State of Crowdfunding: Corporate Philanthropy and Branding

Major corporations have long participated in philanthropic efforts as a way to give back to their communities.

In recent years, these efforts have increased and many corporations have looked for unique ways to utilize their philanthropy dollars. In 2011, corporate giving reached $14.55 billion and accounted for 5% of all charitable giving; 65% of corporations gave more in 2010 than they did in 2009, and 53% are giving more now than they did pre-2007 recession.

A few of these corporations have turned to crowdfunding or crowdsourcing as a way to broaden their outreach and achieve new goals. Crowdfunding/ sourcing –on the most basic level–is a tool for companies to leverage in order to engage employees and consumers in a bigger social mission that grabs people’s attention.  It’s a unique approach that pulls people in by asking them to submit projects, vote, and share.

Corporations have taken a number of different approaches to utilize crowdfunding. Some have worked within their companies to create a fundraising competition among employees.  These competitions combine gamification and social media to increase employee engagement and provide fundraising dollars to predetermined charities. Employees then compete to see who can raise the most money, bringing in their network and sharing their company’s mission through social media channels. This method has most commonly been employed by smaller companies that lack a philanthropic budget but want to give back. This method also helps companies engage their employees and connect them with the company and its mission. The benefit of this is huge: a report by the Corporate Leadership Council showed that companies with high engagement rates have 87% lower staff turnover rates and 20% better performance.

Big corporations can take their philanthropic budget and share it with the public by creating an online competition. Startups, community projects, and non-profits apply for funding and their fans vote. Those with the most votes win a predetermined amount of money. This acts as its own advertising campaign, with every project sending friends and acquaintances to the site to fund the projects and gain exposure to the company’s socially-engaged mission. It helps companies use the money that they would already spend on philanthropy to also achieve bigger goals, such as deepening their reputation, building a relationship with their consumers, increasing community impact, attracting attention from new groups, and building corporate leadership skills with emerging technology and giving techniques. So far, companies that have pioneered this kind of corporate philanthropy have been overwhelmingly successful in achieving their goals. For some examples, consider the following:

Pepsi Refresh

What they did: In 2010, Pepsi offered $20 million of grants for individuals, businesses and non-profits that could benefit their community within six categories: Health, Arts & Culture, Food & Shelter, the Planet, Neighborhoods, & Education. They made the application process reasonably simple–no grant writing–so that it would be accessible to a wide range of people. Once they chose the top proposals, a voting round began and proposals with the most votes could received between $5k-250k in grants to get their projects up and running.

The results: They received more than 61 million votes, and 1.6 million comments on the site. Pepsi jumped from number 16 to number 5 among the country’s most reputable brands. They gave away over $14 million to parks, schools, playgrounds, Teach for America, the American Legion, and more.

Chase Community Giving

What they did: Chase gives away $150 million annually, and in 2009 started a Facebook effort in which they offered up $5 million for the year and allowed employees and customers to nominate local charities. They followed up with a voting round. The top charity earned $250k. Chase has continued to sponsor this competition every year. In 2012, they gave to 196 charities nationally.

The Results: The Chase Community Giving Facebook paged gained 3.3 million fans, more than three times the number of fans of any other JP Morgan Chase social media site. The competition has completed its 4th round this year.

Toyota 100 Cars for Good 

What they did: Toyota gave away 100 cars in 100 days to various non-profits. Toyota used an external panel of judges to choose 500 non-profit finalists. Each day, 5 non-profits would be posted to Facebook, and people could vote on which one they wanted to take home a car at the end of the day. The four runners up received $1000. The hope was to help non-profits by increasing their mobility and to remind employees and consumers of the power of transportation in helping non-profits help their communities. Toyota connected through Facebook and through a separate website which explains the contest and has links to all of Toyota’s philanthropic efforts.

The results: The program has run in 2011 and 2012 with positive response both times. The Facebook page has received over 220k Likes

Fido/ Evergreen “Share your Care”

What they did: Fido, a Canadian mobile company, teamed up with Evergreen, an environmental non-profit, to create “Share your Care,” which allowed people to vote on 20 non-profits that promised to have a positive impact in Canadian communities. They gave away $100k. The winner received $25k and everyone who made it into the top 20 was guaranteed $2,500.

The Results: Fido solidified a space in the market as the “Green Carrier” in Canada and emphasized their dedication to the environment, which carries over into other aspects of their company. For example, they offer recycled phones and various other programs to reduce waste and help improve green spaces in Canada. They have been working with Evergreen since 2009, and this initiative helped them to get more press as a company dedicated to the environment.

Scion Motivate Business Plan Competition: 

What they are doing: Going on right now, the Scion Motivate business plan competition has been garnering a lot of press. They move away from the crowdfunding/sourcing model and focus on a panel of judges, but the idea is similar: using both competition and corporate philanthropy to build brand awareness and help the community. They offer to help business owners in the creative arts community by awarding 50 semifinalists a trip to Los Angeles to meet with experts who will mentor them. At the end, they go back in front of a panel of judges and the 10 finalists receive $10,000, a Scion, and access to mentorship for up to 6 months.

The results: We do not know yet, as the semi-finalists do not head to California until March. In the meantime, it is helping Scion to build its brand as one that “does business differently” and wants to help others do the same.

Causecast: Causecast is a relative startup and utilized corporate competitive crowdfunding to engage its own staff, who competed to earn funding for two local dog rescues. They found it built up team dynamics, added fun to the office culture, and earned a lot of money for the charities they chose.

These examples come with a warning, of course. A few of the corporations have had complaints of lack of transparency and voter fraud, but those risks come with all big rewards. As more companies get into the competitive corporate crowdfunding game, we hope to see these issues iron out. It has already proven to be a great way to increase engagement both from employees and consumers. It improves brand recognition and, when used correctly, it can help companies shape and define the way consumers view them as a whole. We hope to see more of this kind of fundraising in years to come.

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