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Benefiting from the “Halo Effect” of Corporate Philanthropy

November 22, 2016

The holiday season often puts philanthropy and charity top-of-mind in the public consciousness. People seek ways to give back to the community by giving their time, attention, effort, and financial support to worthwhile causes, in keeping with the spirit of generosity that the holidays inspire. For businesses, corporate giving and other cause-related initiatives are not only good PR, but opportunities to engage the customer and generate positive sentiment to carry on into the New Year.

Consumers Reward Corporate Philanthropy …

corporate philanthropyCharitable activity reaches customers in a way that traditional marketing efforts don’t. When a business or brand publicly engages in something that is not directly self-serving, it gets special attention from current customers, potential customers, and the media.

One example in 2015 is outdoor retailer REI’s announcement that all 143 of its stores will be closed on Black Friday and encouraging people (and paying its employees) to “opt outside” instead. In this case, rather than a charity, the cause is the more abstract idea that quality time outweighs profit, and specifically, that the company is willing to forgo profit to “walk the walk” of its stated mission.

This clearly resonated with consumers: within 24 hours, over half a million people signed on to the #OptOutside sentiment on social media. It seems this sentiment carried over to the following year. In 2016, retailers made headlines for their decision to not be open on Thanksgiving, when just a few years ago, the opposite was true. 

There are plenty of other models for generating goodwill through philanthropy: hosting drives for clothing, toys, books, and food; offering matching contributions to charities; donating a certain percentage of every purchase, or giving customers the option to donate the register; organizing or sponsoring community events in partnership with non-profit organizations; and encouraging employees to give or volunteer. All of these can create a “halo effect” in customers’ eyes.

… But It Has to Be Authentic.

We’ve written before about the importance of authenticity to customers, and if anything, it’s even more critical when engaging in corporate philanthropy. Nothing leaves a bad taste in the mouth like the notion of a business using a cause simply to enhance its own image. You may have heard of pinkwashing, a term used to criticize companies who sell pink merchandise in supposed support of breast cancer awareness, without actually contributing much of value to the organizations doing the work. Because of phenomena like this, consumers have learned to be cynical or suspicious of brands claiming a philanthropic purpose.

So be prepared to have to earn customers’ trust before they’ll take your efforts seriously (and if you don’t, you can expect them to call you out!). Brandon Sawalich, senior vice president at Starkey Hearing Technologies, offered these five tips for engaging customers in philanthropy in an article for the Business Journals:

  1. Lead by example, with buy-in from the top down. Make philanthropy part of the company culture year-round.
  2. Invite customers to participate directly in the program, rather than just informing them of what you’re doing behind the scenes.
  3. Supplement the ‘hard facts’ – statistics, data, and information about your cause – with pictures, videos, and stories that show the difference being made.
  4. Provide tools and materials to help customers spread the word. These days, that might include an online option to alert a customers’ social media network when they make a donation or pledge.
  5. Empower customers to pay it forward, or to bring their own causes, ideas, or special cases to your attention and work together to look for solutions.

Do you have advice of your own to add to the list? Good or bad experiences with corporate philanthropy? Share them in the comments section or Tweet them to us at @csprofiles.