Firms profit from charity

Corporate philanthropy can boost business by building loyalty among customers, shareholders and customers, but winning them over will take commitment by senior executives and the integration of charity into corporate strategy, a new study says.

A “corporate philanthropy index” that tracks perceptions of corporate charity shows no better than “middle-of-the-road” performance overall, says the 2001 National Benchmark Study, conducted for the Council on Foundations by WalkerInformation.

The study, which surveyed corporate employees, shareholders and customers, found those who look favorably on a company’s philanthropy are more likely than those who do not to act in ways that directly benefit the company’s bottom line.

“Stakeholders” with favorable impressions, the study says, more often recommend the company and its products and services; keep doing business with, working for or investing in it; and recommend it as a good place to work and do business.

“Clearly, it is to a company’s advantage to be viewed favorably in its philanthropy efforts,” the study says. “And yet, based on these results, it seems that corporate America has a significant challenge ahead if it is to earn stakeholders’ full confidence in this key area.”

Customers give the lowest ratings to corporate philanthropy, employees give the highest and shareholders are in the middle.

The survey also used an “executive philanthropy index” to track perceptions of the role and impact of corporate executives on a company’s philanthropic efforts.

Finding customers least likely and employees most likely to have favorable impressions of senior executives’ leadership role in corporate philanthropy, the study says that aspect of the role of corporate leaders is not as high a priority as are some other corporate functions.

Among the four types of corporate support, the survey says, companies get the highest rating for sponsoring events and causes, and for employee volunteerism, while getting fewer points for contributions of cash or in-kind products and services.

The study recommends that businesses:

* Create a focused strategic plan for their philanthropy consistent with overall corporate goals.

* Track and quantify their philanthropy.

* Marshal employees to spread the word about corporate philanthropy.

* Keep top executives informed about their role in shaping perceptions about corporate philanthropy.

* Integrate external communications into their philanthropic strategy.

* Reassess the way the corporation handles philanthropy, using measurable targets and ramifications when targets are not met.

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