COVER STORY : Belief or bottom line? – Corporate Sponsorship

Elizabeth Arden New Zealand,” said the directive from on high, “get makeover.” Pick charity, said the cosmetic company’s global head office, and support it.
Along with other cosmetic firms, the New Zealand company was already donating make-up to Look Good, Feel Better workshops for women with cancer. There was to be different blush, however, on the new association. Elizabeth Arden was to stand out from the cosmetic crowd by standing alone in support of its chosen charity.
But which one? General manager Valerie Riley consulted the Robin Hood Foundation, an organisation that has brokered partnerships between the business and community and voluntary sectors for the past five years.
Business sponsorship or, to give it its newer and grander title, corporate social responsibility, is not so much seat-of-the-pants decision. Less prey to the lottery of “chairman’s choice”, it’s now more likely to arise from robust, strategic process that produces fit with the company’s values, says Robin Hood’s dynamo chief executive Jude Mannion.
“What’s evolved in the past five years is trying to get an intelligent fit between what business stands for in the business world and what it stands for in the social world.”
And for good reason, she adds.
“We now have research that proves people will buy or not buy your brand based on how they view your social reputation. It’s real vote or veto.
“It’s long-gone piece of history that businesses do good to feel good. We can prove that doing good is good for business. We can prove that consumers will switch brands and support businesses that have social reputation as opposed to those that don’t.”
Leanne Holdsworth, of Holistic Business Solutions, consultancy specialising in corporate social responsibility, agrees the business sector is maturing in the way it handles its sponsorship decisions.
Auckland-based Holdsworth has worked with range of organisations on the issue since 2000 when she wrote book on chief executives in New Zealand and Australia who were doing well by doing good entitled New Generation of Business Leaders.
The road show around both countries that followed the book’s publication, however, proved difficult sell.
“I still do quite bit of speaking on this subject,” she says seven years on. “It’s so much easier to have an audience who will hear you now. There’s been an absolutely noticeable shift.”
As Riley at Elizabeth Arden can attest, Holdsworth says multinationals are now demanding their subsidiaries worldwide improve their performance and report on their social actions.
“What I’ve noticed over the past seven or eight years is an increase in the multinational pressure which has affected the privately owned organisations in New Zealand,” she says. “At the beginning we were seeing more New Zealand organisations leading the way. Now the organisations doing more edgy stuff are those that have the multinational pressure to do so.”
Not just pressure from overseas. In February, New Zealand companies had the chance to study under Richard Steckel, quietly spoken American with an international reputation as consultant on non-profit marketing and for-profit strategic corporate citizenship.
It is the second time in two years that Auckland University has offered short courses by the co-author of Making Money While Making Difference, guide for corporations on market-driven community involvement.
Business is undergoing natural evolution, Steckel says.
“There used to be licence to practise business given in England years ago,” he says. “Businesses had check list of what they had to be mindful of. Most started out with social agenda. They weren’t there to just make lots of money they were there to change society.”
Organisation specialist Charles Handy, who with photographer wife Elizabeth last year published The New Philanthropist, profiling business people who had turned social entrepreneur, also believes business is going full circle.
“[Economist] Adam Smith famously argued that the pursuit of self-interest in free market would benefit all in society,” wrote Handy last September before his book’s release.
“What is less well remembered is that he also said sympathy, by which he meant concern for one’s fellow, was essential for the cohesion and stability of that society.”
There were signs now that the tide was turning, said Handy, who pointed to the billion-dollar charitable works of Bill and Melinda Gates and Warren Buffet as well as his book’s case studies, which include Aucklander Tony Falkenstein, who donated shares worth over $1 million to the University of Auckland Business School.
Not surprising then that Steckel says these days some corporate philanthropy is cosmetic but it is increasingly becoming much more profound.
Late last month Philanthropy NZ released report, Giving NZ, by economic consultants Berl that estimated New Zealand business giving in 2005/06 totalled $254 million – $164.8 million in sponsorship and $89.2 million in outright philanthropy (no direct reciprocation or financial gain expected).
The study suggested that giving by large businesses – those with annual revenue of more than $5 million – made up 86 percent of all giving by businesses.
New Zealand’s total philanthropic giving of 0.81 percent of GDP is on par with Australia, Canada and Britain but behind the United States.
Rapid communication is promoting and speeding the uptake of corporate giving, says Steckel.
“Everything is so globally connected that it is hard to make move without seeing an immediate effect. I think [business giving] is just natural evolution of large, complex organisations realising that they have enormous impact and influence and that they can do that for evil or good purposes.
“I think that when given choice they usually go for the good.”
But if you’ve just joined the party where and how do you start? Charitable sponsorship needs to be part of bigger strategy which examines the company and its place in the world, Steckel says.
Businesses need to ask questions including: “What’s our true north, what do we believe in unshakeably, what drives the company, what is the footprint we want to leave on earth, and what are the folk tales we want to be told about the company 200 years from now?”
Such corporate navel gazing may seem unrelated to whether to give discount or link to particular social cause but Steckel maintains “a business is cause to be believed in; it is not just doing business for business’ sake”.
The most convincing sponsorships are those that extend from this belief. “Anita Roddick at the Body Shop was not talking about sponsorship; she was talking about belief system for the company that was unshakeable,” he says.
Newbies to social responsibility need not feel alone. The Roddicks of the world are still rare but, according to Steckel, their numbers are growing. Here’s how.
“If you have some sense of who you are and where you are going as company then the realities kick in. They are how do we make living, how do we get shareholders to invest, how do we keep them invested and how do we sell, who is going to buy and who’s going to buy more?”
Subsequently, the question of which non-profit to partner becomes clearer. “The ones that I think work long term and are the most convincing are the ones that are related to the core of your business.”
Hubbard Foods has been putting its ‘Take Minute’ suggestions on how to make social difference on its best selling cereal boxes for the past two years. Montana Wines’ long-term commitment to the arts arose because people in the arts tend to drink wine.
Logic also needs to underpin selection. United States home building supply company Target, which sells primarily to families with children has major investment in education, including enabling customers to choose which schools money or goods support. Target offers bridal registry equivalent for teachers and schools.
And US hardware company Home Depot sponsors Nascar (stock car) racing after analysis sho