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In today’s world, every company is expected to do some good with their profits. Thus, corporate philanthropy is on the rise. As younger generations become more socially aware, they expect their favorite brands to follow suit. In a 2016 poll, Millennials are more likely than Gen X’ers and Baby Boomers to say it matters if American businesses give back to society. National corporations used to fill this need by having foundations that donate to nonprofits. In an effort to be more direct, they’re relying less on nonprofits and starting initiatives and campaigns through their own private foundations.
Why do corporations start their own foundations?
One incentive for corporations to start their own foundations is that the funding comes entirely from their business revenue. This frees them from the pressures of donors and stakeholders, giving them more control over where the money goes.
Corporations also receive some internal pressure from employees to be directly involved in charitable giving. As more millennials enter the workforce, employees are wanting to take matters into their own hands by giving directly through their corporations.
Additionally, many corporations are worried their contributions will go unnoticed by the general public. If a national corporation makes a donation to a nonprofit in, say, Oregon, there’s a slim chance that people across the country will be aware of it. Cue: the importance of press releases!
Now, corporations are using philanthropy as a business tactic. They’ve realized that doing good can actually be profitable while building a positive image of the brand. They use it to build social value. Increasingly, philanthropy is being used as a form of public relations or advertising. Corporations often engage in cause marketing, a type of corporate responsibility in which companies promote themselves but also the betterment of society. This is becoming more and more important to the young consumer, and it’s shaping the way companies give.
Why partnering with nonprofits can be better for business
By donating to local nonprofits, companies are not only contributing to a good cause, but they’re benefiting their business both socially and economically. Companies can improve their public image, increase media coverage, boost employee engagement and attract and retain investors by adopting a more socially responsible business approach. The more a company’s values align with a social cause, the more it leads to economic benefits.
The best collaborations between nonprofits and for-profits are symbiotic relationships. A great example of this is PepUp Tech, a career readiness nonprofit, and their relationship with tech companies. They help underserved students build the skills, mentorships and confidence needed to begin careers in tech. They partner with companies to provide volunteers, internships, job opportunities and funding. Tech companies are able to network, attract talent and keep employees happy through industry-specific events.
By giving to several nonprofits, companies can support a variety of causes. Take Ben and Jerry’s, for example. The ice cream company is well known for supporting a variety of causes, and they partner with many different nonprofits that focus on racial justice, refugee support programs, environmental protection and more.
Think global, act local
Even when corporations are willing and able to give, it can be hard for local nonprofits to earn their attention. That’s why it can be more beneficial for nonprofits to partner with local businesses. Community members will likely know more about the cause because they’re based in their community. This way, businesses can start to build their brand of social responsibility from the inside out. And as a community member, you can focus on supporting organizations as a way to focus on the issues important to those around you.
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