In 1900, when Andrew Carnegie turned 65, a new competitor to his thriving steel-making business was ready to enter the market. Andy was confident that his industry-leading company could stave off the new upstart, but he was ready to retire. So he chose instead to sell his company to his new nemesis. “Congratulations,” said JP Morgan’s letter to Carnegie. “You are now the richest man in the world.”
By the time he sold it, Carnegie’s company was making more steel each year than all of Great Britain. The selling price of $480 million would be equivalent to just less than $10 billion today, a massive fortune that parallels modern day heroes of business like Bill Gates and Warren Buffett. But money isn’t all the three had in common: They all also committed to giving most of their fortunes away.
Before the end of his life, Andrew Carnegie gave away more than $350 million.
Must we accumulate unbridled wealth before being generous?
There can be no doubt that the legacies of philanthropists like Andrew Carnegie have stood the test of time. Carnegie’s early exposure to the plight of the unskilled worker drove him to fund education, which he viewed as the surest route to liberation from the shackles of poverty—an interesting sentiment for a self-made entrepreneur. Most of his fortune transformed into 2,500 libraries; much of the rest went to support many colleges and universities.
Carnegie was visionary for his time, and he is now recognized as a pioneer of sustainable investment—a form of philanthropy that applies the fundamentals of business to important and diverse issues around the world. In fact, as the trend toward sustainable business continues, leading organizations are wedding the needs of their businesses to the social needs of the communities in which they work.
More often today, companies are engaging in philanthropy long before their founders and leaders execute their ‘exit strategies.’ Whether as an expression of shareholders’ generosity, as a means to show their goodwill to their communities, or as an opportunity to curry favor among potential employees, companies are giving to good causes. Whatever their motivation, corporate philanthropy is a valuable support mechanism for community projects.
How do leaders move from philanthropy to social impact?
If corporate charitable giving is tactical or project-focused, what might be the next step toward a more strategic approach? Many companies take the next step by aligning their philanthropy not only with leaders’ preferences, but also with corporate public relations. By tying giving to reputation building or brand equity, companies can design programs that lift both the cause and the company.
This ‘cause marketing’ often takes the form of extended sponsorships of public events. In Vancouver, for example, Honda has for the past few years sponsored the annual Celebration of Light, a major fireworks competition that has become a milestone on the sunny road of summertime. Thousands of spectators are grateful the event continues year after year, and without the company’s support, the event wouldn’t be so successful.
Similarly, Apple’s support of the iTunes Festivals around the world drive funding for the arts on to the front pages of newspapers. This year, an entire month of video coverage of famous, international acts, will be broadcast through Apple’s channels, exposing people around the world to concerts in London that could otherwise be attended by a relatively small number.
In both of these examples, the companies get spectacular branding opportunities, while a community festival and a series of open, public concerts get the support they need to be safe showcases of artists’ great work.
Critics might say that these are actually just marketing expenditures. However, there’s also no arguing that these events could not be funded from government revenues, or by the artists whose work is showcased. So while there certainly are marketing returns to the sponsors, those can’t be separated from the community value that’s also cultivated.
How can a company decide between cause marketing opportunities?
These kinds of engagement programs create the win-win of building goodwill for business, while also doing some real good in the community. There are three characteristics that seem to make these initiatives work:
- Matching audiences: Apple’s iTunes customers are the customers of the annual iTunes Festivals. So there’s a direct connection between the festivals and customer engagement for Apple.
- Matching markets: Honda’s support for a family-friendly, publicly accessible event in a relatively well-to-do market means their brand gets exposure to a market that buys their cars.
- Matching profiles: Social/business alliances work best as partnerships. And partnerships are most effective and enduring when forged between like-sized organizations. And they’re generally most successful when both parties gain equal benefit.
Lastly, well-crafted engagement strategies build value that’s clearly greater than the sum of their parts. Their contribution, both to financial and social bottom lines, makes them a remarkable engine both for marketing and for social value.
There is undoubtedly a social mission that aligns with your company’s profit mission. Can you see an opportunity to build value, while doing good?
This post about cause marketing originally appeared on the Junxion website.