CEO Weekly INsights
September 20, 2017
Working with a Nonprofit During a Disaster Strengthens Your Company's Brand and the Community
Powerful research from Stanford and Brigham Young Universities commissioned by the Satell Institute reveals companies receive up to three times more media coverage when announced by a nonprofit partner.
Corporations throughout the nation have quickly responded to aid parts of Texas and Florida devastated by recent major hurricanes. They are aware the money they have donated for relief efforts will help repair the economy of communities hit, and rebuild the economic lives of those affected. What many will find out is that their Corporate Social Responsibility contribution attracts more attention from media when publicized by a nonprofit partner.
New research, commissioned by The Satell Institute Think Tank for Corporate Social Responsibility shows that corporate disaster efforts receive close to 3 times more media attention when partnered with an established nonprofit.
Lessons from the previous largest natural disasters
The two-part study, by Zachariah J. Rodgers of Stanford University and Peter M. Madsen of Brigham Young University, examined data collected on corporate responses to the four largest natural disasters (in terms of corporate disaster response) from 2000 to 2016: the 2004 Indian Ocean Tsunami, Hurricane Katrina in 2005, the 2010 earthquake in Haiti, and the 2011 earthquake and Tohoku tsunami in Japan. These four disasters were diverse in their locations and impacts, giving confidence that the findings would apply across a wide variety of contexts. For example, two of these disasters (Katrina and Tohoku) occurred in developed countries and two affected primarily developing countries (Indian Ocean Tsunami and Haiti).
The first part of the study examined stock price reactions to announcements of corporate relief to aid victims of these four disasters, and revealed that companies whose relief work had received media coverage increased their market value by roughly $150 million. (This will be covered in a future CEO Weekly INsight.)
The second part signaled that corporate relief publicized by nonprofit partners received an average of 2 to 3 times more media attention than corporate philanthropy in which the company was working alone. Just as political candidates receive extra media attention from popular figures because they make the candidate appear more credible, endorsements from recognized nonprofits benefit corporate philanthropic efforts.
Donating to a respected nonprofit is an effective strategy
Simply by partnering with a recognized nonprofit, companies tripled the media coverage for their activities compared to companies working alone. For example, Visa announced a $200,000 donation to the American Red Cross to aid victims of the Haitian earthquake shortly after it happened on January 10, 2010. Many companies gave more but Visa got more media coverage. What was Visa's secret to gaining more media attention? Donating to the Red Cross! As the Red Cross is instantly recognizable to most readers, the media seems especially likely to report on its activities following major disasters. In addition to its donation, Visa was also among the first financial institutions to announce it would wave transaction fees for customers donating to nonprofits working on disaster relief following the earthquake. This amounted to a sort of donation to any nonprofit that any Visa user chose to donate to via credit card. Again, the media took note of Visa's association with nonprofits and rewarded it with free publicity.
These examples drive home that partnering with a nonprofit greatly enhances media coverage
The banking and financial service corporation ING experienced an increase of favorable news stories after the American Association of School Administrators publicly recognized its assistance in rebuilding schools after Hurricane Katrina. Lowe’s, the retail home improvement chain, also enjoyed more positive press after being praised by Habitat for Humanity for raising money and donating materials for building homes in Sri Lanka after the 2004 Indian Ocean Tsunami.
Donations from smaller companies also attract big media attention
Another important revelation from the study was that media outlets are more likely to publish stories about smaller companies that give a smaller but substantial donation to a cause as many viewers find it unexpected. This corporate winning topic will be explored in greater detail in an upcoming CEO Weekly INsight from the Satell Institute.