‘Strategic philanthropy’ burnishes firms’ world images - East Valley Tribune: Business

‘Strategic philanthropy’ burnishes firms’ world images

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Posted: Sunday, April 2, 2006 6:48 am | Updated: 3:25 pm, Fri Oct 7, 2011.

CINCINNATI - Greg Allgood’s job at Procter & Gamble Co. has taken him to remote, diseaseplagued villages in Kenya, into some of the Western Hemisphere’s poorest slums in Haiti, across rebel-ridden territory in Uganda and to tsunami-devastated Sri Lanka and earthquake-ravaged Pakistan.

While most people who work for the Cincinnati-based company sell consumer products such as Crest toothpaste and Pampers diapers, Allgood is the director of the Children’s Safe-Drinking Water Project. The charitable program aims to curb the nearly 2 million child deaths attributed annually to polluted water with a water-cleansing product called Pur that the company donates or sells at cost.

Like other major U.S. companies with international interests, P&G sees long-range business benefits in charitable projects in developing countries, what some call ‘‘strategic philanthropy.’’

‘‘We’re not a for-loss company,’’ Allgood said. But there is strong backing among P&G’s leaders for the charitable project. ‘‘This is something we should do.’’

Companies that work to improve health and education overseas also can improve their images in foreign countries and among consumers at home. They can reap benefits to employee morale and recruiting. And they can lay the groundwork in future markets.

‘‘We’re going into some of these countries where P&G has no presence,’’ Allgood said. ‘‘And maybe it’s 50 years from now when we have business in Haiti, but someday, we’ll want to. What better way to learn the distribution infrastructures and government relationships than coming in with a product that’s saving lives?’’

U.S. corporate donations overseas have been increasing in recent years, highlighted by the more than $566 million in contributions to tsunami relief, according to the Business Civic Leadership Center for the U.S. Chamber of Commerce. The center hasn’t compiled statistics on ongoing charitable projects but says they are on the increase, too.

A sampling: Starbucks Corp. provides support to coffee- and tea-growing communities around the world and works to improve education in rural China and Guatemala. Johnson & Johnson Co. programs include eye health in Asia, diabetes treatment in Mexico and fighting pediatric AIDS in China, Russia and other countries. General Electric Co. programs include support for rural teacher training in China and education for slum children in India. In most cases, the corporations partner with nonprofit agencies.

‘‘I think there are various ways you can engage in these kinds of activities; there are a lot of different models out there,’’ said Brenda Colatrella, senior director for Merck’s office of contributions. ‘‘You try to create the least amount of bureaucracy and get the most done with your partners.’’

Merck, based in Whitehouse Station, N.J., has been working since the 1980s with partners including former President Jimmy Carter’s Atlanta-based Carter Center to donate drugs that combat river blindness in Africa. The company also provides vaccine training to African health professionals, among other programs.

‘‘One of the upsides of globalization is companies looking at developing countries and ways they can help,’’ said Eric Fernald, research director for Boston-based KLD Research & Analytics Inc., which tracks corporate social performance.

American corporations often face skepticism and suspicions overseas about their motives. Being associated with charitable activities and forming local partnerships helps companies gain acceptance and build long-term relationships.

Besides being sensitive to the needs of the developing world, U.S. corporations must also be sensitive to their images following corporate scandals such as the collapse of Enron Corp., said Noel Tichy, a University of Michigan business professor. Tichy founded the school’s Global Corporate Citizen Initiative, which teaches future business leaders the importance of global responsibility.

Projects such as P&G’s help employees feel good about their companies and help morale, retention and recruiting, he said.

Good works can be good for sales, too, said Philip Kotler, a Northwestern University marketing professor who co-wrote ‘‘Corporate Social Responsibility: Doing the Most Good for Your Company and Cause.’’

‘‘People will associate P&G with being a good guy,’’ he said. ‘‘That counts a lot with some people.’’

Meanwhile, officials of charitable organizations say partnerships with corporations bring value beyond large cash donations.

‘‘We clearly need financial resources, but by engaging in a broader spectrum, the corporate sector can bring their business acumen, logistics support, marketing and technical expertise,’’ said Anne-Marie Grey, who oversees corporate alliances for UNICEF.

P&G has put some $25 million into developing and distributing its waterpurifying packets so far. The company’s only not-for-profit division was created for Pur water but operates in a business model.

A single packet of Pur treats about 2.7 gallons of water, costs about 3.5 cents to produce, and is sold to consumers for an average of 10 cents. Nongovernment partners can use some funds for their distribution costs, and commercial wholesalers and individual vendors in the countries can keep profits of 3 to 4 cents or more. This allows the charities to put the extra money back into their efforts while giving a profit motive for individual vendors.

Sally Cowal, a longtime U.S. diplomat who’s now a vice president for P&G nonprofit partner Population Services International, said such business approaches often are more effective than outright donations because people attach more value to something they paid for.

‘‘By selling a product rather than giving it away, we can use the commercial sector instead of the public sector handout,’’ she said. ‘‘We sort of harness the profit motive and turn it into a social good.’’

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