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Giving Back: A strategic business investment

Giving back: a strategic business investment ~ December, 2009

In 2009, TOMS will give away 300,000 pairs of shoes to needy children in eight countries. Every year, employees at Home Depot volunteer seven million hours of service and the company donates millions of dollars in four target areas. The American Reading Company continues to make progress in fulfilling its mission that every student in this country is reading on or above grade level.

Companies large and small are finding that sharing their time, money, talent or products is not only a way of giving back; it’s also a strategic business investment that pays off in many ways. As Scrooge once discovered about this time of year, you can do very well by doing good. It’s a discovery that every company can profit from – and so will the world.

The profitability of giving

Profitability comes in many forms, from personal satisfaction to bottom-line dollars. At one end of the spectrum there is the TOMS “One for One” model, in their case giving a pair of shoes to a child in need for every pair that is purchased. As founder and CEO Blake Mycoskie says: “I think it can be profitable, and I think it can do a lot of good, and that's all we really want anyways….as a life strategy for me, it definitely makes sense.” At the other end of the spectrum is AT&T, which enhanced its branding and garnered customer goodwill for both TOMS and itself by simply making a commercial about the TOMS Shoes do-good program.

According to the Council on Foundations, 83 percent of Americans have a more positive view of companies that support a cause they care about; and 65 percent would switch to a brand that supported a cause they care about, given equal price and quality. These are powerful numbers, and we see the proof in examples like these:

  • Ben and Jerry’s was founded based on a sustainable corporate concept of linked prosperity. They now hold nearly 40 percent of the premium ice cream market.
  • Home Depot’s giving program is based on the belief that employee and shareholder values are inseparably linked. Their revenue grew by $19 billion, or 42 percent, and earnings per share was up 71 percent over a three-year period before the recession.
  • Cisco has a long-term commitment to giving back to local communities in areas where they expand overseas. Cisco increased its market cap 60 percent in 2008.
  • LensCrafters partners with Lions Clubs to provide eye exams and glasses to needy children through their Gift of Sight Program. For the past two years, LensCrafters has been on Fortune’s Top 100 Companies to Work For.

There are many, many more examples of how doing well and doing good are symbiotic. It doesn’t seem to matter whether your motivation for giving back is personal satisfaction, increased employee loyalty, enhanced revenue generation or some other reason. The good will that you generate can increase your market share and provide human resource and public relations advantages that positively impact your profitability.

The advantages go way beyond tax benefits

The business benefits of giving-back strategies extend to both internal and external areas of your company. Like the tax benefits typically derived from corporate giving, these benefits are real and quantifiable. Allowing volunteerism on company time, for example, helps to recruit the best talent. Employees want to give back to their community and to those in need, and many actively seek out companies that make a strong effort to do so. Volunteerism increases employee morale and directly feeds into retention. High employee retention means lower turnover, which saves money over time.

It all adds up:

External benefits of giving back

  • Improves customer loyalty
  • Enhances your reputation in the community
  • Increases positive name recognition and brand awareness
  • Fosters new and enhanced relationships with key community leaders
  • Promotes a reservoir of goodwill within your community
  • Contributes to healthier and economically stronger communities

Internal benefits of giving back

  • Increases market share and revenue
  • Makes it easier to hire top talent
  • Helps retain valued employees
  • Increases productivity through greater employee satisfaction and motivation
  • Reduces costs
  • Creates leadership and development opportunities for employees
  • Exposes senior staff to new ideas and perspectives
  • Improves internal communication and a sense of common purpose
  • Builds teamwork and collaboration skills
  • Boosts morale and increases loyalty

Anchor your program with alignment

The key to a successful giving program is aligning your business need with community responsibility. For example: Home Depot’s “Rebuilding Together” program is based on using their own building materials and products, and the working knowledge of their employees, to build homes for Habitat for Humanity. Along those same lines, Kroger donates to food banks across the country, and Bristol Meyers supports colleges of medicine.

In addition to alignment, do the following to ensure that you and your community beneficiaries receive full value from your giving back program:

  • Encourage employee participation in your company’s charitable giving decisions and in volunteering.
  • Be sure to have a rationale for what you are doing and develop guidelines and objectives—and then communicate the information to employees.
  • Budget your giving and stay focused.
  • Keep top management involved; their commitment is t he single most important ingredient for starting and sustaining a corporate giving program.

Move to the triple bottom line

Giving back programs are a prime example of triple bottom line thinking: people - planet – profit. Triple bottom line is full cost accounting, measuring ecological and social performance as well as financial performance, and considering all stakeholders in your actions, rather than just shareholders. It’s a concept—and an investment strategy—that every company can profit from.

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