Philanthropy-minded corporations in Birmingham say they give to improve the quality of life in their communities. They also acknowledge their generosity benefits the bottom line.
The comments follow the findings of a new national study, which shows that corporate philanthropy can result in loyal customers, employees and shareholders.
The study, titled "Measuring the Business Value of Corporate Philanthropy," found that generous companies are more likely to have:
Customers who will continue doing business with them
Employees who will stay and recommend the company as a good place to work
Shareholders who will continue to invest and suggest the firm to other investors
The study was commissioned by the Council on Foundations in Washington, D.C., and released this month.
"I think corporations give because they feel it's their responsibility to help a community. It's where their customers and employees live," says Kate Nielsen, president of The Community Foundation of Greater Birmingham, a public endowment that makes community grants. "Helping their bottom line is an additional benefit."
Alabama Power Co. has given more than $60 million to education, health, environmental and and arts programs since starting its philanthropic foundation in 1989. Last year, the foundation provided $200,000 in teacher grants for reading and math programs and 50,000 refurbished science kits as part of its "Science Suitcase Program."
"We are vitally interested in our communities," says foundation president Bill Johnson. "From a business perspective, the better our communities do, the better the state does and the better we do."
The purpose of the study was to document how corporate philanthropy affects shareholder behavior.
Walker Information Inc. of Indianapolis conducted the study. The firm surveyed 1,700 adults in November and December - employees of for-profit firms with at least 2,500 employees and people who have invested in stocks.
The study used a measurement called the Corporate Philanthropy Index and categorized respondents into two groups, High CPI and Low CPI, based on whether they perceived a company's philanthropy favorably or unfavorably.
The study, which defines philanthropy as cash contributions, in-kind products and services, employee volunteerism and event sponsorship, found that:
High CPI customers are three times more likely to be loyal, compared with 15 percent in the Low CPI group.
High CPI employees are four times as likely to be loyal workers, compared with 10 percent of Low CPI employees.
In addition, statements from respondents showed that: One of every three customers say they choose a company based on its giving record; from one-third to two-thirds of employees say a good giving record is a main reason for remaining with an employer; and one-third of shareholders say corporate generosity affects where they invest.
"These are important when you consider that two of the biggest problems for companies today are customer and employee retention," the study says. "Clearly, it is to a company's advantage to be viewed favorably in its philanthropy efforts." Local corporations agree.
"You cannot have a successful company unless you have satisfied customers, and that requires satisfied employees," says Alabama Power Co. president and CEO Charles McCrary. "And the more successful a company you have, the more your shareholders will gain." $12 million from AmSouth
AmSouth gave $12 million last year, which includes donations employees made to the United Way, in addition to providing time for employees to participate in Habitat for Humanity programs and blood drives and teach school children about financial institutions, says Ann Wells, director of corporate contributions.
Wells says AmSouth's philanthropy includes a matching program in which the bank matches (dollar for dollar up to $4,000 per year per employee) contributions employees make to qualified non-profits. Last year, the bank gave $230,000 through the program.
"It's a benefit to our employees," Wells says. "I would like to think that our customers and shareholders notice, too."
While local corporations say their primary reason for giving is to help their communities, how philanthropy might add to the bottom line also is a factor.
McCrary says businesses considering locating in Alabama want to know about schools, health care programs and whether communities have cultural programs.
"The stronger these things are the more successful our economic development efforts are and that helps everybody, including Alabama Power," McCrary says. "If it didn't benefit everyone, we wouldn't do it."
Wells acknowledges that when AmSouth employees talk about financial responsibility in schools, students also are seen as potential employees and customers. And when the bank sponsors events, "it's again with the same motivation. It gets AmSouth's name out in front of people," Wells says.