Doing good is good for business

Philanthropy sells when clients and customers identify with causes backed by businesses. Nick Martindale reports


Adopting a corporate philanthropy policy, whether that’s diverting a percentage of sales to support particular charities or sponsoring good causes locally or nationally, is not just about acting in a responsible manner. It can also make sense commercially, for both customer-facing and business-to-business organisations.

Sharon Johnson, chief executive of Re:Purpose, a social business consultancy owned by Havas Media, believes the growing emphasis on organisations “putting something back” is a direct result of the post-recession environment. “Increasingly people, young and old, are re-shaping the role they see for all institutions in our society,” she says. “People want business to improve our quality of life, not just sell us products and services.”

The growth in round-the-clock news coverage and power of the internet has pushed the issue of helping others into the consumer conscience in a way that has not been experienced before, adds Beverley Traynor, head of charities at financial technology business Ebury.

“The internet has revolutionised the way we all think,” she says. “It’s fired our passion for the things we care about and maybe exposed us to concerns that we previously may not have even had. Increased personal awareness leads people to want to know what their suppliers and providers are doing. What and who are they committed to? Are their values aligned with their own? Do they demonstrate a social purpose?”

For organisations, this can help not only win new business, but generate long-term loyalty from customers, potentially giving them an edge over their competitors. “Leveraging new ways to engage with the marketplace can provide a great opportunity to re-establish the brand, reduce price sensitivity and connect at a deeper level with their audience,” says Richard Morris, founder and managing director of The Giving Machine. “In turn, this will induce higher loyalty and engender increased brand advocacy.”

EMOTIONAL RESPONSE

Ignoring charitable causes or stopping particular initiatives, meanwhile, can have the opposite effect. Mr Morris gives the example of a high street retailer that stopped a scheme under which a percentage of sales went to charitable causes and was inundated with customers asking them to reconsider. “The emotional response we saw was the first time that we realised that something important was happening here,” says Mr Morris. “At a time when hundreds of retailers sell the same or similar products, we’re finding that it’s a company’s social awareness that drives the decision behind where customer loyalty lies.”

It’s a company’s social awareness that drives the decision behind where customer loyalty lies

It’s not just organisations selling direct to consumers that should be thinking about this, however, and nor is this just confined to financial support. IT and finance recruiter Harris Global has been working closely with Mosaic Clubhouse, an organisation which helps people with mental health issues find work. “We host events for them where our consultants spend time working with members on CVs, interviewing skills, career planning and guidance on potential career paths,” says Patrick Feast, Harris Global’s training and development director.

“It adds a new dimension to discussions,” says Mr Feast. “Underpinning our values around corporate philanthropy gives us a very different look and feel, and one that is recognised by candidates and clients alike. It makes us memorable.”

For organisations in particular sectors it can also make good business sense to fund relevant causes to support their own brand. “If they are in an industry that relies on technological innovation, then giving money to initiatives that support young people into STEM [science, technology, engineering and mathematics] subjects reinforces that story,” says Jo Arden, head of strategy at creative agency 23red. But any initiative must add value to beneficiaries, she says, otherwise it will be seen as an exercise in vanity.

Stephen Lee, professor of voluntary sector management at Cass Business School’s Centre for Charity Effectiveness, also warns against seeing philanthropy as something which needs to be done just to put a tick in that particular box. “It must be genuine,” he says. “It should be about doing good deeds over a long period of time, demonstrating total commitment to a cause. Anything less might be greeted with cynicism from staff, stakeholders and customers.”