Philanthropy gets serious for some companies

To make that easier, one organization brands philanthropy-involved products with the “One Percent for the Planet,” label, which promises that one percent of the product’s revenue will go toward environmental causes. One Percent for the Planet has about 450 member companies, up from just 90 a year and a half ago, says executive director Terry Kellogg. Mostly made up of small and midsize businesses, the group also allows bigger companies to join with specific branded product lines, like hats and shirts from clothing maker Volcom’s “v.co-logical” label.

While these companies are giving away a share of their revenue, their generosity hasn't exactly been bad for business either. Casey Sheahan, Patagonia’s president and CEO, explains the company’s philosophy: “Every time we do good, we end up making money.” Along with food company Newman’s Own, which gives away 100 percent of its profits to charity through owner Paul Newman, Patagonia helped lead this new wave of company philanthropy. In 1985, the company decided to give 10 percent of profits as an “earth tax,” to offset the resources the company used. As Patagonia grew, that number turned into 1 percent of revenues, and to date, the company has given over $26 million to environmental causes.

“This is in large part enlightened self-interest,” Sheahan says. “To have a business, our customers need to have wild places to recreate…. There’s no business to be done on a dead planet.”

But it also helps the company appeal to its nature-loving customers, when it comes down to choosing products from a wealth of competing outdoor clothing makers. “We see it as a tie-breaker,” Sheahan says. To that end, the company has started looking for other ways to grow the philanthropy brand. A few years ago, they switched to all-organic cotton, a risky move that they weren’t sure would pan out, because of a shortage of suppliers. The move was a success, and other manufacturers — including Nike — have since followed suit. Customers, meanwhile, have responded by picking up the items in droves.

Others have started to follow Patagonia's lead, according to the Center on Philanthropy's Burlingame. “Today, almost all of the giving is thought of strategically as, ‘How can it increase my brand recognition?’”

GoodSearch.com has done philanthropy branding one better, making giving its entire identity. The company has partnered with Yahoo, which lets GoodSearch borrow its technology on the site so that Web searchers are using the exact same tool they would at Yahoo.com. But instead of just clicking and surfing, users choose a charity from a list of thousands that have registered with the site.

Each time the user searches the Internet, half of GoodSearch’s advertising revenue gets funneled to the charity of their choice. So far, GoodSearch has registered around 20,000 charities and is growing at a steady clip — donating thousands of dollars to charities ranging from the Cystic Fibrosis Foundation to the Elephant Sanctuary.

“Companies are finding that they can grow their businesses by being socially responsible," says GoodSearch co-founder and president Ken Ramberg, who also founded job search engine JobTrak and eventually sold it to Monster.com. "That’s generating interest in their products where they may not have had it before. Sure, they may be giving a percentage away to charity, but their overall revenue is growing."

GoodSearch's motto? "Why wouldn't you use it?"

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