HR Corner: The Business Advantages of Philanthropy

The last two months of every year fill people with goodwill as they get into the holiday spirit. The admirable energy also often attracts businesses. Philanthropic contributions and working within communities to improve them play a big part in many companies’ corporate culture. Altruistic donations are a win-win for businesses and charities alike, as the names of both organizations are further promoted, uniting causes to gain more public awareness. There are two different ways to go about flexing your company’s charitable muscle: cause marketing and charitable giving.

Cause Marketing vs.Charitable Giving
Both methods ultimately result in a benefit for in-need organizations, but have characteristic variances that differentiate one style of giving from the next. According to, cause marketing is generally a profit-making initiative by a for-profit company or brand to raise awareness, money and/or consumer engagement in a social or environmental issue. For example, in 2003 TUMS was able to help fund 60 fire stations across the U.S. through their campaign “TUMS Helps Put Out More Fires Than You Think.” The overall mission of the First Responder Institute was to raise money to help train new firefighters and TUMS donated $0.10 per sale. The cause helped facilitate more sales for the company while subsequently giving back. This cause marketing campaign was very successful for TUMS as it increased sales, profits, recognition and resources for their cause.

Charitable giving, on the other hand, is a gift or donation made by a person or organization to a non-profit organization. The contribution of choice can be monetary, real estate, motor vehicle, clothing, appreciated securities or other assets and services. Marketing strategies from press releases to press conferences with check presentations can of course accompany charitable giving activities, but there generally aren’t any obligations by the receiving organization as there are with cause marketing.

Tax Breaks
While the “Do Good” feeling is contagious and usually the driver for charitable giving, businesses can’t forget that there is always “something in it for them” by way of tax breaks. The Better Business Bureau states that companies are able to deduct all contributions to public and private 501(c)(3) organizations. If a threshold of up to 10 percent of the company’s taxable income is not exceeded, it will receive a full tax deduction on the amount donated.

Whether your choice of philanthropy is by way of cause marketing or charitable giving, the reputation of your organization can be positively affected. The very popular term, “Your reputation precedes you” means that people are aware of the attitude or behavior of an individual prior to meeting them. For example, many of us have never physically met Bill Gates, founder of Microsoft, but most of us are aware of his billionaire status and philanthropic habits. This philosophy of reputation is not only true for individuals, but businesses as well, and creating a generous stature among consumers within your demographic works to your business’s benefit, as a general respect for your good efforts is amassed.

Another common benefit derived from philanthropy is that it can be a draw for potential employees and help bring in more customers. Culture plays a big part in driving future employees as the opportunity to engage in more service-based humanitarian efforts in the workplace and community showcases the human side of corporations and businesses. Additionally, Americans tend to support charitable businesses, as studies show nearly 60 percent of consumers are more likely to buy from companies that have formed a charitable partnership, or make a donation to the associated cause. In today’s busy society, offering charitable opportunities to both employees and customers also allows them to meet some of their personal goals without the hassle of researching to whom or where to allocate time and donations.

Getting Started
If cause marketing or charitable giving is something that interests your business, there are many ways to go about executing the task. The first task is setting the giving goal and allocating a budget. Whether donation or cause-related you will need to know what you need to execute a campaign and/or want to deduct from your bottom line.

Forming a company committee to brainstorm ideas regarding where and how to distribute your company dollars (especially for charitable giving) is very

effective. This method allows employees to voice their thoughts about causes they find important and put ideas into action.

Research and reach out to the organizations you are interested in contributing to. Some charities have strict policies of how donations can be made, how their organization can be promoted and referenced any campaigns, and may have ideas on how to work best
with them.

In the case of cause marketing, be sure your partner organization is related to your core business (such as the example of TUMS putting out fires and the First Responder Institute in relation to the fire department), as this makes for a more relevant and easily understood campaign. Most times, charitable giving is targeted to local organizations, but can expand to state charities and national causes as you see fit.

Last, once you have settled on a charity, determine the method of giving and any marketing strategies and tactics. Will you host an event, send out a press release, keep it simple with an in-person delivery or work on a cross-functional campaign to promote further giving? Lay out the plan of action for accomplishing the goals you set, and make it happen.

In business, the cycle of giving is ever-present. Whether it is offering great customer service, a fantastic product, a clean environment or a plentiful menu, you give your time, energy and resources daily. Charitable giving and cause marketing are simply other means of giving, and to give is to receive.