Written by Dr. Mary E. Donohue Ed.D., Financial Post
Published: Wednesday, August 19, 2009
The adage that it is better to give than to receive - a corruption of “It is more blessed to give than to receive.” Acts 20:35 - is a difficult principle to follow for anyone in charge of corporate giving in a recession.
The return on investment of corporate philanthropy is hard to measure and even harder to justify to shareholders at the best of times, but when profits are down, giving gets harder. In the past, when the economy slowed, money, in the form of philanthropy, became a trickle. Five years ago, I was challenged by the late Paul Newman to find a way of enticing corporations to keep the money flowing. After my internship with Newman’s Hole in the Wall Camp, I began to understand that philanthropy is a reputation-management tool, as much as it is a feel-good gesture. When I started viewing philanthropic dollars as a strategic tool to build brand loyalty, the corporations I was working with began to see a return on their philanthropic dollars in the form of better government relations, more effective public relations, improvements in internal culture and noticeable growth in consumer trust in the brand.
Give money and you leave an impression. Give time and you leave a sense of the brand. Give money and time and you create a brand experience that positively affects internal and external audiences. To discover how to put your money successfully where your brand is, create programs and benchmarks for success from your existing data. First, obtain a baseline. In the past with corporate partners I have used the following data mix successfully: corporate social responsibility media, government relations, consumer-trust indicators and employee-satisfaction surveys. Each of these verticals in your business is affected when you practice outcome-based giving. Next, determine where the alignment is between where you are giving and your brand objectives; for example: What are your sales targets? What are key messages for the year? What do you need to accomplish with your government-relations strategy. Once you have gathered all this data, code it and determine your common themes and weaknesses. Then, review your findings, create a strategy that includes a giving methodology and philosophy. If you already have a strategy, determine the points of intersection between what you are doing and what you want to achieve.
Why should you spend all this time on a philanthropic strategy? Abraham Lincoln once said if he had eight hours to cut down one tree, he would spend six hours sharpening his axe. Spending time on your strategy and researching how to align your values with the expectations of your core constituents enables you to use philanthropy as a “sharp” competitive tool. In this economy, people can’t remember an ad, let alone which corporation gave what to whom. But they can, and do, remember people who helped them in a crunch. Giving money without aligning it to your staff and customers is like trying to cut down a tree with a dull axe: The process is long, back-breaking and not very successful.
My practice and theory on mentoring and volunteering were developed in conjunction with financial services, beer companies, wine-makers and gaming organizations. I spend my time with people who traditionally have to work very hard for their reputations. Yet in a long-term study, I was able to demonstrate how effective outcome-based giving can be.
Below is the result of my research and development work with a corporation of more than 3,000 employees (which will remain nameless for competitive reasons) for the past four years. The data were collected in the spring and analyzed in June 2009:
Corporate social responsibility media coverage rose to 11% of the firm’s media mix from 2% in 2006. In 2008, CSR press was the only consistent positive press the company received. The firm received a return of 4:1 for every dollar invested in my mentoring programs, including research-and-development costs, compared with its traditional giving style.
Of the employees surveyed, 100% said they are proud to work for the firm; up from 54% in 2005. Ninety per cent of all employees said it has an excellent reputation among their friends, compared with 50% when the project began in 2005. Ninety-eight percent of employees believe the corporation cares about the communities in which it operates, up 17.7% from 2006.
Data pending for 2009 is trending toward increased trust in the brand. Previous years’ data indicate consumers trust increased on average 9% a year.
My study did not link sales and profit to this philanthropy because there are too many variables that corporate reputation is dependent upon. However, recently published literature indicates that a corporation’s philanthropy can make a distinct difference to consumer trust in the brand especially with consumers between the ages of 20 and 34.