A New Corporate Philanthropy
Thursday, December 15, 2011
By Christopher Haight
Corporate philanthropy has long been a staple of the more socially-inclined aspects to running a company. Cash or in-kind donations to schools and nonprofits brings multiple benefits to the donor, including helping to make a positive contribution to the communities in which they do business, improving brand image and loyalty, and helping provide a small tax write-off.
According to a survey earlier this year by The Chronicle of Philanthropy, corporate giving is expected to be flat for 2011 and 2012. Unsurprisingly, some of the biggest earners also rank among the biggest givers, with Wal-Mart and Goldman Sachs each donating over $300 million in cash. Although the overall level of giving may not change dramatically in the coming year, the way in which these funds are disbursed may be.
The typical corporate giving pattern is relatively simple: applications are restricted to communities in which a company has operations and employees, or giving is provided on a matched basis to employee donations (for example, an office of employees collects $5,000 to donate to a local school and the company provides an additional $5,000 to match their efforts). Corporate giving programs also tend to focus on programs related to the sector of the economy specific to the business - such as pharmaceutical giant Pfizer providing medical education grants or international carmaker Honda offering support for science education programs.
Now, corporate philanthropy may be taking a more socially engaging turn as the charitable and marketing arms of these companies seek to leverage social media outlets like Facebook or Twitter to award grants. The most prominent leader within this field has been Pepsi Co., with its Pepsi Refresh Project launched in 2010. While Pepsi still manages a standard giving program through the Pepsi Corporate Foundation, the more high-profile Refresh Project uses funds formerly directed to company marketing expenses and allocates them to nonprofits.
The Refresh Project garnered national attention because it was just as much social as it was philanthropic. In awarding the grants (ranging from $5,000 to $250,000), Pepsi solicited ideas online and then put the first 1,000 ideas selected to a national vote. Backers and supporters of ideas then took it upon themselves to promote their cause any way possible -helping local projects not only gain a more prominent national voice, but also giving Pepsi a new marketing ploy through philanthropy.
Another company getting in on the social giving game is J.P. Morgan Chase, which launched its own social philanthropic effort that relies on crowd-sourcing ideas and votes for funding. The Chase Community Giving Program reports over $18 million in donations to 500 organizations since its inception in October 2009.
Target Corporation has offered customers an even more direct influence on where dollars are directed through the use of its credit card program, Take Charge of Education. Users of Target's designated credit card can designate a school of their choice to receive donations based on their credit card use at Target stores or online. Schools can receive one percent of a buyer's credit card purchases. Target also offers resources and tools to school to help them promote this feature, allowing them to maximize donations.
Not all corporations are likely to be as effective in utilizing this kind of interactive giving, however. Companies that conduct a majority of business-to-business relationships (that is, selling to other companies or agencies, rather than to individual consumers) are less able to capitalize on this form of giving as both a charitable and marketing endeavor. They certainly may garner some public goodwill, but it will be more difficult to translate that into customer loyalty and sales. In addition, companies that may be in sectors held in less esteem by the public also may benefit from a low-key giving style instead of the splash made by crowd-sourcing.
Ideal candidates for engaging in this arrangement are those that directly sell to consumers and have a national reach, such as Pepsi Co. Selling a consumer product, rather than a service, is also better suited to leveraging the excitement generated from donations into sales. Consumers can more easily switch brands of products than they can with most services (i.e. cell phone carriers).
In many ways, these are not entirely novel concepts. For many years before the internet became widespread, parents cut box tops from cereal boxes that they then sent into the company in order to generate charitable donations. Yoplait yogurt has also used a similar scheme with yogurt tops to raise money for breast cancer. However, what these new models of giving (and marketing) do offer is a more exciting way to allow customers to participate in and not just accept corporate philanthropy.