Chairman's Perspective - August 2021

The business case for corporate philanthropy

This is one of those fun opportunities where my day job and my volunteer life come together as I discuss the upsides of corporate philanthropy.

I have the great good fortune of spending my days helping donors realize their philanthropic goals, and in turn, I also get to experience firsthand the positive impact the generosity of our donors is having on those in our community. Every day I am able to see lives changed in big and small ways due to the caring of individuals around us. But does, or should, philanthropy stop at the individual level?

I believe the answer is clearly no, but for more than just the obvious reason of it being the right thing to do.

I was blessed to be president of a company in Rockford that had a long history, established decades before I arrived, of giving back.

My predecessors embraced a couple of fundamental truths:

1. The success of our company was inextricably linked to the success of the communities we served, and

2. It was our responsibility to give back to those that made us successful.

We also realized that our corporate philanthropy did not stop around the board table, rather it was a part of the culture of who we were as a company, and we encouraged all our employees to give of their time, treasure and talent.

But does this approach make business sense?

If you read my article in The VOICE two months ago, you know that I have a habit of quoting old-school business thinkers, and I am going to do so again strictly to point out how the world has changed. The famous economist Milton Friedman stated decades ago that the only “social responsibility of business” is to “increase its profits” and that philanthropy should be left at the individual level. Porter and Kramer argue, in the Harvard Business Review article “The Competitive Advantage of Corporate Philosophy,” that Friedman’s observation does not hold water in today’s world. Specifically, they state, that “companies do not function in isolation from the society around them. In fact, their ability to compete depends heavily on the circumstances of the locations where they operate.”

There is no greater example of this than workforce. Businesses are wholly reliant on the educational success of their communities to meet their employment needs.

There is growing evidence to suggest that employee engagement and productivity are greatly enhanced through corporate philanthropy. Givinga, in the 2018 article “Corporate Philanthropy Benefits,” indicates that up to 78 percent of employees want to engage with corporate social responsibility initiatives and that, according to a Gallup poll, employees who are engaged in corporate philanthropy are 21 percent more productive than their counterparts who are not engaged. Employee engagement in corporate philanthropy can come in the form of opportunities to give, paid time off to volunteers, and corporate matching dollars, just to name a few examples.

Corporate philanthropy can improve brand awareness and reputation, which can lead to enhanced revenue opportunities. Giving in the name of the company or allowing employees to roll up their sleeves on company time and get involved with philanthropic endeavors lets your potential customers know who your company is and what you believe in. The Givinga article, described here, references two separate studies that show that 87 percent of consumers would purchase a product simply because a company advocated for an issue they cared about and 90 percent of consumers would, when choosing between two brands of equal value, choose the cause-branded product.

Finally, and I am certainly no tax expert, there is also a financial case to be made for tax deductions at the corporate level for charitable giving. It is not a dollar-for-dollar deduction but, taken in conjunction with the other benefits described above, this is certainly an added benefit.

Dan Ross is chairman of the Rockford Chamber and president of the Community Foundation of Northern Illinois.