Mendoza School of Business

Why companies donate to charity

Published: May 20, 2007 / Author: Ed Ronco

When it’s all done, the 36 acres of land that eventually will become Wellfield Botanic Gardens will be a myriad of paths and ponds, lush plant life and peaceful places to relax.

Right now, though, it’s a construction site and a fundraising project — one that is relying completely on the good will of corporations and community organizations.

“I think it’s fairly remarkable what people are willing to contribute,” said Eric Amt, executive director of the garden project. “I’ve never been turned down when I’ve asked for someone to work as an in-kind contribution.”

Area companies have donated excavation, engineering and landscaping services. And Amt has managed to attract a healthy share of financial contributions, too.

The Elkhart Rotary Club, which devised the project, threw $200,000 in seed money into the pot. The project has raised over $2 million of the $3 million it needs for the first phase of the project. “Everybody who donates, doesn’t matter if it’s $10 or $1 million, they donate because they have interest (in the garden project),” Amt said.

If the gardens are an incredibly visible example of what philanthropy can do, the positive image companies receive from it is the invisible example — the opportunity behind the altruism.

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OSMC, an orthopedic medicine practice in Elkhart, sponsors 44 groups and 13 youth athletic organizations. A rodeo, the Lions Club, fundraising walks for various causes, the Special Olympics — the company has its hand in a lot.

Outreach efforts at the company include everything from straight-up donations, ranging from $50 to $5,000, to employee participation events, such as Denim Days.On select days, employees can wear jeans for a $2 donation. The money goes into a general fund, which is then distributed to three local organizations picked by the employees.

“It’s important to give back to the community,” said Jaime Wrigley, spokeswoman for the company. “It’s your responsibility.”

In the case of a medical practice, it’s difficult to find out where your new business is coming from, Wrigley said, but outreach efforts certainly don’t hurt to attract patients.

“It keeps you top-of-mind with people that you are there to support the community,” she said.

Over at Teachers Credit Union, in South Bend, it’s a little clearer that outreach has a direct impact on business.”We get all the time, ‘We saw you at this event, or my son got a scholarship from you, and I needed a loan,’æ” said Paul Marsh, senior vice president of sales and marketing at the 238,000-member credit union.

TCU, which has $1.7 billion in assets, gave out about $1 million in philanthropy during 2006. It donated to the fine arts, housing and human-service organizations, and educational foundations and institutions, Marsh said.

“You name it, we do it,” he said. “We get a lot of good will from that. That’s not the reason we do it, but it’s a great benefit.”

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Companies’ expectations of what they might get in return for a donation is changing, said Rose Meissner, president of the Community Foundation of St. Joseph County, a grantgiving organization with $120 million in assets.Before, many corporations just flat-out gave to charities. Now they look for how the donation will pay off in terms of customer attraction and public relations.

And many big companies go so far as to have a staff set up to track the return on investment from charitable giving, said Georges Enderle, professor of international business ethics at the University of Notre Dame.

But having self-serving reasons for giving a donation isn’t necessarily a bad thing, he said, since the company is still helping the community.

“Even in private life, we do not have just one motivation when we do something,” he said. “If there is a win-win situation strategy, I think that’s acceptable.”

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Keeping a name in the community is important even for companies that don’t deal directly with the public, said Craig Mac Nab, director of public relations at AM General, which makes Humvees for the U.S. military and the H2 consumer truck.

“We don’t connect (philanthropy) to any aspect of our business, other than being a good citizen,” Mac Nab said.

In other words, it’s not like you can just go buy a Humvee when you see the AM General sponsorship logo at the field where your kid plays Little League.

So why does AM General bother?

“We’re part of the community,” he said. “We’re not the local incarnation of some international corporation with its headquarters in Munich.”Mac Nab declined to say how much AM General gives out every year, but said that the company tries to spread as much around as possible, to hundreds of different causes.

The company keeps most of its contributions in the area, since more and more, people are
looking at quality-of-life issues as well as the economics of taking a new job.

“We want to help make it a great place to live,” Mac Nab said.

With AM General, business tends to ebb and flow a little more, depending on the federal government’s needs at the time.

In the mid-1990s, for example, things were a little thin, and the company had to cut back on its contributions, Mac Nab said.”We never did nothing, but we did less,” he said.



Topics: Mendoza