Fact Checked

What Is Strategic Philanthropy?

Jim B.
Jim B.

Strategic philanthropy is a business concept whereby companies perform charitable deeds and receive indirect financial benefits from these actions. The process usually entails a corporation's engaging in some sort of partnership, either for one project or on a long-term basis, with a non-profit organization. In the process of strategic philanthropy, the corporation is able to perform a good for society by using its funds or other resources to help a worthy cause. The tangential benefit of this action is that the brand awareness of the company is increased and the public may form a positive association with the company, both of which can help the company's profits in the future.

Most large corporations are involved with different charitable causes. These corporations can be important sources of funding for non-profit organizations, since they can provide the kind of funding that the non-profits wouldn't be able to secure anywhere else. While a company usually may not need any other reason to help charitable causes other than a simple desire to help, it can secure some indirect benefits for its bottom line in the process. That's where the concept of strategic philanthropy comes into play.

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To execute strategic philanthropy, a company must form some sort of relationship with a non-profit organization. This can occur simply when a corporation donates money to the non-profit's cause of choice. A corporation may even be more directly involved with a charity, providing valuable resources to the cause or even having their employees volunteer at an event. In certain cases, a company may even strike up a long-term relationship with a non-profit group, acting as a corporate sponsor.

One of the most important aspects of marketing is brand awareness, and strategic philanthropy is an excellent way for companies to achieve this. Brand awareness basically means that, once a consumer gets knowledge of a certain company and gets comfortable with it, he or she is more likely to buy goods or services from that company. A positive relationship with a worthy charity can certainly make consumers feel good about a specific corporation.

As a result, the strategic philanthropy performed by a corporation may stay in the minds of consumers when they must decide between different alternatives to serve their needs. In this way, not only does the company help out a worthy cause, but the cause-related marketing in turn helps out sales and profits. Companies have to make sure to always put the charity's benefit first in such arrangements, or else the effect on public perception might turn out to be the opposite of what was intended.

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