Business needs to be thinking about philanthropy

Philanthropy can be described as the desire to promote the welfare of other people, expressed particularly by making generous donations of money to good causes. There are several different variations on this theme; some philanthropists choose to give their time as volunteers or to set up charitable foundations that distribute grants as well as or instead of simply making donations. Here, too, there is room for giving “in kind” – supplying goods, for example, rather than donating money. There are several very good reasons for building philanthropy into a business strategy – here are a few examples of how businesses can benefit as a result.

Supporting the local community

 Business owners who give back to their local community are much more likely to stimulate positive views in respect of their customers. One study in the Journal of Consumer Research has shown that this “benevolent halo effect” surrounds both the way the businesses operate and their products. The reputation of a business is fundamental to its position in many ways – for example, in terms of how it fits into the local community and how successful it is. Human resources experts say that a philanthropic philosophy within a company can improve employee recruitment, engagement, and retention.

Philanthropic businesses

Bob Parsons, founder and executive Chairman of Go Daddy, an internet company, is well known for his personal donations to good causes, as well as for his company’s philanthropy; last year, the total given was almost $5 million. The company, based in Arizona, looks after more than 49 million domain names, five million hosting accounts as well as secure email accounts and SSL certificates. The effect of philanthropy on the business is indeed impressive – it has been cited in the Phoenix Business Journal as one of the “Best Places to Work in the Valley”; in 2010, the University of Baltimore honored Parsons with the “Distinguished Entrepreneur” award, and recently he was given the “Celebrity Fight Night Muhammad Ali Entrepreneur Award.

It’s not simply the big companies that can be philanthropic – in a way, it’s to be expected that giants such as Walmart, Wells Fargo and Chevron would support good causes given their huge turnover and substantial profits. However, smaller companies can also be philanthropic on a scale that is reasonable for their size and income level. Risa Blythe owns the business Girlie Press, based in Seattle, which she founded in the 1990s, and each year donates approximately 5% of revenue to local non-profits in the form of printing, materials, and services. Philanthropy has thus been integrated into her business model and indeed into the culture of her workplace – all employees get 100% paid dental and medical benefits, for example. Pride Foundation has described the company as a leading “example of how businesses and non-profits can partner to build a mutually beneficial relationship.” The Association of Fundraising Professionals and Advancement Northwest have named the company an “Outstanding Philanthropic Small Business.”

How to start

Finally, to get started, pick out a local good cause that fits with personal or business interests. There’s no need to focus on cash donations if the preference is to offer goods or services instead. This will engender a lot of goodwill for the business in the local community and employee job satisfaction may also increase. In fact, employees may be delighted by the opportunity to volunteer or help out with a good cause, which, in turn,will strengthen their commitment to the business. Philanthropic endeavors clarify a company’s relationship with its environment – the return in terms of increased goodwill alone is worth a thousand marketing promotions.

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