Just as the weather changes rapidly, so does the business climate. Today we are in the midst of one of the most transitional periods in the history of global economics. Business tycoons like Bill Gates, Warren Buffett and Richard Branson are giving away most of their fortunes for the greater good, and billionaires like Facebook’s Mark Zuckerberg are following suit with major philanthropic initiatives.
Why is philanthropy such an important factor in the future of successful businesses? Philanthropy creates more than just goodwill—it promotes and shapes company values, which in turn makes a company more desirable and socially conscious to potential investors, employees, and customers. Blending philanthropy with your business model is truly a win-win. Here are five reasons why giving back will yield better business results:
1. Philanthropy is Great R&D
In an article written by Doug Conant, Chairman of Committee Encouraging Corporate Philanthropy (CECP), he makes a strong case for philanthropy producing some of the best research and development data for a company.
For instance, the British telecom giant, Vodafone, created a program for mobile banking services in collaboration with the U.K. government for a charity program in Kenya. Without having to take a huge financial risk by starting the program without social proof, Vodafone’s program proved mobile banking was a viable need in Kenya, and therefore spurred a new market for their company.
2. Philanthropy Creates a More Engaged Workforce
Corporations and even small businesses who add goodwill and investment back into their communities receive better dividends than just profit. They solidify their business in the community with a stronger, more qualified workforce, who in turn are invested in having their job truly make a difference in the world.
Michael E. Porter, a professor at Harvard Business School, writes that charitable donations and social programs are essential to the long-term success and competitiveness of a business.
The community around a business can be enhanced through charitable resources including funding, education, and other initiatives. This not only improves the lives of a company’s employees, but gives them more incentive to stay. The company is also enhanced, by showing itself as an innovative team player that cares about more than just the bottom line.
3. Philanthropy Builds Business Trust
One way to solidify your company’s future place in the market is through targeted community outreach in areas of need. By lending resources and being an active participant in creating a better community, you will not only grow respect from your employees and the surrounding community, but also from potential clients, who will want to do business with a proactive and ethical company. Facebook took this approach by improving the local community of Menlo Park, CA, by cleaning up areas and even donating $120 million to the city’s education system.
4. Philanthropy Provides Greater Job Satisfaction
Studies show that the rate of job satisfaction increases when an employee feels like they can actually make a difference. Having a content workforce that cares about what they’re doing will generate more productivity, innovation, and general content among your employees, especially millennials.
As Harvard professor Michael Porter wrote, a business’s competitiveness relies on several factors, including: employees’ productivity, safety, health, good housing, and a sense of motivation with opportunity. By improving a community and giving employees a sense of purpose, philanthropic initiatives will actually improve productivity in your employees.
5. Philanthropy is Great PR
Philanthropy’s positive impact on the community, the employees, and even the leaders of the business, is an amazing feat for building a sustainable and productive business. Beyond strengthening your community and conducting important research & development, you’re also solidifying brand awareness through your good deeds. To thrive in the global marketplace, companies must be global minded.
Shaun Walker is the Creative Director and Co-Founder of HEROfarm, a marketing agency in New Orleans. He talked with Forbes about the rise in HEROfarm’s name recognition and increased revenue every year that they’ve done pro bono work for the community. Not only has Walker’s company become a pillar in the New Orleans community, but they’ve also increased their profits every year by just giving back.
The Bottom Line
Philanthropy will do a lot more for your business than just grow your profit margins. From fostering greater job satisfaction to improving the community around you, philanthropy simply makes sense from a business perspective. This is your chance to build a legacy of ethical corporate social responsibility.