveness of the charity in achieving its goals from employees at the charity.
The generosity of corporate gifts is measured as a percentage of annual profits and the absolute dollars donated. In 2011, author Greg Emerson challenged readers “to see if your favorite brand made the cut” to be in the top 10 most charitable US companies. Brand is the operative word.
Among the top 10, Kroger food stores gave up to nearly 11 percent of annual profits to charities. Most companies hover in the 5%-8% range, including Macy’s, Safeway and Dow Chemical.
US corporate philanthropy topped $18 billion in 2012, a generous amount. However, Ken Stern, former CEO of National Public Radio and author of With Charity for All, said corporate philanthropy is trending downward, with 2.1% from profits in 1986 to 0.8% in 2012. Corporations play a very small role “in charitable giving in the US, now comprising only about 6% of private-sector donations and only a little more than 1% of the $1.5 trillion charitable economy.”
Corporate life in Israel is young but vibrant, pulsating with energy, the core of a stable and growing economy.
Dominated by Jewish people, whose traditions value tzedakah, it is disheartening that Israeli corporate contributions are modest.
Maala is an umbrella organization of 130 of Israel’s largest companies promoting corporate social and environmental responsibility (CSR). They reported a pattern closely paralleling the parsimony of American companies. Some 1.2% of profits is the average corporate philanthropic giving rate, with most donating lower percentages. Strauss gave NIS 10 million and Osem nearly NIS 8m. in one recent year, or 2% and 1.66% of their profits, respectively. Some include in-kind contributions of food from grocery chains (most likely valued at retail prices) rather than cash. Several value volunteer hours of their employees as donations.
Charities received NIS 5m. (about $1.5m.) when Waze sold out for nearly $1b.
This one-half of 1% contribution earned Waze praise for “spreading the wealth,” as one news headline screamed.
Hardly, but it is tough to buy better press.
Stern wrote: “Making philanthropy effective is terribly difficult work, and no doubt some companies – maybe even some of the ones that seem stingy – do it better than others. But in the corporate world, as elsewhere, nothing speaks louder than dollars.”
IBM credits its corporate giving with increasing employee engagement in community affairs, reducing employee turnover and skill development, strengthening customer relationships and opening new markets. Their giving is good for others, good for them, and IBM is good at it.
A small business might sponsor a local soccer team, a girls swim night, a marathon run for charity, the cleanup of a river bank or an all-night learning session for students. Place the company logo everywhere. Create opportunities for name recognition. The Nike swoosh is everywhere, and it is the most successful example of brand building.
Keep in mind Ralph Waldo Emerson’s blessing: “It is one of the most beautiful compensations of life that no person can sincerely try to help another without helping themselves.”