Do corporates participate in charity due to kindness? Or is it a company tactic?

In Hong Kong, charitable events took place on an average of 10 times per month in 2015, while over 83% of firms claim their involvement in corporate philanthropy. Some people believe it is simply giving back to the society as a token of thanks to all consumers, while some suggest there are more reasons behind it.

Benefits of corporate philanthropy

Public Perception
According to Nielsen, 55 per cent of global consumers say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact. Positive image of a corporate reflects the value of the firm, and thus the value of its customers. When products share similar price, attributes and quality, customers may prefer a company that shows care to the society. 

Make employees feel great
Research into organizational behaviour has found the relationship employees have with their organization – how it makes them feel and what opportunities it offers for personal growth – is becoming just as important as their remuneration. Witnessing social movement initiated by teenagers these few years, it could be seen that Generation Y is in strong pursuit of social involvement instead only pursuing stability in life. Participating in charity events could enable employees to feel a sense of mission and some may regard as personal growth. On top of that, morale and bonding could also be strengthened among employees during the functions. ‘…We have rehearsed for more than 3 weeks, it offered us a chance to get to know each other. We kinda have more motivation to go to work and are actually having better dynamics in the office!’ said  Michael Kwong, one of the participants in the team Yo Fida! in Sedan Chair 2016 Race.

‘…We have rehearsed for more than 3 weeks, it offered us a chance to get to know each other. We kinda have more motivation to go to work and are actually having better dynamics in the office!’

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Yo Fida! employees took picture delightedly after the Sedan Chair Race.

Tax reduction
Charitable foundations are a popular option for companies wishing to be philanthropic in a tax-efficient way. Other forms of donations are generally tax-deductible including sponsorships of charities or philanthropic events, cash donations and donations of inventory. In general, a firm could get up to 50% deductions on charitable donations of one’s adjusted gross income.

Free publicity
Charity events or donations post a positive image and is a cost-efficient method for branding. Participating in a certain topic, like climate change initiative, is a good way to convey a corporate’s culture and values to the public. On top of that, organizations that a firm is supporting are likely to help promote its business as well when promoting their events. A small corner in SCMP could cost more than HKD5,000, while participation in social initiative might get you on newspaper at low cost. “We would love to give back to the society, and well of course, there is exposure for us as well in various platforms.” said Marketing Intern from Freshfields in Sedan Chair 2016. 

“We would love to give back to the society, and well of course, there is exposure for us as well in various platforms.” said Marketing Intern from Freshfields.

The change is actually empowered by social media

Cash-giving has remained largely static in recent years, but in-kind giving has risen, says Cathy Pharoah, professor of charity funding at the Cass Business School and co-director of CGAP. It is suggested that corporates moved away from the cheque-book to in-kind or participative giving.

It is suggested that corporates moved away from the cheque-book to in-kind or participative giving.

One possible reason is the increase in use of social media. In the past, one’s participation in charity is usually recorded or publicized by means of newspaper, magazine or its own website. Donations usually occupy a larger photo space with clear company name; while for now, no one will be interested to see cheque handover on social media. They for something more juicy, giving rise to many charity events that corporates would participate.

Variety of charity events in Hong Kong

Numerous of charity initiatives are happening every month. Sedan Chair Race 2016 has just taken place last week. J.P.Morgan, KPMG, Carlsberg all participated in it.  Pink Heel Race is an annual charitable event organized by Hong Kong Hereditary Breast Cancer Family Registry. It aims to promote knowledge about breast cancer which will take place in November 2016. The CENTRAL Rat Race is another significant charity event that takes place in the heart of Hong Kong CBD. In the race, teams of executives dressed in business attire or creative costumes and running shoes navigate eight different obstacles, passing a briefcase ‘baton’ between each other as they race their way to the finish line. Many corporates join for fun and promotion. Flag selling is also one type. Tung Wah Group cooperated with famous artist Plastic Thing to produce flags that match the taste of teenagers.

Are consumers perceiving corporates ‘charitable’ as much as they think of themselves?

In a recent study, the Charities Aid Foundation (CAF) highlights a clear discrepancy between the public’s perceptions of corporate giving by the FTSE 100 and the reality. “Businesses should be communicating how they are integrating a clear social purpose into the core of their business and the role that corporate giving plays in delivering sustained positive outcomes,” according to Klara Kozlov, Charities Aid Foundation Head of Corporate Clients. It can be seen that corporates should not merely talk endlessly on its nice resume about charity, but should also tell the public how they incorporate value into their products which is the long-term way to spend your money on charity (if you want something beyond solely giving!).

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