Digital Library > Building and Inspiring an Organization > Philanthropy"Sweet Charity"

Besides helping others, corporate philanthropy has significant internal rewards.

Today's business owners are facing a growing expectation to support social causes. Consider: In March 2001, 65% of Americans believed that companies have a responsibility to support causes, according to a Cone/Roper survey. And though that figure has been growing steadily in recent years, it spiked to 79% after the terrorist attacks in September.

"It's almost as if you have a double bottom line today," says Eileen Spitalny, co-founder of Fairytale Brownies, a $3.75 million mail-order food company in Chandler, Ariz. "There's a financial bottom line that revolves around profitability; however, there's also a 'good corporate citizen' bottom line — and you want to be in the black there as well."

For harried business owners already stretched thin, finding the time and money to support community and charitable causes may seem impossible. Yet investing in corporate philanthropy has some surprising dividends:

  • It's a recruiting and retention tool.
  • It strengthens ties with customers and suppliers.
  • It broadens your entrepreneurial perspective.

Enhancing your image

Corporate philanthropy doesn't necessarily cause new clients to storm through your doors, but it does bolster business indirectly.

"It builds a reputation for what kind of company you are, what's important to you," says Judy Kirpich, founder of Grafik Marketing Communications, an Alexandria, Va.-based agency with 36 employees and more than $10 million in annual revenues. Grafik takes a multipronged approach to giving, which includes monetary donations, pro-bono work and paid time off for employees to participate in altruistic activities.

Carolyn Nelson, founder of Capital Office Products, a $1.75 million company in Pacoima, Calif., serves on the Santa Clarita board of Soroptomist International, a volunteer service organization. "When clients see what I'm doing in the community, it reflects on me," says Nelson. "Philanthropy says something about the kind of person you are … that you're willing to give up time and money to help other people."

Yet the biggest benefit is the positive impact that philanthropy has on employees.

"Corporate philanthropy is the most powerful way to capture your employees' loyalty and trust," says Lisa Buksbaum, founder of Boxtree Communications, a New York advertising and PR firm.

Boxtree has won both media coverage and awards for its pro-bono work. "That's been gratifying and exciting for employees," explains Buksbaum. "They could show friends and families that they've made a difference — and making a difference is something you can't buy. Employees feel better about their company because it galvanized the effort."

Because philanthropy gives employees a chance to rally around a common cause, it can be a valuable team-building exercise. It's also an important recruiting and retention tool. According to Cone/Roper's October 2001 survey, 76% of Americans said a company's commitment to causes is important when they decide where to work.

Other research documents that corporate philanthropy causes employees to feel greater loyalty and pride for their employer.

And that translates into higher productivity, says John Noel, founder of The Noel Group, an insurance and travel company in Stevens Point, Wis., that is involved in numerous philanthropic programs. About half of Noel's 500 employees are stationed in call centers where the turnover rate is 20% — compared to a national average of more than 100%. "Not only do we have to train fewer people, but as people stay longer, they become more experienced, more skilled and more productive," observes Noel.

And when employees care about others, they care about each other and become a family, adds Noel: "And when you have caring people work for you, it's an easier company to lead."

Personal growth

Corporate philanthropy also leads to personal and leadership development for CEOs, say experts. For example, serving on a nonprofit board teaches consensus building — a skill that entrepreneurs may lack, but need as their companies grow.

Matt Stewart, co-founder of National Services Group, a $9 million firm in Santa Ana, Calif., says serving on a nonprofit board has given him a more positive outlook: "It changes how you feel about the world in these troubling times. When you hear all the news about anthrax and terrorist [attacks], you know that those people are the minority, that the majority of people are good."

When Buksbaum looks back, her most satisfying accomplishments at Boxtree have been pro-bono work for nonprofits, such as creating a national campaign for Take Our Daughters to Work Day. "That's because it wasn't about market share or money, it was about changing people's lives," says Buksbaum.

Some pointers

Find a focus. No one has unlimited resources, so it's a good idea to concentrate on a cause that aligns with your company's values and objectives. By focusing, you can make more impact.

Fairytale Brownies has donated its brownies to a wide variety of groups, but last year, the company began a relationship with KaBOOM, a national nonprofit organization that builds playgrounds for children.

"For us, it made sense because David (co-founder David Kravetz) and I are childhood friends — we met on a playground in kindergarten," says Spitalny.

Although Fairytale Brownies will continue to work with two local nonprofits, it will cut back on participation with other groups. "All the individual requests for donations took a lot of time, and the focus just wasn't here," explains Spitalny. "For many years it was the right thing to do — giving back to the community got us started. But now we're shipping worldwide, and two-thirds of our customers are now outside Arizona."

Communicate, but don't crow. It's important to tell people, especially employees, what you're doing. But when publicizing philanthropic efforts externally, leverage your existing communication vehicles, such as company newsletters or e-mail lists. Spending money on expensive ads could be seen as self-serving, doing you more harm than good. Also, rather than just patting yourself on the back in missives, try to enlist customers or suppliers to join the cause.

Embed altruism in your culture. "We give our managers points for hitting different goals such as sales and hiring. But we also give points for charity work that they or their staff do," explains Stewart of the National Services Group.

Follow through. "Don't do something just because you see it as a stepping stone," stresses Buksbaum, who has created her own nonprofit organization, Soaringwords, to help catastrophically ill children and their families. "Don't overpromise and then underdeliver. As the founder of a nonprofit, I know firsthand that if someone reneges on a commitment, it really hurts."

Writer: TJ Becker.

Related Articles

Staying Balanced

How to Delegate Effectively

Doing a S.W.O.T. Analysis for Your Company

CEO Journal: Blending Into the Melting Pot

Growing by Design



Building and Inspiring an Organization

Articles in our Entrepreneur’s Resource Center appeared in print and online newsletters published previously by the foundation. More than 1,000 articles can be found in the categories below, addressing timeless challenges faced by entrepreneurs of all types.