The Pros and Cons of Corporate Giving

gift-1420830_1920Some business opportunities come in the most unlikely places. Others are common, being tried-and-true. One such strategy is corporate giving — supporting and/or sponsoring a cause, organization, or event to increase brand awareness. Philanthropy, when sincere, is a wonderful conduit to give back to the community a business serves. Although charitable giving provides certain benefits, it does have downsides, as well. Before you commit to a sponsorship, you should know the pros and cons of corporate giving.

The Pros and Cons of Corporate Giving

Company philanthropy is much like building strategic partnerships. It provides all parties involved with benefits, ostensibly in the form of brand awareness. It represents a clear sign of goodwill and conveys thankfulness. Corporate giving became most prominent in the early part of the 21st century. It represented a response to consumer demand companies invest more into their local communities, and is now a common practice with its own cottage industry.

At first blush, the idea of corporate social responsibility seems like something every company should strive for. Giving back to the community, or even the world, seems like a reasonable expectation for companies that want to “do the right thing.” But Department of Management Chair and Associate Professor Blaine McCormick contends the concept is not always so black and white. “As people, we have the urge to do good,” he said. “We are beings who want to help. We seek the good; we are attracted to the good. But sometimes our desire to do good harms other people.” In the case of corporate social responsibility (CSR), the harm may be to shareholders. —Baylor Hankamer School of Business

The lure of its promise is undeniable and this is why too many companies give without completely thinking through possible consequences. They are so enamored with all the prospective positive attention, business owners don’t stop to consider the downsides. The truth of the matter is, if you aren’t careful and thoughtful, you could face having to move past a bad business decision. Here are the pros and cons of corporate giving:

  • Broadcasting a more favorable image. The most obvious benefit of corporate giving is broadcasting a favorable image to the public. It also helps to establish your business as a true part of the community, a powerful form of currency in its own right.
  • An enhanced ability to attract support. It’s not only consumers who will see your brand through company philanthropy, but other businesses, as well. This can lead to joint ventures and strategic partnerships. It can also help you to attract more talent to join your team.
  • The ability to take advantage of tax breaks. Of course, another obvious benefit to corporate giving are the tax breaks it offers. Companies who give money to 501(c)(3) organizations are entitled to deduct up to 10 percent of contributions, according to the Better Business Bureau.
  • Expenses, time, and effort all add up quickly. Though there are definitely benefits to corporate philanthropy, there are downsides. Among these are the expense, time, and effort, which add up to a lot more than first estimated quickly.
  • Very limited tangible benefits are actually received. Brand awareness is somewhat of a misconception. A McKinsey Global Survey study revealed business owners are very uncertain of receiving clear tangible benefits, if any at all, through corporate giving.

What causes or organizations does your company support? What’s your favorite story about it? How has it impacted your team and you personally? Please share your experiences!

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