Most owners have considered the correlation between business giving and the success of the business. Strategic giving improves reputation management and strengthens relationships with vendors, customers and clients. But how does business philanthropy affect the company’s value?
Since valuation is typically a function of available cash flow it stands to reason that a company designating a portion of its profits to the community means less money flowing to the ownership—decreasing the overall business value.
Not so fast!! Research suggests that socially responsible companies can expect an increase in sales, profitability and value.
Having a defined and active business giving program increases marketplace respect resulting in the enhanced ability to attract qualified personnel, greater employee engagement and increased sales and profitability. And that impact is reflected in financial metrics such as increased sales, employee and client retention and improved employee productivity.
For one recent client the question was not whether they should engage in corporate philanthropy but what form should that philanthropy take and was there enough benefit to the company to justify the expense?