The Role of Strategic Philanthropy in Marketing Strategy

The Role of Strategic Philanthropy in Marketing Strategy Linda Ferrell University of Northern Colorado Debbie Thorne Le. Clair Mississippi State University

Strategic Philanthropy • The synergistic use of organizational core competencies & resources to address key stakeholders interests & to achieve both organizational & social benefits • -goes beyond traditional benevolent philanthropy • -involves financial & nonfinancial contributions

In General, Strategic Philanthropy is. . . • “A blueprint for making thoughtful, reasoned, informed, and meaningful contributions to organizations that match an individual’s interests & concerns. ” – homelessness – pollution & environmental issues – literacy & education – AIDs • Source: Anne Marie Kemp (1999) “Innovation Important to the Future of Philanthropy, ” Rocky Mountain News, Feb. 5, pp. 63 A.

General Benefits of Strategic Philanthropy. . . • more businesslike approach to philanthropy • produces a better organizational image • increases employee loyalty • improves customer relations

When Target Surveyed Employees Involved in Volunteerism. . . • 74% agreed or strongly agreed that employee morale and commitment to the company was strengthened • in addition, they indicated that experience brought new skills to the company that significantly enhanced Target’s image in the community

Are good deeds & good business mutually exclusive?

John Damonti, President Bristrol Myers Squibb Foundation • “When you align your contributions with your business focus, you then can draw on the greater wealth of the corporation’s people, information & resources. ”

American Express. . . • global financial & travel company • contributed funds & know-how to institute the development of the Academy of Travel & Tourism in Hungary • provided benefits to the Hungarian economy • provided benefits to AMEX: understanding of Hungarian market & enhanced employee entrepreneurial skills

Timberland. . . • offers free boots to “City Year” youth activists • supports youth development & from a business point of view: – “we want their hip, urban friends to want them too”

Other Strategic Philanthropy Programs. . . • ADT Security company giving alarm systems to battered women • Kimberly-Clark building playgrounds in poor neighborhoods • Barnes & Noble promoting literacy • Coca-Cola is supporting local Boys & Girls Clubs

Cause Related Marketing vs. Strategic Philanthropy • tieing your product directly to an organizational concern • % of products sales are donated to a cause appealing to a relevant target market – Avon-Breast Cancer Awareness – % of sales of “Pink Ribbon” products donated – over $25 million raised

Corporate Contributions. . . • donations to “cause programs” now exceed $700 million annually • What do stakeholders expect?

1999 Cone-Roper Consumer Survey Results. . . • 61% of American consumers think cause related branding should be standard business practice • 80% have a more positive image of a company who supports a cause • 66% indicated they were more likely to trust a company that is aligned with a social cause

Con-Agra. . . • major food producer • supports “feeding children better” • sets up Kid’s Cafes-after school kitchens run by & for children • meals meet or exceed USDA requirements for nutrition – yields good press, pleases employees, & generates significant shareholder interest

Kraft Foods. . . • sponsors “Feed-the-Hungry” Initiatives • hoping to be positioned as a food company that cares

How to chose a charitable alliance. . . • look beyond your headquarters & current markets • think beyond dollars: employee time, products, services • think long term: try to develop longer term relationships with causes & organizations

Three Categories of Socially Responsible Companies. . . • Open handlers-highest level of corporate consciousness • Ben & Jerry’s-go to great lengths to buy from minority or disadvantaged suppliers • Tom’s of Maine-toothpaste & personal care products-shuts down his factories 4 times a yr. (costing $100, 000 each time) to allow his employees to attend meetings on environmental & social issues

Three Categories of Socially Responsible Companies. . . • Practicing what they preach-companies with a long term commitment to a cause • Mc. Donald’s Restaurants -Ronald Mc. Donald Children’s Charities

Three Categories of Socially Responsible Companies. . . • Image builders-pure cause-related marketing • represents the vast majority of companies • adopting a cause to ‘brighten’ the corporate image or generate sales • State Farm Insurance- supports womens sports events

Team Activity. . . • Form teams of 3 -4 and make up a strategic philanthropy program for a company that you have some knowledge about: – one you work for – one you have interviewed with – or, one you are very familiar with: products, services, and culture