Why Business Philanthropy Is So Important

Why Business Philanthropy Is So Important

In today’s competitive business climate, building a culture of giving that benefits your company, and its community is more important than ever. Corporate philanthropy is one way to help you do that.

When done well, a successful corporate philanthropic strategy can positively impact the company and its employees. These benefits include trust, customer loyalty, and employee engagement.

It Builds Trust

As consumers become more discerning and aware of their buying choices, they increasingly seek sustainable products and companies that share their values. This is especially true among Gen Z.

The business community is no exception to this trend, with many companies developing a culture that incorporates giving and community service. This is a great way to differentiate yourself from competitors and build employee trust.

A company can contribute to the common good by donating money, time, and resources in several ways. The most practical contributions involve improving a company’s competitive context—the quality of the environment in which it operates. These elements include the availability of trained labour, high-quality research and development institutions, adequate infrastructure, transparent administrative processes, and access to natural resources.

It Increases Customer Loyalty

Effective business philanthropy makes companies blossom by attracting new clients and securing the long-term customer loyalty of existing ones. Supporting charitable causes makes your company seem warmer and more competent to consumers and employees, who see this as an indicator of what they can expect from the firm.

Corporate philanthropy strategically aligned with a company’s unique strategy will significantly impact its competitive context. It is here that social and economic gains converge, and it is here where corporate philanthropy can make the most significant difference to shareholders’ interests.

It Increases Employee Engagement

Employee engagement is a critical component of business success, and a strong culture of philanthropy can help companies develop a sense of community. Studies show that engaged employees are more satisfied and perform better.

Research also shows that offering a corporate giving program positively impacts three critical drivers of employee engagement: relationship with direct managers, belief in senior leadership, and pride in working for the company.

Engaged team members are also more likely to donate their money to charity, which helps a company’s philanthropy efforts. For example, many companies offer matching gift programs, making employee contributions go twice as far.

It Builds Brand Reputation

When customers or clients see a business give to charity, they feel good about shopping with that brand. That can lead to more purchases and increased revenue.

Corporate philanthropy can also help improve the competitive context of a company, mainly when it uses its unique assets and expertise to address social problems relevant to its corporate strategy. It can improve the quality of the local labour force, for example, or improve the quality and effectiveness of research and development institutions.

Similarly, improving the context of a cluster, a geographical concentration of related companies and suppliers in a particular industry or specialized segment, can help a company attract more customers. Cisco Systems, for instance, has funded an ambitious educational program to train computer network administrators that alleviates potential constraints on its growth while creating high-quality jobs for young people.

It Increases Employee Engagement

Business philanthropy not only builds trust, loyalty and brand reputation; it also boosts employee engagement. Research shows that employees who feel they work for a company that cares about others are happier and more dedicated to their jobs.

The key is to build a culture where giving and volunteering are valued as much as financial benefits. Volunteer days and charity events are a great way to increase morale and bond employees around a cause they care about.

Companies can enhance their competitive context by using philanthropy to improve four elements of the corporate environment: training and education, infrastructure and resources, administrative processes and natural resources. The Cisco Networking Academy, for example, relies on the support of many technology companies in its cluster, educational systems and governments worldwide.