How Corporate Phlanthropy Improves Corporate Profits      

    by Bill Ballas                                            

    by Bill Ballas


    Earlier this week I attended an informative luncheon hosted by the AFP Silicon Valley Chapter.  It was so fascinating I felt compelled me to write this entry for my friends and clients in the corporate and not-for-profit sectors. 


    The featured speaker was Jacquelline Fuller, Google’s Managing Director of Global Giving (www.google.org).  Her presentation, “Why Google Gives,” was focused on sharing Google’s grant opportunities and hints for submitting a successful application.    


    Between taking notes, I was reminded of a study that showed for every $1 the average corporation gave to charity, it should see its profits grow by $2 to $3.  The research was published by Lev, Petrovist, Radhakrishnan (2007), and it analyzed the corporate donations of 251 major companies for 2005. 


    For details on this research project and their more recent work on the topic, copy and paste the following link in your web browser: http://blogs.law.harvard.edu/corpgov/2011/08/20/making-the-business-case-for-corporate-philanthropy/


    In the meantime, their other findings were:


    • The top 251 corporations donated $14b in cash and goods (44% of donations)

    • The top 251 corporations averaged donating 10 cents for every $100 of net sales revenue

    • The top 15 corporations donated $1.6b cash, and $4.5b in goods

    • For every $1 given to charity, the average company should expect profit to rise between $2 and $3

    • Most corporations do not take full advantage of corporate philanthropy as a business tool.


    It seems that when corporations properly promote their charitable activities, they attract new customers, strengthen consumer loyalty, improve staff retention, and build an esprit de corps among their employees.  This is quite a return on an investment of 1/10th of 1% on net sales revenue!


    Google seems like an exemplary corporate citizen – not just for the $100 million it donates annually – but also for the time and talent their 30,000 employees give to not-for-profits.  The aggregate value Google’s contribution to philanthropy is enormous.


    While some marketers argue that corporate philanthropy is wasteful or a “tax” levied on shareholders, others ask, “If a company doesn’t support the community in which its employees and customers live and work, why should consumers support the business?”  After all, corporate philanthropy is good business for everyone. 


    If you want more proof, do a google search on “corporate + giving + enhances + profits" and see other study results.

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