How to find ROI in corporate philanthropy

There’s a lot of pressure on companies to give something back to the communities in which they operate. There’s even a term for it: corporate social responsibility, a phrase that emphasizes the somewhat obligatory nature of corporate giving.  

Despite growing expectations, corporate executives are fairly divided over their role in the charitable sector. In a 2010 COMPAS Inc. poll that surveyed Canadian executives, 45% said that charitable giving should be left to individual shareholders. Only 35% believed that corporations should support charities, as long as their giving was consistent with corporate objectives and employees’ desires. 

And while attitudes about corporate giving may be divided, when it comes to putting dollars on the table, we still have a long way to go. According to a 2008 Imagine Canada survey of corporate community investment, the median cash donation was $2,000 (1.25% of pre-tax profit), while 25% of businesses 
barely contributed at all—less than 0.06% of their pre-tax profits. 

If mounting pressure doesn’t make companies beef up their charitable giving, what will? I believe that companies will increase their philanthropic efforts when they start seeing giving as an opportunity rather than an obligation. The best corporate philanthropy not only makes a social impact but also adds to a company’s bottom line.

I know from experience that charitable giving can be one of the best ways to grow a business. Realistically, there’s no such thing as pure altruism, nor should there be; companies should expect a return on their charitable donations. In my world, “giving and getting” go together. For those who disagree, think about this: Charitable giving that reaps an economic return creates stronger companies that can make more meaningful contributions to their communities in the long run.

At the highest level, the benefits of philanthropic giving are obvious. Businesses have a vested interest in creating better communities. Strong communities are able to attract new businesses, corporate head offices, and a more educated workforce, which in turn create an even stronger business climate. Employees want to live in communities with a strong economic and social fabric—places where they feel connected to each other and where they enjoy a great quality of life. 

Better than anyone else, nonprofit organizations know how to build these “sticky” communities. According to management guru Peter Drucker, the management of the social sector will largely determine the values, vision, cohesion, and performance of 21st-century society. That’s an enormous responsibility and one that we, in the business world, can help achieve.

As a co-founder of FirstEnergy Capital Corp., I’ve seen the enormous impact that one company can have on its community. It would be nearly impossible to measure the number of lives that have been touched and dramatically improved by FirstEnergy’s philanthropic work. Since 1993 FirstEnergy has generated over $8 million in donations to more than 500 charities and community organizations. I’ve often been moved to tears by the letters of appreciation we’ve received from those we have supported.

To be candid, FirstEnergy didn’t set out to be a leader in corporate philanthropy but rather a leader in investment banking. We used charitable giving as a marketing tool; every time we made a contribution to a charity, we were open about the fact that we expected something in return. What we gained in the form of public recognition, co-branding with larger companies, and recognition within the charity’s network helped us dramatically increase our profile, develop new partnerships, and grow our client base.

What I didn’t expect when I started out on this journey is how much my philanthropic work would impact me personally. As many of you know, financial success can be hollow. So after spending many years focused soley on making money, I now spend as much of my time and energy giving it away. Over the years I have financed numerous events that have raised tens of millions of dollars for worthy causes. I have also invited several friends and their children to come with me to Mexico to help build houses for the homeless. 

Yet it seems impossible to give without receiving much more in return. One of my greatest rewards has come from connecting people to their own potential for doing good. As more people see how easy it is to make a difference in the lives of others, they’ll engage their family, friends, and colleagues in the experience, and the circle of influence and impact will grow.

Whether you’re a student, young entrepreneur, or seasoned corporate executive, everyone can benefit from learning more about the opportunities that philanthropic investment can bring. It can lead to a bigger business, a better community, and a much more meaningful life. 

Brett Wilson is one of Canada’s best-known entreprenuers and philanthropists. Follow him on Twitter@wbrettwilson.