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Not long ago, a company’s philanthropic strategy largely boiled down to a decision about which large, generic charity would receive a donation and how big of a check should be cut. Employees were seldom involved save for very high levels and the giving, done overwhelmingly by big companies with deep pockets, had little to do with the rest of the company’s strategy for growth.
But times have changed. Although companies are still writing checks, they’re doing it in the context of carefully crafted strategies that target specific causes based on geography and/or alignment with business goals. When they do write checks, they expect transparency and results-oriented data. They supplement cash contributions with product donation, skills-based volunteering and long-term relationship building with nonprofit organizations to provide ongoing resources. The choice of cause to support is no longer dictated by the CEO’s passion but rather by company strategy, with employees contributing their vision for making the world a better place.
GIVING ON THE RISE
While still not at pre-recession levels, corporate giving rose by 12 percent in 2014 over the prior year to $17.8 billion, according to “Giving USA,” an annual report on American philanthropy.
The report attributed some of that upswing to faster growth in corporate pre-tax profits and the gross domestic product, but at least some of the increase can be attributed to more companies across the spectrum participating with in-kind donations and volunteer hours counting along with cash.
“Passing out United Way checks is faceless, nameless and, frankly, meaningless for creating a culture of helping people,” says Tony Aquila, founder and CEO of Solera, a 10-year-old, $1.3 billion provider of risk and asset management software and services to the insurance industry. Instead, Solera funds six philanthropic expeditions per year that allow employees to take up to a six- month paid sabbatical to work on an approved project.
Aquila believes that this deeply personal work benefits his employees and the company’s culture at least as much as those they help. “This is not about ‘corporate philanthropy,’” he asserts, noting that he objects to the term. “It’s about giving not only to those lives that you touch but the lives within your company that you allow to touch them.”
More and more often, companies are seeing the causal relationship between giving back to the community, whether local or global, and the company’s own health. “What’s changed over the years is that it used to be a ‘nice to do,’” says Daryl Brewster, CEO of CECP, a coalition of 150 Fortune 500 CEOs who believe that investing in societal engagement brings a critical return. “We’re
approaching an emerging sea change as leading companies move from occasional check-writing to increased community engagement, viewing societal advancement as a key measure of business success.”
The market has responded in kind. Brewster points to the 2012 study by Babson professor Raj Sisodia, which looked at 28 companies identified as the most conscious—“firms of endearment” as Sisodia calls them—based on characteristics such as their stated purpose, compensation, quality of customer service, investment in their communities and impact on the environment. Out of the 28, the 18 companies that are publicly traded outperformed the S&P 500 index by a factor of 10.5 over the years 1996-2011.
Jane Madden, managing director and head of U.S. Corporate Responsibility for global PR firm Burson-Marsteller, says the outperformance of socially responsible companies isn’t so much about investors rewarding companies for their good deeds as it is that those companies that invest in their environments and communities make better strategic decisions. “If you are measuring and
managing your environment, including social and governance impact, you’re just a smarter company. You’re minimizing risk and maximizing opportunity and that has a definite positive impact on the bottom line.”
MORE WAYS TO GIVE
John Ferdinandi makes it a practice to get engaged in the local communities in which his company, Milano Restaurants, operates. With 43 restaurants and 18 franchises located primarily in California, Milano habitually approaches local communities to find out what they most need. That presence and involvement gives Milano an advantage vis-à-vis other fast-casual restaurant chains.