December 16, 2022

Corporate Philanthropy
During an Economic
Downturn
WizeHive

Many companies are inclined to pull back during an

economic downturn, saving as many resources as possible
and cutting back on all non-essential expenditures.
Corporate giving, however, is arguably even more important
in a volatile economy than in a stable market. Not only does
continued giving demonstrate a company’s confidence in
its ability to withstand crisis; it also reinforces and
broadcasts core values beyond financial stability. 
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 Recent research supports the notion that strategic expansion—
specifically in the form of corporate social impact—offers exponential
value. Being among the minority of companies that maintain or
increase spending in philanthropic ventures in hard times will serve
to solidify and project your company’s ideals in a way that marketing
alone cannot. Making a genuine effort to do good when it is most
needed—and when the financial future is most uncertain—will not
only generate goodwill, it will also provide competitive advantage.

Building Resilience

While some companies begin cutting back on giving ahead of

concerns about economic volatility, according to McKinsey, the
percentage that emerge better off after economic downturns, which
they term “Resilients," follow key strategies, among which are: being
proactive, aggressively making significant changes ahead of a
forecasted downturn, and, most importantly when it comes to the
topic of Corporate Social Responsibility (CSR), focusing on growth
even amid economic instability. 

In the current era, corporate giving is an important part of a well-

designed growth strategy. A recent article from Boston University
states that “a major benefit of CSR [is that it] provides insurance-like
protection by accumulating reputation assets to provide resilience
during crises.” The research supports the bolstering role of
philanthropy in protecting a company from the negative effects of an
economic downturn. It also suggests that companies that continue to
engage with and invest in their communities in hard times
experience fewer negative long-term impacts.
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 Perhaps unsurprisingly, a 2020 academic study found that charitable
giving during a recession is  “associated with increased perceptions of
brand value.” In the modern era more than ever, people are looking
for companies with heart. In fact, 77% of consumers are motivated to
purchase from companies committed to making the world better,
while millennials are significantly more invested in companies’
commitments to improving society and the environment than are
older generations.

Impactful Giving

In a 2020 study, LEGO was ranked as the company with the best
global reputation for CSR, followed closely by Disney. CEO Niels B.
Christiansen described the company’s emphasis on making an
impact by saying: “Everyday, employees at the LEGO Group are
empowered to make decisions to do what’s right…” During Covid, the
LEGO Foundation instituted or continued impactful programs from
the US to Hungary, the UK, and China to bring both tangible goods
such as food and educational tools, and intangible essentials, such as
joy and emotional support, to children facing hardship from the
global crisis. 

The Walt Disney Company also gave back in meaningful ways during
Covid. Disney spent $27 million on food donations and PPE in local
communities and also encouraged employees to volunteer through
virtual programs during lockdown. Likewise, Warby Parker continued
its philanthropic efforts via its “Buy a Pair, Give a Pair” program, which
has thus far donated over 10 million pairs of glasses to those in need.
Smaller companies also launched or continued social impact
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 initiatives. Clothing brand Darity, for example, continued its campaign
to donate 3% of profits to maternal healthcare efforts; Internet Advisor
offered free internet to underprivileged families; and JJR marketing
partnered with local businesses to buy coffee for community
members, take teachers “going above and beyond” during the
pandemic out to dinner, and install free granite kitchen counters for
first responders. 

During Covid, each of these organizations avoided the trap of pulling

back in their CSR segments. Instead, they continued (or increased)
the scope of their giving programs, and the world took notice.
Businesses of any size can prioritize social impact by creating
philanthropic programs that fit their resources. In fact, companies of
all sizes used our Bright Funds platform to engage their employees in
giving and volunteering programs and our Zengine solution to
manage community grants and scholarships – all of which positively

impacted their communities and their businesses throughout the

pandemic.

From Theory to Action

In a world in which there is a great deal of talk about values, action is

paramount. Employees increasingly value mission-driven
organizations over those that are less dimensional. They want to see
that their company is more concerned about impact than perception.
What this looks like is less important than how much weight CSR is
afforded as part of company culture. In other words, it’s less about
finding the most innovative ways to give back and more about
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 focusing on true community impact via an effective, consistent
corporate philanthropy strategy that creates meaningful results. 

The bonus here is that by continuing or increasing your corporate

giving programs, particularly in the midst of an economic downturn,
your company is actually bolstering its market perception as well as
making an impact. When the intention is to do good rather than to
merely look good, the benefit to reputation and company culture is
far greater and longer lasting. 

While you don’t get to decide what economic climate you’re working
in, you do get to decide how you respond to that climate and the
challenges—or opportunities—it presents. Making a calculated
investment in your company’s giving programs is an excellent way to
give back to your community, build resiliency, and signal that your
brand has both strength and staying power, regardless of the
economic climate. 

Want to take some next steps? Schedule a chat with us to learn more.

 
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Topic(s): Corporate Giving , Corporate Social Responsibility

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