Corporate philanthropy is a general term that describes the initiatives businesses adopt to promote the welfare of specific communities through monetary and non-monetary charitable donations. For-profit companies view corporate philanthropy as a way of giving back to the organizations that support their existence. On the other hand, nonprofits use philanthropic contributions to attract free money in volunteer grants.
How Is Corporate Philanthropy Different from Corporate Social Responsibility (CSR)?
Although philanthropy and CSR overlap in practice and some corporations use the two terms interchangeably, they are dissimilar. CSR is broader than philanthropy and focuses on much more than giving to the community. Corporations practice CSR to impact their employees, local community, and environment positively. Philanthropy is essentially an integral part of CSR that companies use to promote their brand image or as part of a public relations company.
How Can Businesses Benefit From Corporate Philanthropy?
Enhanced Brand Reputation
The more good deeds a business does for its community, the better the general public will perceive it. Through corporate philanthropy campaigns, corporations can provide support to vulnerable communities while improving their brand’s image.
More Employee Engagement
Directly involving employees – voluntarily – in philanthropy campaigns fosters teamwork, improves employee engagement, and ultimately uplifts productivity. Businesses that allow employees to pick the charities they would like to donate to and offer paid volunteering opportunities are more likely to have a highly energized workforce.
The positive publicity that comes with corporate philanthropy can attract new customers. People are often more willing to spend their money on brands that donate to the causes they support.
A 2017 study performed by Cone Communications found that 87% of consumers were willing to purchase products from specific brands simply because they advocated for issues that mattered to them. Similarly, 90% of consumers are more likely to pick a product from a cause-affiliated brand when evaluating multiple brands of equal perceived value.
While the more social benefits of philanthropy, e.g., employee engagement and brand perception, could take a while to manifest, tax savings due to charitable giving will happen almost instantly. Corporations should never donate to charities with the sole intention of financial gain; however, the potential economic rewards in the form of tax deductions are too irresistible to ignore.
Donating to the local community reflects well on a business and its intentions. Companies can significantly boost their performance by developing philanthropy programs that tie into their CSR strategies.