Corporate Responsibility

Programs That Achieve Business Goals and Add Value to the Community

by Richard Wong and Gailen Vick

Reverse Logistics Magazine, July/Aug 2008

In a 1970 New York Times magazine article Milton Friedman, a well-known conservative economist, spoke out against public companies’ charitable giving practices, calling it a form of theft against shareholders. Fast forward four decades. Today companies actively embrace philanthropy as an important business strategy within their corporate responsibility tenets.

Corporate Social Responsibility (CSR) Defined

CSR, (also called corporate responsibility, corporate citizenship and responsible business) is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment. This commitment seems to extend beyond the statutory obligation to comply with laws and regulations, and involves organizations voluntarily taking steps to further improve the quality of life for employees and their families as well as for the local community and society at large.

Product Giving On the Rise

While there are many tactics that companies employ in the area of CSR, over the past few years there has been an increase in product donations generated by corporations. According to The Conference Board’s 2007 Corporate Contributions Report, non-cash gifts—including company products, property, equipment and other material donations—made up the largest portion of all corporate contributions in the United States, comprising about half of overall giving.

Consumers Keenly Interested in Corporate Responsibility Practices

Consumers are also increasingly interested in companies’ social responsibility practices. A 2007 Golin-Harris Corporate Citizenship study (“Corporate Citizenship Gets Down to Business”) finds that 76 percent of Americans agree that corporate citizenship is an investment that contributes to business success and competitive advantage. And, according to Cone Inc., a Boston-based public relations firm, for most Americans “doing good” has become an expected business strategy. Further, Cone’s 2007 Cause Evolution Survey indicates 83 percent of Americans say companies have a responsibility to support causes; 92 percent have a more positive image of a company that supports a cause with which they are concerned and 87 percent say they will likely switch from one product (price and quality being equal) to another, if the program is associated with a good cause.

Increased Concern about Corporate Sustainability

Companies, consumers and the general public at large have heightened interest in the reduction of corporate environmental footprints as part of the overall CSR area. The greening of the supply chain may well be one of the most prolific trends of our time, driving corporate decisions on inventory management. From product sourcing, packaging, facilities management and green transportation to reducing waste management, companies and consumers alike are keenly focused on sustainability. According to a recent consumer environmental study by Cone, 93 percent of Americans believe companies have a responsibility to help preserve the environment. With the increased consumer and corporate attention to this matter and the costly expenses associated with disposal and re-disposition activities, the time has never been more appropriate to harness product donations as a disposition option in the inventory management toolkit.

How to Launch a Product-giving Program

With increased pressure to demonstrate social responsibility, today’s companies realize the need to align their giving programs with business needs, business objectives and branding.

Donating consumer products has long been a win-win for companies because they can promote their brand and enhance their supply chain management performance by eliminating reverse logistics and providing viable solutions for returns and non-salable items. Companies can also receive tax benefits for product donations that are used to help children, the sick or the needy. For inventory donations provided to certain types of public charities, companies are eligible for a tax deduction of up to twice cost.

Each company has its own unique business and philanthropic goals, product or service line, target audiences, corporate culture, industry-related issues and geographic scope of operation. All of these things should be considered before creating a product-giving program. Each company should define what success would look like for their programs. Goals should be ambitious, but realistic. Once they are set, it is time to begin developing the programs that can help achieve your company’s overall business and philanthropic goals.

As companies plan their giving programs, they should ask the following questions:

• What are the company’s top three business goals?
• What are the company’s top three target audiences?
• What are the company’s current philanthropic goals and how are they linked with its business goals?
• If the company has issued CSR reports, what is the overall message of these reports?
• Which audiences do you want to target through the programs? What impact do you wish to have on these audiences? (be specific)
• What product or service does your company offer that could be used in a product-giving program?
• How could this product help people or communities?
• What internal and external stakeholders should be involved in the program development?
• Should the company’s product-giving program be focused locally, regionally, nationally or internationally?
• Are there current business challenges that could be resolved with such a product-giving program (loss prevention, supply chain issues such as returned inventory, discontinued models or old packaging, employee retention and morale, etc.)?
• How will such a program be managed and do you have the necessary resources (staff and resources for managing logistics, transportation, charity recipient vetting, evaluation, etc.)?
• Is there an issue that you could use to highlight such a program (cause marketing)?
• Should you partner with a nonprofit organization that could help manage the program or highlight the issues you propose to solve?
• How will you evaluate such a program to make sure it is having an impact on your target audience?

Keys to Successful Product-giving Programs

Product-giving programs that achieve business goals and demonstrate community impact share a few important traits. As you develop your program, be sure to keep the following in mind:

• Align your product-giving program with your business objectives
• Be authentic—corporate citizenship is a commitment to doing good, not simply a check-off or public relations opportunity (greenwashing—the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service—is on the minds of today’s consumers, so they are looking more closely to make sure your programs are legitimate)
• Select capable partners (look for innovation, flexibility, accountability)
• Ensure the recipients of your donated products have been thoroughly vetted (in order to get the highest tax break allowed by law, recipients of your products must be helping the needy, the sick or children; recipients cannot use the donations for fundraisers or raffles, give them to volunteers or staff or sell them in any manner)
• Define your desired social outcomes and benchmarks
• Develop a detailed budget for the program
• Recruit influential champions, then engage your employees
  
• Measure and evaluate—focus on your business, philanthropic and sustainability goals
• Share your positive news

Final Thoughts

It is never too late to consider including the donation of products in your company’s business and philanthropic plans. Whether your product donation activity is a planned strategy or a way to address inventory situations that arise during the normal course of business, the benefits can be enormously satisfying for the business and the community.

Other Sources:

The Conference Board
(www.conference-board.org/utilities/pressDetail.cfm?press_ID=3315)

Golin Harris (www.golinharris.com/cap_specialty_change.htm)

Cone, Inc. (www.coneinc.com/content1091)

Richard Wong is President and CEO of Gifts In Kind International, the eighth largest charity in the United States, and the leading charity in the field of product donation innovation assisting nearly 50 percent of the Fortune 100 companies with their product-giving strategies. For the past 15 years, he has guided both large and small organizations to realize their vision and reinvent their mission and helped to raise more than $600 million in contributions. More recently, Richard was the CEO and Co-founder of Richmond-based HumaniLink, L.L.C., a management, technology and fundraising consultancy that leverages advanced communications strategies to improve nonprofits’ efficiency and accountability. Simultaneously, he also founded Strategic Partners Advertising in 1996, an advertising agency that served commercial clients, also based in Richmond.

Gailen Vick is the Reverse Logistics Association Founder and President.