What are the benefits of corporate donations to charity?
Philanthropy may seem a relatively new concept in the world of business, but corporate charitable giving has actually been around for some time. In Ancient Rome, businesses were expected to pay taxes to fund military campaigns (that were believed to be for the good of the Roman populace). And by the eighteenth and nineteenth centuries, philanthropy was common amongst the growing number of wealthy middle-class, particularly the new industry owners as a result of industrialisation. A prime example is Thomas John Barnardo, who established hundreds of homes for children to alleviate them from poverty (and who is still a household name thanks to his charitable organisation Barnardos).
However, it wasn’t until the 20th century when community development and social responsibility was recognised as going hand in hand with business growth and success. George Cadbury, the founder of Cadbury, was one of those thought leaders, founding the Bournville Village Trust in 1900 to provide safe, comfortable living conditions for his workers. He certainly wasn’t alone in this thinking. Today, many companies give generously to charities on a regular basis. Aside from the sense of reward and satisfaction that comes from giving back to the community, there are actually multiple benefits to corporate charitable donations. In this article, we’ll be outlining a number of reasons why businesses should regularly give to charity.
Why do companies give to charity?
It’s a simple fact – when you do good at work, you feel good. And when you feel good at work, you are more likely to have a positive mindset towards your role and company. It’s no secret that being in a good mood increases your productivity and the quality of your work – one study showed that happiness can make you 12% more productive.
This is the essence of why the philanthropic business model works. It causes companies to look beyond meeting their KPIs and generating profit to build a more generous, positive workplace environment. Your employees will feel proud to be part of a team that is making a real difference to the lives of those in need and are more likely to view the company in a good light as a result. Workplace volunteering makes millennial employees twice as likely to rate their corporate culture as very positive according to one study. Fostering a productive and happy office culture also improves your chances of retaining your current workforce and attracting new employees. All this good stuff contributes to a successful business – a happy, enthusiastic and productive team who believe in you as a company.
Shines a positive light on your brand
Corporate giving also makes your business look good to the public. Think of it as another marketing channel – being a philanthropic business is a great way to raise the profile of your organisation and improve your reputation amongst your audience. According to one study, millennials spend 70% more on brands that support causes they care about. The Charities Aid Foundation also found that 51% of British adults are more likely to buy a product or use a service if a company donated to charitable causes.
Corporate philanthropy is also a rich source of audience engagement, particularly with younger generations who are more likely to engage with brands on social media to discuss social responsibility issues. By being a vocal ally to disadvantaged groups or causes you are passionate about on social media, you will be clearly communicating your company’s values for all to see. It also shows that your support is genuine by backing a cause even when it’s not trendy to do so.
What you don’t want to happen is to rally behind a cause that doesn’t align with your company brand values simply because it is popular or current. This approach often attracts public scrutiny for piggybacking on a movement to raise your business profile. For example, during Pride 2019 various companies were accused of ‘pinkwashing’ their branding by using the international celebration of LGBT rights as a PR stunt. M&S once came under fire after releasing an LGBT sandwich for the event, which resulted in them being accused of tokenism. Corporate charitable giving will only improve your brand’s reputation and awareness if your engagement is authentic and you aim to make long-lasting change beneath the publicity.
Helping the community
Corporate charity giving does not necessarily have to be on a national scale. Giving back to your immediate community also has multiple benefits for businesses, particularly if you operate on a local level. For one, the locals will notice the effort you are putting into improving their community, consequently raising the reputation of your business. Two, by aligning your donation choices with local causes that your employees care about, you are more likely to get greater engagement from your workforce when it comes to raising funds and volunteering. Three, through your fundraising efforts you are likely to directly engage with your current or prospective customers, creating additional opportunities for your business to grow and strengthen your customer base.
Specialist training and support
By forming a partnership with a charity, companies can increase their awareness of a certain issue and use that as the basis of a training program or initiative that offers tangible benefits for their staff. For example, Campaign Against Living Miserably (CALM) provides corporate partners with mental health training. This helps to reinforce the fact that corporate giving is often a mutually beneficial relationship.
All of the above points are worthy reasons to invest in corporate charity giving within your own business. To go one step further than supporting a cause as a one-off is to look into ways you can integrate corporate social responsibility into how you operate.
But hang on, what is corporate social responsibility?
What is corporate social responsibility?
Corporate social responsibility (CSR) is the self-regulatory model businesses use to assess their impact on society and how they can develop ethical business processes and practices. The idea is to work out how you can improve the way you operate to benefit all your stakeholders (employees, customers, investors, local communities etc). When done correctly, corporate social responsibility should form an integral component of your company’s ethos and values.
