"I’m very proud of our collaboration – it was inspirational in many ways. This was a true partnership where both organizations benefited as the total sum was greater than the individual parts..."
Robert Molander, formerly with Pharmacia
 
 
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Written By Cynthia Currence

 

Companies, do you have "SMART" hearts?

 

With an estimated $12.7 billion given to charities in 2006 by US corporations and corporate foundations (Giving USA, 2007), this is a good question for CEOs to ponder. Successful companies spend a great deal of intellectual resource in the assessment of most business moves. Yet, my recent informal survey of large and small companies indicates that corporate investments in charitable causes often happen with little thought to synergy with business objectives. The reason most often mentioned for giving (36%) was, "it is the right thing to do" followed by "someone in leadership was touched by the cause" (22%). Only 32% of those surveyed considered a charity's ability to add value to business objectives when selecting which cause to support. Companies do believe in the "halo" of supporting charities. In fact, any relationship between charitable involvement and business objectives is largely seen as supportive of efforts to achieve greater credibility or for promotional value. Only a few respondents felt that charities could impact marketing issues such as pricing strategies (8%), product development (14%), market research (18%) or distribution (20%).

 

In fact, charities have different assets and capabilities by virtue of the leadership and operations employed to pursue their missions.  Many have the ability to impact critical business issues such as costs, credibility, distribution, media reach, pricing, brand affinity, and positioning.  Unfortunately, it is rare to see these conversations explored.  A significant number of companies are unfamiliar with the regulations for such relationships and others fear they may be seen as attempting to exploit charities.  The latter is easily dispelled if significant tangible outcomes are targeted for all parties.

 

I have facilitated several exceptions to the normal dialog between companies and charities. One such discovery session involved a major health charity and a maker of several major cereal brands. A quantitative study conducted by the charity before the first meeting with the company indicated that consumers of the brand of cereal tested would be willing to spend on average 25 cents more for a box of the cereal if the additional price supported the cause. There is a growing body of research indicating strong correlation between corporations doing well by doing good, but it only begins to illuminate the untapped potential for greater results for all parties. For example, Cone Inc. has over a decade of research showing sustained trends of consumer support and preference for companies that support causes. These findings relate to the promotion of good works and or the engagement of consumers to actively participate in transactions that trigger additional funds to charities. The smartest relationships look beyond the promotional elements to leverage each others' assets against shared business challenges. And, at the end of the day, these kind of relationships bring significant value to all parties.

 

Another reason for corporations to get smarter about their relationships with charities is that the charities themselves are getting more sophisticated and they are looking at their own bottom lines in terms of actions that move mission directly and generate funds. Major nonprofits are setting standards for business-oriented discussions along with their philanthropic conversations with companies. These charitable businesses are taking a strategic approach to choosing which company relationships are best suited for marketing alliances that would help drive their missions in terms of dollars and deeds. Brands like the American Cancer Society, American Heart Association, Habitat for Humanity and United Way have all measured the value of their brands. They know what they are worth and they know the legal parameters within which they can play. They also have selection criteria for corporate alliances which have the nod of oversight organizations like the Better Business Bureau. Beyond traditional relationships with charities , this new conversation has the potential for tremendous impact on nonprofit missions as well as the corporate bottom line.

 

Companies that want to have SMARTer hearts can follow my five simple steps for making sure they have done due diligence with regard to the dollars they invest in the community on behalf of their corporate stakeholders. These steps build relationships that have a strong potential for reducing marketing costs and increasing return:

  • Strategic: companies should first consider whether a charity provides a strategic fit with their business objectives, brand identity and positioning.
  • Marketing-based: Causes that fit should then be screened for their ability to add value to marketing plans and activities.
  • Alignment: Relationships must align with regulatory obligations and recommendations from oversight groups that monitor such relationships.
  • Results: Both companies and charities should agree on the tangible results that they will monitor together. Tracking results will provide tangible indications of the relationships' ability to provide strong mission return for the charity and bottom-line results for the company.
  • Trust: Finally, all such relationships must be true to the consumer with proven value added to the customer experience.