Thoma Thoma

We hear statements of corporate piety all the time in reference to corporate philanthropy: “we want to give back to the community,” “this community has been good to us and we want to return the favor,” “it’s our company’s responsibility to do good while we’re doing well.”

Perhaps these sentiments are driven by an innate goodness of the human character. Perhaps by the biblical admonition, “it’s better to give than receive.” Perhaps by the enlightened self-interest of smart business people who know that without communities in which to live and work their enterprises will be toast.

Reflecting on the matter set me off in pursuit of answers to the question, “Is philanthropy good for your brand?” The received wisdom says it is, and our own firm frequently counsels clients to undertake a smart, strategically-aligned cause in order to build goodwill and reputational value.

But what does the data say? Interestingly enough, there is plenty of research that tells us, “Yes, Virginia, corporate philanthropy really is good for your brand, and good for your business.”

The 2001 National Benchmark Study on corporate philanthropy conducted by WalkerInformation underscores that employees, customers and investors who perceive a company as high in its Corporate Philanthropy Index more often:
    • Recommend the company, its products and its services
    • Continue to do business with, work for or invest in the company
    • Are loyal and committed to continuation of the relationship with the company

Other studies confirm that corporate philanthropy contributes to key business success factors:

Employee Recruitment and Retention: The Aspen Institute’s “Where Will They Lead,” a survey of MBA students at 15 business schools underscores that future business leaders are thinking broadly about the role and responsibilities of business in the world. While participants still define “maximize shareholder value” and “satisfy customer needs” as primary responsibilities of a company, “create value for the local community in which it operates” climbed nearly 10 points between the 2002 and 2007 surveys. MBA students also express greater interest in working where they can make a contribution to society (growing from 15% to 26% between the two surveys). The National Benchmark Study—Measuring the Business Value of Corporate Philanthropy demonstrated that employees with a favorable impression of their employer’s philanthropy are five times more likely to remain with their employer. Better quality, more highly motivated and longer-tenured employees contribute to better financial performance.

Meeting Customer Expectations: Following the death of Apple founder Steve Jobs, a lot of ink was spilled not only about his genius for reinventing technology, but the apparent lack of personal and corporate philanthropy demonstrated by him. Regardless of the progress and innovation Jobs and Apple had driven during his extraordinary business career, the fact remained that many wanted and expected more—primarily in the realm of corporate philanthropy. Research bears out the customer expectations: 95 percent of Americans agreed that U.S. companies should have more purpose than profit alone and that they owe something to the communities in which they operate (Business Week/Harris Poll, Sept. 2000).

Driving Customer Preference, Share and Loyalty: What about growing sales though? Cone Communication’s 2010 Shared Responsibility Study underscored that in our highly digital society, consumers want to engage in the dialog with companies about their philanthropic, social and environmental initiatives. When they do, their loyalty increases and their referrals increase. The National Benchmark Study referenced above showed that customers with a favorable impression of a company’s philanthropy are three times more likely to be loyal customers than those with a less favorable impression. A Wirthlin survey on corporate citizenship showed that 91 percent of respondents said that good corporate citizenship would be paid back with a better reputation and more customers (The Wirthlin Report, 2003).

Increasing Employee Engagement: It’s well documented that the paycheck is way down the list on why people come to work and how they experience their work. No matter how industrialized the economy or how high-tech the business, people are still tribal. They want to win. They want to belong. They want to know they are connected to something greater than themselves. Philanthropic and socially responsible initiatives give employees “causes” to be more motivated, loyal and engaged with your company’s mission, vision and values. That drives productivity, customer service and profits.

A survey of 2,772 U.S. companies, executives agreed that company volunteer programs advance strategic business goals and significantly increase their companies’ overall competitiveness in three critical areas:
    • 74% agreed that volunteerism increases employee productivity
    • 93% agreed that volunteerism builds employee teamwork skills
    • 94% agreed that volunteerism improves a company’s public image
    (The Points of Light Foundation and The Conference Board, 1999)

If you need a rationale for deploying your business resources to create more good in the world, there is plenty of data to support it. Or, you can just default to the old, “I know it’s the right thing to do.”

Your brand is the sum of all that is thought, known, perceived, experienced, said and felt about your company, service or product. That represents a lot of inputs—so of course some good old fashioned do-good, feel-good philanthropy is going to be good for your brand.

Martin Thoma is principal with the brand leadership and marketing firm Thoma Thoma in Little Rock, Arkansas.Reach him at martin@thomathoma.com.