According to the Minnesota Council on Foundations, corporate contributions
in the state grew more than 90% between 1987 and 1996 to more than
193 million. In 1996, the MN Keystone Program recognized 252 companies
in the state for contributing between 2 & 5 % of their pre-tax
earnings for charitable purposes, up from 184 in 1994.
Become Corporate Citizens
The concept of becoming a “corporate citizen”, i.e., playing a
leadership role in social problem solving by funding long-term initiatives
is growing more powerful in the 1990s. This entails cultivating
a broad view of the business’ own self-interest while instinctively
searching for ways to align self-interest with the larger good.
This is a paradigm on the rise in corporate America.
Already powerful in the U.S., “corporate citizenship” promises to
bring even more success to U.S. companies international, especially
in countries which are still uncluttered by social initiatives.
Here even small well-conceived grant programs can have a large impact.
IBM’s philanthropic efforts in Japan have given it, according to
a recent poll of Japanese citizens, a reputation second only to
Sony in respect due to its reputation for social responsibility.
Its leaders have access to the inner sanctums of Japanese business
enjoyed by few U.S. executives. (Harvard Business Review of May-June,
1994)
The success of Hewlett Packard and other such companies belies
the notion that businesses that are socially responsible can’t also
be fiscally responsible. In fact, the opposite is true. A business
can’t do much good if it isn’t any good at what it does.
It’s no coincidence that these same companies have been able to
embrace the leading management trends of the past decade: flat organizations;
bottom-up management; empowerment; customer-focused, just-in-time
manufacturing, and total quality. These philosophies demand a flexible
and dedicated work force not locked in battle with management.
As a CEO put it, “This is not do-good stuff. This is the way you
make money.”
According to Tom Kochan, a professor of management at M.I.T.’s
Sloan School, “if firms do these kinds of things (socially responsible
measures), they will get an economic return for their investment
and a higher quality work force that is more loyal and productive.
It is a virtuous cycle.
Businesses have another constituency, of course, one that, given
the choice, generally prefers cash to virtue. Happily, in the world
of business it is becoming increasingly possible, if not necessary
to get both.” (Harvard Business Review, 1994)
Rationale of companies such as The St. Paul Companies: “We view
it as a long-term strategy for supporting a group of organizations
that collectively have an important long-term impact on the community.”
Increase Name Recognition & Reputation
AT&T is among a number of blue-chip companies, including General
Motors, Eastman Kodak, and Coca-Cola, that rely on the prestige
value of their products and have taken on larger philanthropy expenditures
than their lean, mean, and lower-priced competitors. Within each
of these companies, internal advocates successfully argued again
drastic cuts in philanthropy on the grounds that competing on price
and corporate citizenship is a smarter strategy than competing on
price alone.
“It wasn’t until the Exxon Valdez oil spill in 1989 that the shortcomings
of the style of philanthropy (which doesn’t tie giving to business
interests) were fully exposed. Without ties to environmental leaders
nurtured by the foundation, then Exxon Chairman Lawrence G. Rawl
had nowhere to turn for advice on handling the crisis. In the end,
strategic alliances can prevent public controversies that might
irreparable damage a company’s reputation and its business. Philanthropic
initiatives should help advance business interests through strategic
alliances with marketing, governmental affairs, research and development,
and human resources functions . And by putting corporate resources
and know how into problem solving, the community also benefits.
More than anything, the government affairs staff at A T & T
wanted AT &T to be a leader in public policy discussions regarding
the “information superhighway”. By having CEO Allen work on the
well-being of children with Clinton-Gore administration, he was
invited by them to be at the table regarding the decision to make
the superhighway a private rather than public initiative.
The Council of Foundations reported that 60% of the CEO’s they
surveyed said that contributions to charity helped to attract good
people to the community and company. Approximately 98% of the larger
firms cited this as one of their rationales for giving.
Galaskiewicz also found that companies which gave more to charity
were regarded by business leaders as more successful business enterprises
(New York Law School Review 1997)
The Toro Company: “We view philanthropy as a way to build relationships
with customers more than to sell products. It goes beyond your products.
Corporate giving can enhance the best part of your family name.”
ReliaStar uses its corporate philanthropy to help raise awareness
of its educational brand. “We use our community tools to enhance
our name recognition and brand awareness efforts so that when people
think of ReliaStar they think of the financial education company.”
Today cause marketing, which includes promotions in which a portion
of the purchase price is donated to nonprofits, is the fastest growing
type of marketing.
The most obvious case was American Express Corporation’s partnership
with the Statue of Liberty. Card usage increased 28% over the previous
year, the number of new cards issued rose 45%, and the Statue of
Liberty restoration fund received $1.7 million from American Express.
Other research has shown that cause related marketing increases
public awareness of the cause, expands the nonprofits base of support,
and generates a more positive image of the nonprofit and company
among the public. (New York Law Review)
Many companies also view cause-related marketing and other marketing-related
philanthropic initiatives as valid and effective ways to let people
know about their good works. A recent survey of 1,500 households,
conducted by Boston College’s Center for Corporate Community Relations,
showed that more than 75 percent of respondents felt that a company’s
philanthropic activities made a difference to them when deciding
whether or not to do business with the company. (MN Council of Foundations
Giving Forum
In an increasingly tough business environment, philanthropy is a
way for a company to distinguish itself from the competition.
Improve Human Resource strategies
Aid Recruitment
By donating equipment and providing scholarships to the academic
programs where they recruit, companies add value to their efforts
to entice new employees.
Increase loyalty
In a study commissioned by Chivas Regal, 53% of employees say their
loyalty to their employers is strengthened when they are involved
in the companies’ philanthropic programs. (New York Law Review &
other sources.)
Improve employee benefits
By using philanthropy to create new day care and elder care options
in plant communities, companies ease the dependant care burdens
of employees.
AT&T by supporting child care in their neighborhoods has increased
available child care for their employees.
Improve Employee Performance
What’s more, people who volunteer make better employees, according
to a recent survey of Pillsbury employee volunteers.
*91% of employee volunteers report that volunteering enables them
to develop managerial, teamwork, problem-solving and strategic management
skills
*89% of supervisors say that employee volunteers engage in positive
work behaviors more frequently than do non-volunteer employees.
*Employees who volunteer are more satisfied with their work, identifying
more with the company, and have more confidence in management than
do employees who do not volunteer. (Giving Forum MN Council of Foundation,
1998)
Contact Information
Sandra Larson Consulting |
11472 Fairfield Rd. West, Suite 302
Minnetonka, MN 55305
952-595-0432 | 612-964-4389 (Mobile)
