Corporate Giving & the Bottom Line

Today marks the ninth annual International Corporate Philanthropy Day. Started in 2004, the day is an opportunity for corporations to recommit to their philanthropic goals.

Recent reports have shown that consumers want to support businesses that give back. On its face, it seems as if businesses are responding to this consumer preference: the most recent Giving USA report estimated corporate philanthropy up by more than 10% in 2010 from the previous year.

However, a study from the Committee Encouraging Corporate Philanthropy (which founded International Corporate Philanthropy Day) showed that more than 40% of surveyed businesses maintained or cut back on corporate philanthropy in that same time period. More telling, I think, is that—on average—corporations give away only one-tenth of one percent of their after-tax earnings, while individuals give between 2 and 3 percent of their adjusted gross income to charity. With this imbalance, it is unsurprising that individuals are more likely to support a company with transparent corporate philanthropy practices.

Attendees at this year’s International Corporate Philanthropy Day noted the difficulty in convincing investors that charitable giving is an important part of doing business these days. No doubt this is a challenge, but it’s one that companies must overcome. As consumers become increasingly educated about corporate practices and engaged in social media, their purchasing influence will rise accordingly. Companies who can’t demonstrate a transparent and meaningful commitment to philanthropy may be left behind.

If corporations need a reason to engage in philanthropy, they should look no further than data published by the University of Iowa last year. The numbers showed that giving not only bolsters PR and community relations, but actually improves employee morale and productivity–making corporate giving good for the bottom line at every angle.