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Giving Back Gives Back: How Corporate Philanthropy Benefits the Bottom Line

“Greed, for lack of a better word, is good.”  

That famous line, spoken by Gordon Gecko’s character in the movie Wall Street, gives the impression that selfishness equals success in business.

The reality, however, is quite the opposite. Research shows that giving back is good for the bottom line. 

But why? What is it about corporate philanthropy that helps drive profits? 

Let’s take a look. 

First, the research. 66% of consumers say that they prefer to spend their money on brands that support social or environmental causes, according to a 2015 Nielsen study. That’s a powerful marketing tool, says Stephen Canton. 

Canton is senior partner of Florida-based venture capital firm Anacostia Ventures and former CEO of Virginia-based telecom giant iCore. Canton was behind the sale of iCore to Vonage for $92 million in 2015 and has seen the benefits of corporate giving first hand.

While at iCore, Canton spearheaded corporate sponsorship of fundraising events for the United Negro College Fund, a national philanthropic organization that funds scholarships for minorities and supports historically black colleges and universities.  

Also, during Canton’s tenure with iCore, the company supported other local and national charities, including Habitat for Humanity, a national nonprofit that builds homes for those in need.

“Philanthropy in the corporate world is a really good way to extend the reach of your brand, and enrich yourself in a community,” he says. “Appeal to your customer and the customer you want with your giving. For a company looking to attract forward-thinking millennial women, that might be by sponsoring women’s athletics, like soccer events. It’s all about marketing. You’re marketing your brand successfully AND supporting a good cause.”

And it’s not just that customers want to get behind purchases with a purpose. 90% of all consumers would switch brands to one associated with a cause, given a choice between the two, according to a 2015 Cone Communications study. That’s close to 100% of all consumers. Those numbers are foolish to ignore, according to Canton.

Like Canton recommends, sponsoring events can go a long way to getting your brand’s name associated with the causes you support, says Gail Bower, a Philadelphia-based revenue strategist for mission-driven organizations. 

“Yes, companies can make donations,” she says, “which are an important though sometimes unreliable revenue source for nonprofits.”

Those donations can be good for businesses, she says, depending on the size and nature of the donation.  But when a company just sends a check and disconnects, they are losing valuable marketing opportunities. Better to be engaged in causes and movements that really mean something to the business, its employees, and customers, 

In strategic philanthropy, Bower and Canton agree, donations and sponsorships are promoted and advertised to amplify the cause and the two partners’ roles in it. One effective marketing-driven activity is cause marketing, Bower says, in which the purchase of a product or service is tied to a specific donation.

And it’s important to make sure that the charities you support mirror your company’s goals, Canton asserts. For example, iCore had a large customer base in southern metropolitan areas, so the company often sponsored or participated in charity events that benefited those areas.

“We took part in a campaign that painted public schools in Washington, D.C. that needed facelifts,” he says. “And one of them happened to be a school that I myself had attended.”

Events like this show your current and future clients that you really care about your business and your community, according to Canton. And when other organizations learn of your charitable efforts that align with their mission, you can gain even more.

“Let’s say you are a donor to the UNCF, “ Canton says, “the Urban league (an urban advocacy organization) might consider working with you because of that. Appeal to the customer base you are looking for. It’s about marketing and wider acceptance for your product.”

In addition to the marketing gains that come from companies taking active interests in their own communities, studies show that corporate giving can also lead to a boost in employee morale. Giving simply makes employees feel good, it seems, and increases their emotional attachment to their employer.

In fact, one 2016 Deloitte study reported that millennials were twice as likely to report their corporate culture as very positive if their company participated in volunteer activities. 

Not only does giving make employees happier, but the research also shows that it makes them more productive too. Businesses that included their employees in charitable giving saw a 13% increase in employee productivity, according to Causely, a company that helps businesses generate social media reviews by giving back.

“Employee pride is important,” Canton agrees. “When people feel good about the company that they work for, they work harder.”

And when employees and customers feel positively about a company, Canton says, it’s like an insurance policy that protects the business from future downturns. 

“Lean on your nonprofit when there is a scandal in the organization,” Canton says. “Turn down the volume on the scandal and turn it up on philanthropy. It’s a safety valve. Businesses with an overall positive reputation are more likely to survive in situations of adversity.”

And, of course, there are tax benefits for corporations that support charities. Specifically, corporations can take up to 10% of their annual income for charitable giving deductions, as well as deduct any matching gifts that they make.

But the tax benefits are the least of the advantages that giving back brings for Univest Bank & Trust, a Pennsylvania-based financial corporation. Much like Canton and iCore did, Univest makes a priority out of charitable giving to the community that it works in. 

“We know that Univest is only as strong as the communities we serve,” says Mike Keim, president of Univest. “Our approach is simple, offer financial support coupled with strong leadership and volunteerism.”

Univest focuses its giving in the areas of youth and education, health and social services, community and economic development, and arts and culture. This creates a mutually beneficial relationship, according to Keim, getting the Univest name out into the community it serves and supporting important community causes.

As a longtime partner with ArtsQuest, a Pennsylvania-based nonprofit arts organization, Univest is a presenting sponsor for ArtsQuest’s annual Musikfest music and arts festival.  In addition to the financial sponsorship, Univest employees serve as Musikfest volunteers. 

Univest’s financial contributions to nonprofits in their community totaled more than $1.9 million in 2020, Keim said, with Univest employees providing more than 7,300 hours of service.

That commitment to local philanthropy helps Univest stand out among the competition, according to Keim. 

“We take our role as a corporate citizen seriously,” he says. “The strength of our “committed to local” philanthropic program is one of the things that differentiates us in the market.”

It’s clear that corporate giving can benefit both a business’ bottom line and work culture, all the while having a dramatic and positive effect on the community.

For Canton, the relationship that he nurtured with the UNCF evolved into a partnership, whereby iCore provided discounted services to areas in need of internet access.

“The UNCF tagline of ‘a mind is a terrible thing to waste’ took on a lot of meaning as we were bringing updated broadband to students that had been historically underserved,” Canton says. 

Canton was also behind a campaign called “Northern Virginia UNCF Strong,” which worked to encourage business owners in Virginia to support the UNCF and minority education.

“I know what it’s like to be at a disadvantage when it comes to schooling,” he says. “I wanted to do what we could to ensure that all young people have the opportunity to get the higher education that they deserve.”

“Wherever I can help people that are down, I will do what I can,” he adds. “I don’t give handouts, I give them a hand up.”

Of course, Canton is quick to remind that when consumers become aware that your company is affiliated with a good cause, they are more likely to spend dollars on your product.

“When your business supports a good cause, it helps to make your community better,” he says. “But it also makes your business better.”

Giving, for lack of a better word, is good.

Stephen G. Canton © 2024. All Rights Reserved.