Why Companies Give Back: The Value of Corporate Philanthropy

Jan 16, 2017 - Chris O’Reilly
Strategic Corporate Philanthropy

Editor’s Note: CyberGrants has many passionate people who work tirelessly to make incredible happen. Chris is one of those people. Here, he shares with us his views on why people give, how that translates into corporate giving and gives us some solid facts to help us convince our fellow executives and co-workers to make giving a priority in 2017!

There has been significant research over the years whether we humans are innately good or bad, cooperative or selfish. Recent research shows we are intuitively good by nature and want to cooperate, even if it means some personal loss. An excerpt from Scientific American explains it best,

“Cooperative behavior may have evolved first among relatives to promote the continuation of their genetic line. As communities diversified, such mutual support could have broadened to include individuals not linked by blood. Another possibility is that humans cooperate to gain some advantage, such as a boost in reputation. Finally, a hotly debated idea is that evolutionary processes take place at the group level. Groups of highly cooperative individuals have higher chances of survival because they can work together to reach goals that are unattainable to less cooperative groups.”

This is fantastic news and means there is hope for us humans! So, if the premise is we are naturally good by nature, want to cooperate and are willing to sacrifice for the benefits of others then if we extrapolate that out to collections of humans…say companies we can assert that it is “clinically” normal for companies to want to give back as well.

Research proves humans are good by nature. See what this means from a corporate philanthropy perspective. Tweet This!

Some people believe there is an unwritten social contract with civil law and society for companies to give back. I am one of them. Companies create and have a persona of who they are, what they stand for and what they represent. My personal belief is this is reflected in their approach to corporate philanthropy. At CyberGrants, for example, we don’t just help others give back. We take part in it every day. Our employees coach youth sports, spend vacations on humanitarian missions, volunteer at animal shelters, lead youth groups, and more.

How do companies engage the communities they live, work and play in? How do they care? I have been impressed by several companies that I have had the good fortune to work with in how philanthropy is at the core of their business. It is engrained in everything they do, from warmly greeting guests at their front door, to how they go about selecting capital investment partners. Would you prefer to work with a company that is strip mining the earth for profit or reinvesting in it for generations to come? That should be an easy, no brainer question to answer.

Have you considered WIFT in #CSR? Find out what this entails…Tweet This!

WIFT?

So the question for companies beyond just being innately good humans, wanting to cooperate and willing to sacrifice to help someone in need is What’s In It For Them (WIFT). The answer is quite a bit. There are benefits that range from increased employee engagement to improved public image and media coverage.

Let’s start with the value of happy and engaged employees that are loyal to their company. Take, for example, credit card giant American Express. Because of the American Express Foundation and their commitment to giving back, American Express was ranked #33 in Forbes’ 50 Best Workplaces for giving back. As of 2017, the company has donated over $39 million to philanthropic causes. They offer both paid time off for volunteering, and have a robust employee gift matching program. Employees rave not only about their philanthropic efforts, but their commitment to work-life balance:

“The company’s devotion to work-life balance is really driving factor in making American Express a great place to work. Close second is its commitment to philanthropic initiatives and community responsibility. These two things are, in my opinion, amongst the best in class.”

Here are a number of interesting studies and statistics that prove engaged employees have real and substantial financial impacts on the bottom line.

  • Companies with highly-engaged employees had a near 52% gap in performance improvement in operating income, compared with companies whose employees had low engagement scores. (source)
  • Companies with high levels of employee engagement improved 19.2% in operating income while companies with low levels of employee engagement declined 32.7% over the study period. (source)
  • Engaged employees in the UK take an average of 2.69 sick days per year; the disengaged take 6.192. The CBI reported that sickness absence costs the UK economy £13.4bn a year. (source)
  • 70% of engaged employees indicate they have a good understanding of how to meet customer needs; only 17% of non-engaged employees say the same. (source)
  • Engaged employees are 87% less likely to leave the organization than the disengaged. (source)
  • 78% of engaged employees would recommend their company’s products or services, against 13% of the disengaged. (source)
  • Companies with both highly aligned cultures and highly aligned innovation strategies have 17% higher profit growth than companies with low degrees of alignment. (source)

Next, let’s talk about improved public image and media coverage. They way your company is received by the public has everything to do with your bottom line. Today’s consumers are more socially and environmentally conscious than ever. Brands have risen and fallen in the wake of this movement. Take for example SeaWorld Entertainment, which has been struggling with public perception for some time. Since the release of the documentary Blackfish in 2013, which recounts the death of Seaworld trainer Dawn Brancheau and the company’s substandard safety practices, revenue and attendance fell considerably; revenue by more than 7%, and attendance by nearly 5%.

SeaWorld’s recent numbers show improvement after a long publicity battle and multiple lawsuits, but they are nowhere near pre-Blackfish levels. They serve as an example of the power of public perception. SeaWorld has since labeled the documentary as propaganda, but it came too late. It will take a lot for the public to begin to trust them again. Here are a few more stats that demonstrate what I’m talking about: 

  • Corporate responsibility nurtures, grows, and protects brand and reputation value, potentially by up to 11 percent of a company’s total value. (source)
  • 57% of consumers would purchase a product of lesser quality or efficacy if it was more socially or environmentally responsible. (source)
  • More than 9 in 10 millennials would switch brands to one associated with a cause. (source)
  • Two-thirds of millennials use social media platforms to share and engage with an organization's CSR. (source)

So do you think you could garner support from senior management and the CFO if you were to apply the above numbers to your company? I suspect after some healthy debate on your current state of employee engagement the answer would be yes.

 One last thing. Good business is all about networking and making connections. Corporate philanthropy is one excellent gateway to the invaluable resources that come from networking. Philanthropic organizations and conferences are populated by some of the world’s most powerful individuals; Think Bill Gates or Warren Buffet. These are the kind of individuals you could partner with to make real, lasting change in the world. I leave you with a quote from Buffet to consider as you’re contemplating the benefits of giving back:

 "It is not necessary to do extraordinary things to get extraordinary results."

Let’s all work to make incredible happen in 2017!

 Chris O’Reilly Vice President, Client Solutions CyberGrants

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