Businesses and charity

Do companies give money to charitable projects, or do they work purely for their own benefit? Can charity be a negative thing? Can charity be used as a branding strategy?

Delve down into this article as we look at the relationship between businesses and charity, why it maybe could be negative and how you as a business owner can use it to your advantage.

Companies donate money too

It seems obvious to most people that the big companies who make millions in profits year after year donate money to charity. We are all human and part of the same society, we pay taxes and contribute to the community in many ways already but as individuals, it can be difficult to make a significant difference. On the other hand, companies have the opportunity to make a significant difference for many people without it really being a problem for the company. Typically, individuals may donate a modest amount of around 5 dollars per month to a particular charity. A company, on the other hand, could multiply the amount and thus the impact. On average, the top 100 UK companies give 2-3 % of their annual profits to charity. That may not sound like much, but it is the equivalent of around $3 billion. Some companies donate as much as $ 500 million a year to charity. Some companies go even further though. Take OMNIA Global as an example. CEO, Daniel Hansen, has started the Omniafoundation - a concept we have seen in other cases as well. Perhaps the most known is the Bill & Melinda Gates Foundation. Read more on the reasons behind establishing a foundation here. Daniel Hansen explains the motives (read in German here, and French here).

It is obvious that companies can make a huge difference to the world's population, so why do some companies note give to charity? How do you assess whether a company should donate or not? Without a doubt, some people would argue that we all have a shared responsibility to make society work and that companies have an even greater responsibility. Companies themselves assess this in different ways. Perhaps they only give to projects that are within their industry or aligned with their strategy, mission and core value. Indeed, supporting a project that is not related to your sector muddies your communication and can have a negative impact on your reputation. Ultimately, a company may lose credibility - believe it or not - by donating money to an otherwise worthwhile cause that is just not relevant to the company.

How can companies use charity in their branding?

Charity is an inherently good act that benefits other people and society as a whole. We get that. In turn, it can actually also benefit the company donating the money. Many companies are already thinking along these lines, and theorists in marketing and branding, among others, call this concept Corporate Social Responsibility (CSR). The concept of CSR is revolves around how companies take responsibility, have a positive impact on society and operate in an ethical way. Charitable donations are a great way to do this, as they make a direct difference here and now. Other ways of doing CSR work could be greening the production line to make it sustainable or taking a stand on other social issues such as immigration, discrimination or homelessness. This can be used in a branding strategy if the aim is to create a narrative about the company taking responsibility in the climate fight, supporting returning veterans or something else. It sends strong signals to the outside world and can potentially create new followers and customers or even stronger supporters.

Is there a negative side to corporate charity and CSR?

Some would argue that a weapon is only dangerous in the wrong hands, and the same can be said for many other things – including corporate charity and CSR.

If a company donates a large sum of money to a charity, becomes a sponsor of a charity or launches sustainable projects, they will very rarely hide it. The company's communications department will most likely be raising awareness of the good virtues via different campaigns and PR work. This is also will-deserved and, as a bonus, it can also create even more awareness of the project that the company has supported, which ultimately is even better. However, everything can be misused – remember the saying about weapons – and it is true in this case too. Some companies use the opportunity to get good publicity from activities that are either insignificant or not good at all, just to get a better reputation. It just requires getting the communication right. In this case, the actions are not selfless, but purely for personal gain, and this is an abuse of people's trust. Ultimately, it can also weaken the credibility of the company.