Thursday, January 18, 2007

AFP Reviews ROI On Philanthropy

The Association of Fundraising Professionals (AFP) addresses how corporate giving increases company profits at a rate of return of 200 to 300 percent, according to a new study.

According to a recent article in The Wall Street Journal (“Charity Has Its Rewards for Generous Companies,” Jan. 7, registration required to view the article), the study shows that for every dollar a corporation gives to charity, they can expect profits to rise by two or three dollars.

The study, Is Doing Good Good for You? Yes, Charitable Contributions Enhance Revenue Growth, examined 251 corporate donors and their giving contributions from1989 to 2000. The researchers, led by Prof. Baruch Lev at New York University’s Stern School of Business, found that corporate giving is associated with subsequent sales growth, particularly for businesses in fields where consumer perception can be important.

However, the study’s researchers were quick to note that corporate giving is still a very minor percentage of overall costs and profits. The firms in the study spent 50 times more on marketing than philanthropy, and their average giving was only 0.1 percent of average sales revenue. Visit AFP to to see an abstract of the study.

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