It won't get a funeral or an obituary. It won't even get a headstone. If it did, it would read something like this.
In the long history of business, corporate charity is just a youngster. It survived a relatively short time, but during that time, billions of dollars will have flowed from corporate coffers into the bank accounts of community charities. These, in turn, will have used those funds to solve social and environmental problems and build or rebuild communities. The sad irony of corporate charity's demise is that its own brother, driven by market forces, will eventually be the cause.
Many are surprised to learn that corporate charity didn't exist legally in the United States until 1953. That was the year the Supreme Court established that corporations could give money to the community in the same way that other "persons" could. This was a big step, as it unleashed the power of corporate wealth in the pursuit of social and environmental issues in a way that until then was done only by individuals and government, if at all.
The beginning of the end of this noble experiment came just three decades later, in 1983, when Corporate Charity's younger half-brother, "Cause-Related Marketing", was born. That's when American Express released its Statue of Liberty restoration ad campaign. With it, they almost single-handedly created the practice of intentionally improving a company's image and, more importantly, increasing sales by donating to a cause the customer cares about.
In a stroke of marketing genius, the company linked its profits to the fate of an American icon. It pledged to donate one cent for every use of the American Express card and a dollar for every new card issued. The company experienced a 28% increase in card usage over the same period of a year earlier and ultimately raised $1.7 million for the project.
Did executives at American Express sit around the mahogany table lamenting the fate of one of America's greatest landmarks? Maybe. The genteel practice of corporate charity would have dictated quiet, dignified support, the success of which being almost irrelevant.
Instead, cause-related marketing came screaming into the board room, demanding the company get something in return for its efforts: publicity and image enhancement -- pure gold in the modern economy -- and more sales. It dealt what would be a fatal blow to its older sibling by shifting the mindset in corporate America away from the mushy softness of "charity" to the business-savvy world of strategy.
From that day forward, companies felt the heat of competition as they came up with ever more sophisticated ways of supporting the community while serving the company's interests. The goal was to get more targeted and more strategic. Cause-Related Marketing soon grew into "Strategic Philanthropy" in its toddler years. Strategic Philanthropy was all about moving the company past the easy PR splash to look for new and sometimes subtle market advantages to feed the company's bottom line through corporate giving.
Some looked at it as a way to penetrate new markets. If you wanted to reach Latinos, for example, you might donate to English as a Second Language (ESL) programs and inner city schools. Then, tie strings to the donation to be sure those who benefited knew who was behind it through co-branding course materials. Or, you might foster dependency on your products through generous donations. Apple created a whole generation of Mac enthusiasts by getting the jump on Microsoft and IBM with their computer donation program.
As strategic philanthropy grew, it became more talented and multifaceted, so much so that the term "philanthropy" no longer aptly described it. It had grown to adulthood, now known as "Strategic Corporate Community Involvement". With strategic corporate community involvement, the company uses multiple channels (human and material resources) to achieve multiple goals (marketing and organizational effectiveness) that are aligned with overall corporate strategy.
For example, you might find a clothing company whose executive team has decided to support Race for the Cure. They might choose to do so because market research shows that support for women's charities is an important determining factor for purchases made by the company's target demographic.
Being a leading company in today's market, they don't stop there. They might go on to decide that in addition to foundation grants to Race for the Cure, the company will match employee contributions up to a certain dollar amount. This might also be supplemented by paid time off for employees to volunteer on race day. On top of this, you might find that Human Resources is leveraging the event to develop the communications and teamwork skills of the participating employees.
These tactics may be aimed at engaging employees on an emotional level in mutual support of a worthy goal, creating a halo effect that enhances morale and support for the company, thus increasing productivity and retention. It also spills over into recruitment, since roughly eight out of every ten recruits is looking for socially engaged companies. Finally, with the skill development dimension added in, you see that volunteering is also leveraged to improve employee job performance.
Whether it is skill development, employee morale and engagement, employee recruitment and retention, market share, or public goodwill, the purpose of corporate giving is a far cry from what it was in 1953. And, as Strategic Corporate Community Involvement gets older, stronger and even more sophisticated, the charming but woefully inefficient Corporate Charity will fade away and die – killed by a younger, more vibrant, and more effective younger brother.
Copyright © 2006 Steven E. Schad. Reprints must include full attribution and all links.
Steve Schad helps companies and individuals tap into service as a strategy for improved performance. Jaded by the junk "teambuilding" games that flood the market, he created a one-of-a-kind team development model called Team Serve. His approach uses volunteer projects as a catalyst for creating the service ethic in a group and teaching critical teaming skills. He also helps executives and managers learn how get more from employees by leading according to a service ethic. He couples an in-depth assessment and development process with powerful volunteer experiences to provide a learning laboratory for core leadership competencies. For more information, visit the Vector Group, LLC web site at http://www.VGLearning.com. Visit Steve's blog at Service Power.
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