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How Companies Benefit From Donating to Charity

When you refused to share your toys with your playmates as a kid, your parents probably lectured you on the golden rule: do to others what you want them to do to you. Fast forward ten years, and you’ve grown up and learned that almost nothing comes for free. As the popular adage goes, "There ain’t no such thing as a free lunch". But if that’s the case, why do large for-profit companies spend their hard-earned dollars on causes like cleanup drives or animal rights? Well, it turns out that there are a lot of benefits for giving back, as you will soon find out.

Many of the world’s largest and most successful companies know this, so they donate a significant percentage of their profits each year to charity. Big names in business like Wells Fargo, Walmart and Chevron are counted among Forbes’ list of America’s most generous companies. Donations from these companies, both in cash and in kind, amount to billions of dollars and make a huge difference for charities, causes and volunteering campaigns the world over. But you can be sure that the top executives of these companies consider these donations an investment. Like some of the world’s most successful investors, they know that the money they give will reap dividends in the future.

Here’s how it works.

See Also: Three Very Innovative Charity Marketing Campaigns

It Offers an Alternative to Traditional Advertising Methods

Back in the Dark Ages (read: before the Internet), the only ways for companies to communicate with the big-haired masses were through television, radio, and print media. These were the only ways to reach people who could potentially become paying customers.

When the Internet came along, things changed radically. Because people began spending more and more time surfing the web, the Internet became the best way for a company to get exposure for their brand names and products. But traditional advertising, and even online advertising, has its limits. An infographic prepared by Invesp shows the reality of the effectiveness of online advertising. According to the infographic, only 0.1% of ads in an advertising campaign ever end up getting clicked.

In a world where you are bombarded with information at every turn, it’s becoming harder and harder for traditional advertising to be effective in making conversions.

That’s where sponsoring a charity works best. Supporting a local volunteering campaign, for example, can be a great way to get a company’s brand name known in a certain community. Because volunteers are in a more open and friendly environment, they will be more open to suggestions than the average person. The same goes for anyone who happens to see the campaign going on or who may experience the campaign’s benefits. Compared to the negligible effect an ad would have on someone checking their Facebook feed or watching TV, sponsored advertising has much more potential.

It Boosts the Company’s Image

A company’s public image matters much more than you may think. According to a study by the Journal of Consumer Research, products are seen to be of higher quality if the company that made them is engaged in corporate social responsibility.

If a company donates or organizes a charitable event, chances are that the company will see a significant boost in sales soon after, even more so if the event is big enough to warrant attention from the media. The reason behind this is because consumers may view buying that company’s products as an alternative form of supporting and giving to causes that they already care about.

It Helps Attract New Talent

According to a report released by Net Impact, 53% of workers and 72% of students said that having a career where they could make a difference was very important or essential to their happiness. The report says that people even ranked having a job where they can make a difference or help solve a social problem as more important than having a prestigious career or having kids.

This trend is becoming more and more apparent as more and more millennials join the labor force. Companies that have their own charities or regularly sponsor volunteering events will be seen as more attractive to jobseekers, thus giving them a greater opportunity to have their pick of the cream of the crop.

It Helps with Employee Retention

We all know how it feels like to get up in the morning and go to a class or job that you absolutely hate. So even if an employee is getting competitive pay and great benefits at his company, every day will be a constant struggle if he isn’t happy with what he is doing.

It is generally accepted that happiness has a significant effect on employee retention. Because of the effect that giving has on happiness, employees that are part of an organization that regularly donates to charity will be bound to stay in the company for much longer. Along the same lines as the point mentioned in the previous section above, knowing that the company or the firm that they work for contributes to a charity or cause that they care about will significantly affect employee retention.

It Boosts Efficiency

In any economics class, one of the first concepts that are introduced is that people are motivated by incentives. Incentives can take many forms, such as higher pay and better benefits. But in some cases, the incentives for employees to perform better are not the incentives that you expect.

A social experiment conducted by The Conversation showed how a worker’s performance improves if they know they are helping a charity. The study found that workers performed better when told that donations to charity were based on their performance. Even in cases where the donation was not linked to performance, productivity still increased by 13%. It also found that when given a choice to donate or not, more than half chose to give a donation coming out of their pay.

Supporting a charity and letting employees know so can therefore have a huge effect on the productivity and satisfaction of a company’s employees.

It Creates Valuable Networking Opportunities

If you are an entrepreneur, you’ve probably already experienced the horror that is a networking event. Imagine going up to a complete stranger and telling him to buy something from you just because.

A volunteering campaign can actually be a great way for businesses to meet other businesses. Being in the context of a charity event makes making connections easier and more natural than if you are meeting someone with the express purpose of making a profit. Engagement in a community volunteering campaign will give your business exposure to people who would have otherwise ignored marketing through other avenues.

See Also: 6 Awesome Benefits of Working Voluntarily for a Charity

Despite the possible ulterior motives behind the exercise of corporate social responsibility, nobody is complaining, and rightly so. Donations from companies make life better for a lot of people, especially for those in developing countries. Knowing how much these donations help, it’s fair to say that the boost to sales and productivity is well-deserved.

How do you feel about a company giving to charity? Are you a business owner who regularly donates to charity or an employee whose company supports a charity? We’d love to hear about your experiences, so please do drop us a line in the comments section below and let us know what you think.

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