UK: Selling Points - Rewarding donations.

UK: Selling Points - Rewarding donations. - Companies continue to make healthy donations to their favourite charities, providing, says Sarah Lonsdale, that they stand to gain something in return for their generosity.

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Last Updated: 31 Aug 2010

Companies continue to make healthy donations to their favourite charities, providing, says Sarah Lonsdale, that they stand to gain something in return for their generosity.

Victorian businessmen were big on philanthropy. Industrialists sought to ease their guilty consciences about workers living in slums by producing museums, public bath houses and schools. The Cadbury brothers even built a model village for their workers, naming a product, Bournville, after it.

Today, British companies donate some £250 million to charity. But these days there are lots of shareholders to worry about. Therefore, to justify the handing over of millions of pounds of pre-tax profits, boards need to show that there is something to gain from this generosity. Charities are encouraging companies to be 'corporate citizens' but, realising the difficulties, are offering previously unheard of marketing incentives to generous corporations. The Business in the Community charity, for example, has developed the idea of the 'Per Cent Club', which currently has a membership of 400. It is made up of firms who give at least half a per cent of their pre-tax profits to charity, although this figure is to be pushed up to 1% over the next three years. BT is a member and last year the company donated £15.6 million to charitable causes. BT spokesman David Orr believes it makes good business sense to help local communities. 'An impoverished, crime-ridden place is not somewhere people are going to be using the telephone a lot,' he says.

Obviously choosing which charity to support, initiating payroll giving and other methods of raising money for charity can be time consuming and costly for wages and financial departments.

So many companies are offered assistance from the Charities Aid Foundation (CAF), which can oversee the complicated administrative work needed to make these initiatives viable. Andrew Cook, head of CAF's Corporate Services Department, says: 'CAF has relationships with hundreds of companies, from simple advice on tax-effective giving, matching companies to appropriate causes, to wholesale administration of pre-tax payroll giving.' More than half the Times 1000 companies now have links with CAF. 'The trick for us now is to increase the average donation, which is only 0.2% of pre-tax profits, to a half or better, 1%,' says Cook. 'Companies must be convinced that it makes good business sense to give to charity and I think cause-related marketing is the way forward.'

Instead of one-off donations to worthy causes, companies enter long-term partnerships with charities with the full involvement of marketing departments. Midland Bank, for example, which likes to promote itself as the community bank has recently re-structured its charitable activities, targeting three main groups of causes: the elderly, the disabled and youth. Hence in a recent home insurance mailshot, potential customers were informed that for every new policy taken out, £10 would go to Shelter, the Midland's current youth cause. 'It is no longer a question of saying "Here's some money, go and spend it",' says Amanda Coombes, Midland's community affairs manager. The RSPB's links with Land Rover also illustrate how much things have changed from the old-fashioned straight donation of previous years. Alasdair Bright, the RSPB's commercial development manager explains how this new type of deal works: 'Land Rover loans us brand new vehicles, which are replaced annually and which our wardens use to get over rough terrain. In being linked with the RSPB, Land Rover gets its conservation message home to would-be Discovery buyers.' But it doesn't stop there - 'If we establish a long-term relationship with Land Rover, not only can the company illustrate their vehicles' appropriateness over rough terrain, but also press home the fact that the Discovery model is an effective conservation tool.'

There is still one company operating on the old-fashioned philanthropic approach. Levi Strauss, the jeans manufacturer, donates a creditable 2.5% of pre-tax profits to a range of charities, with no strings attached.

Alan Christie, director of community affairs for Levi Strauss Europe, admits: 'It would be disingenuous to say that it's 110% altruism, but we don't insist that charities acknowledge our involvement and we don't work with the marketing department.' Having said that however, Christie does admit that the causes Levi Strauss chooses to support sit very well with the young, trendy image of the jeans: HIV/AIDS charities, social justice and youth empowerment. 'It's true that we wouldn't give funds to charities involved with the elderly or animals - all research in this area shows that the public responds badly when a company supports a charity that has nothing whatever to do with its clientele or image.'

The quaint idea of something for nothing is dead and buried, it seems.

Mind you, the Cadbury boys and their contemporaries weren't being entirely selfless in their construction initiatives: at a time when cholera and dysentery were decimating the workforce, it made sense to offer workers the chance to have a bath once a week.

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