What is the purpose of corporate social responsibility?
The purpose of corporate social responsibility is to have a positive, lasting impact on society which goes beyond throwing money at a good cause. Of course, there is still room for traditional corporate philanthropy as the aid sector still needs funding to continue its good work, particularly in our new age of contactless payments and the decline of cash donations. But companies should also recognise that they can have a much more powerful role in community development and alleviating social issues by going beyond financial support.
When utilised in the right way, CSR should help to drive long-lasting change. A good example of a brand doing exactly this is Ben & Jerry’s and their support of same-sex marriage. The ice cream giant renamed two of its ice creams (Chubby Hubby to Hubby Hubby, their apple-flavoured ice cream to Apple-y Ever After) in support of legalised same-sex marriage in the UK. But they didn’t stop there – when Australia didn’t legalise same-sex marriage, Ben & Jerry’s refused to sell same-flavour double scoops in their Australian stores in response. They also placed rainbow-decorated post boxes in each of their Australian stores, politely encouraging their customers to contact their local parliamentary representatives about the issue. They even promised to deliver all handwritten letters to the Australian Parliament themselves.
Inspiring examples of corporate charity partnerships
A successful corporate charity partnership should represent not only the charity’s long-term goals but also the company’s brand identity. The partnership should ‘make sense’ in the eyes of the general public. Take McCain Foods, for example. McCain is a ‘family-owned business’, and a lot of their advertising is centred around bringing families together at mealtimes. In 2021, McCain announced that they would be pledging £1m over three years to help Family Fund in their efforts to support families with disabled or children living with serious illnesses. Family Fund aims to offer 150,000 grants and services to help families in their day-to-day lives, which will include kitchen appliances to help bring people together during mealtimes.
While McCain and Family Fund are certainly well-matched, corporate giving can also reveal partnerships that are less ‘obvious’, which make for creative and innovative campaigns. For example, Stella Artois’ ‘Buy A Lady A Drink’ campaign. Back in 2017, the beer company partnered with Water.org and announced a 4-year pledge to help provide 3.5 million people in developing countries with long-term, sustainable access to clean water. When you think about it for a second, water is pretty integral to beer brewing, and it’s this kind of creative thinking that captures the public’s imagination and attention. To find out more about how to create long-standing, mutually beneficial relationships with charities, read our guide on forming charity partnerships.
How much do corporations give to charity?
As we mentioned in our Are You Giving Enough To Charity article there is no golden rule when it comes to how much you should give to good causes. If we could offer one piece of advice, it would be that the majority of corporations (approximately 70%) opt for strategic, regular giving rather than ad-hoc or one-off donations.
If you’re struggling to settle on a set figure to give, there are a few cases that can serve as examples of how much corporations give to charity. According to the CFA’s report, the FTSE 100 companies donate on average 2.4% of their pre-tax profit to charity. While international corporations such as Gilead Sciences, Wells Fargo, Goldman Sachs and JPMorgan Chase give millions to charity each year. In 2017 alone, Gilead Sciences donated $446.7 million (£333.2 million) to charity, funding numerous national and international public health campaigns. That’s certainly something to feel good about.
Are there tax incentives for corporate giving?
Yes there are! Since 2000, companies that donate to charities have been eligible for Corporate Gift Aid. This differs slightly from individual Gift Aid in that while charities can reclaim income tax from donations (which then increases their value), companies who give to charity have the value of the donation subtracted from its profits – which means that they pay less income tax. To find out more, take a look at our guide to Corporate Gift Aid.
Should my company set up a corporate foundation?
If you want to go the extra mile in your philanthropic efforts, why not build a corporate foundation? This means essentially forming your own charity so your company can support causes that it feels strongly about whilst having a hand in the overall strategy. It would also allow you to consolidate all of your giving into a single entity, so you can better measure and predict future outgoings.
Corporate foundations vary in both their purpose and structure. For instance, some companies decide to offer grants and scholarships, which usually involves setting up a charitable trust. Others, however, decide to go the extra mile and form a charitable incorporated organisation (CIO) which usually involves setting up official premises and hiring employees.
Corporate foundations ensure that your CSR activities are focused and well-structured, whilst also having a large-scale impact on a range of truly worthy causes. To find out more, we suggest you take a look at this guide to corporate foundations taken from GOV.UK.
If you’re thinking about starting to fundraise within your own company; we can help. As a FinTech company dedicated to digitally transforming the aid sector, we are experts in helping charities, nonprofits and corporations make the most out of their fundraising, and have worked with many corporations to do so. From our contactless charity boxes to helping you form long-standing corporate charity partnerships, we can help you make corporate social responsibility an intrinsic part of your business.