Give and Receive When done right, corporate charitable giving can boost company morale and exposure--as well as your bottom line.

To many entrepreneurs focused on keeping costs down and milkingevery cash-flow dollar, corporate giving programs sound like aluxury they just can't afford. But in today's competitiveenvironment, corporate charitable programs and partnerships may bethe cheapest strategic competitive edge you can get--not to mentionthe satisfaction they can bring.

According to the "2004 Cone Corporate CitizenshipStudy" conducted by Cone Inc., a Boston-based strategicmarketing firm, 8 in 10 Americans say corporate support of causeshelps earn their loyalty to a business; that represents a 21percent increase since 1997. The study further found that 90percent of respondents would consider switching to anothercompany's products or services because of illegal or unethicalcorporate behavior. And younger Americans, ages 18 to 25, weresignificantly more likely to consider a company's corporatecitizenship when deciding whether to buy from, or work for, thatcompany.

While most of the talk surrounding brand loyalty tends to focuson bigger companies, the underlying trend is equally significant,if not more so, for small businesses, says Mary Fehlig, presidentof the FehligGroup, a Washington, DC, consulting firm that helps companiesimplement socially responsible business practices. Says Felig,"If 8 out of 10 people say they'll switch vendors based ona company's reputation, that's as true for the local cornerstore as it is for Coke."

The Goodwill Advantage
When executed strategically, doing the right thing can directlyboost a company's bottom line. Eight years ago, Steve Cohen,third-generation owner of Jason's Music Center in Pasadena, Maryland,saw that local public schools were short on funding for their musicprograms and could ill afford the new instruments their studentsneeded. Cohen struck up a deal to lend the schools new pianos, freeof charge, for one year, and then replace them at the end of thattime. In return, the schools hold a well-advertised liquidationsale, where the used pianos are sold at a discount. Jason'salso receives free advertising in all the schools' musicprograms and gets the added benefit of the press the music programgarners.

"In that first year, we did about $150,000 worth ofbusiness that was directly attributable to the program," saysCohen. His program is now operating in six different counties, andCohen estimates the company is pulling in an additional $1 millionannually thanks to the program. "Plus, we've cut ouradvertising budget in half," he adds, noting that newcustomers routinely claim they've chosen to buy fromJason's because of Cohen's support of the publicschools.

Business philanthropy can also translate into employeesatisfaction and better recruitment and retention, says ChrisPatterson, president and COO of Austin Grill, aseven-restaurant chain in the Washington, DC, area. Austin Grillhas a program called First Mondays, which allows therestaurant's general manager, with help from employees, toselect a local charity to which they donate one-third of sales fromthe first Monday of each month. In addition to boosting employeemorale and giving the company a tax break on the portion itdonates, says Patterson, "It gives credibility to the brand.We get a lot of repeat business just because we're out theretrying to be good corporate citizens."

The key to the goodwill advantage, says Fehlig, is findingstrategic ways to donate time, money or product so that the programis enhancing the business rather than depleting it. If, forexample, you're trying to launch a new product or service,donating it to a local charity can give you publicity and theopportunity to do a bit of market testing, she says. "Youreally need to think of it as an investment in the business,"says Fehlig.

That investment can pay off for smaller companies, which have ahard time competing on price. Stephen Jordan, executive director ofthe U.S.Chamber of Commerce's Center for Corporate Citizenship,notes that companies short on cash or product can achieve similargains through volunteerism. And it's a natural fit. "Thecommunity is their customers," he says, "Being goodneighbors is part of their [survival]."