Corporate giving: is it good for business?

• Author: Graham, John R.

LARGE and small companies long have supported community activities and charitable associations. Like politics, corporate charity mostly is local. For college scholarships and Little League sponsorships, locally owned businesses, as opposed to branch operations of national firms, have been the most supportive.

Today, a "tit-for-tat" element is entering the corporate-charity scene. A tire dealer advertises that profits on certain days will go to a local homeless shelter; a supermarket chain announces that it will give free computers to schools based on register receipts collected by students; a catalogue outlet for children's clothing gives a merchandise credit in exchange for outgrown garments. One company even asks customers to include a one dollar contribution to a national health charity when ordering.

American business has discovered that doing good can be good for business. There are dozens of examples of using charity to gain an advantage. For instance, a public utility offers free pickup of old, but still-operating refrigerators. A major clothing chain collects coats from customers, has them cleaned, then donates them to needy families.

In each case, an element of altruism appears to be wrapped inside an advantage to the business. The tire dealer hopes to attract more customers on certain days. The public utility is eager to get rid of energy-inefficient refrigerators. Kids urge their parents to buy groceries at a certain store so their school can get a free computer. There are good reasons for this trend of packaging products and services in charitable wrappers.

Charitable marketing is part of an overall strategy to attract narrow segments of consumers. The demise of mass marketing as a result of the diversification of the U.S. consumer base has caused companies to realize that they must appeal to smaller and smaller demographic segments. It no longer is possible to direct a single advertising campaign at huge portions of the population and generate the needed impact. Marketing efforts now must be directed to implementing a wide variety of mini-campaigns focused on specific groups.

Since many Americans admire aiding the less fortunate, they generally respond favorably to corporate-sponsored programs aimed at relieving poverty, ignorance, and hunger or protecting the environment. All this is made possible by the ability to gather, evaluate, and manipulate information easily and efficiently by using computers and sophisticated...