Executive Thought Leadership

Corporations Can Do Well By Doing Good

Corporate philanthrophy isn't just good for the soul, it can be good for a company's bottom line. John Morgridge explains why.

In today's challenging global economy, companies can do well by reining in expenses and focusing on profits. They can also succeed by building, maintaining, and growing their commitment to corporate giving programs. If managed well, corporate philanthropy can be an integral part of a company's strategy, regardless of the state of the economy. And there are multiple ways to handle donations so that your philanthropy programs continue to thrive.

Recent research by the Walker Institute for the Council on Foundations finds that corporate giving can help businesses succeed. Their research indicates that customers, employees, and community leaders who view a company's philanthropic programs as successful are more likely to conduct business with that company, even when faced with a better financial deal elsewhere.

Corporate giving can also serve as an effective tool in attracting and retaining employees. When it comes to a satisfying job, people consider many factors, including company location, advancement opportunities, salary, benefits, and so on. And for many people, working for a good corporate citizen is on that list.

So how can companies be more successful in giving back to the community? Consider the following strategies.

Look carefully at your employee engagement programs. Are you offering your employees the opportunities they need to get involved in the community? The variety of programs you offer, how strongly you support them, and your willingness to encourage employee-originated ideas are essential for a successful program.

Get strategic about your giving. Just as in business, you can have greater impact by focusing on a few "markets" for corporate giving programs. Over time, the expertise and experience you gain will result in smarter funding and better programs. At Cisco, we have focused our efforts in three areas: Education, the Internet—the two fundamental equalizers in life—and support for basic needs, such as food and shelter. This three-pronged focus allows us to leverage the energy, ideas, and strengths of Cisco employees and product solution areas.

Be creative. Cash and equipment donation programs are the primary means by which corporations are judged. But there are many other ways in which companies can contribute. We have launched more than 6,500 Cisco Networking Academies—many located in least developed countries (LDCs) and U.S. Empowerment Zones—to help train the next generation of information technology engineers. Using the Cisco intranet, we've supported employee-generated philanthropic efforts, such as employee matching gift contributions. And we're proud of innovative employee-driven efforts, such as the formation of a nonprofit group comprising Cisco employees to provide earthquake relief to India. Projects like these take time and resources, but lay the foundation for a caring corporate culture.

Partner with nonprofits that demonstrate success. Many nonprofits seek the business expertise and technical know-how that business can offer, while others are already highly successful and would receive greater benefit from ongoing counsel and support. When choosing a nonprofit in which to invest, you should assess your choice as carefully as you would a stock market investment: Devote resources to companies that consistently demonstrate success over time.

Consider endowing a corporate foundation. There are more than 2,000 corporate foundations in the United States, with collective coffers of more than $13 billion in assets. Many of these foundations are funded as line items in annual company budgets. As a result, foundations are funded generously in good business cycles, but suffer when business is challenging. By endowing a corporate foundation, such as the Cisco Foundation (and diversifying its portfolio), you protect your foundation during tough times. Although Cisco has reduced its philanthropy efforts during this challenging economic cycle, 90% of our programs will not be affected, thanks to the establishment of the Cisco Foundation.

At Cisco, we strive to continually expand our corporate giving programs. Some of the ongoing investment is traditional, such as increasing the Cisco Foundation's endowment as the company grows and encouraging employee engagement efforts. And some are nontraditional, such as new e-philanthropy programs to complement Netaid.org , Cisco's global partnership with the United Nations Development Program to fight extreme poverty.

The time for corporations to step up and help is now. We live in a time of unparalleled prosperity, yet an increasing number of people, particularly in developing nations, are left behind. This need should drive everyone to do more. The bottom line is, giving back is good for business. Corporations will do well by doing good.