Sharing in the Effort

From the ABC

“The Australian Shareholders Association has expressed disapproval at companies pledging money to the tsunami relief effort in Asia, saying they have no approval for their philanthropy.
Association spokesman Stephen Matthews says firms should not generally give without expecting something in return.
Mr Matthews says that in most circumstances, donations should only be made in situations that are likely to benefit the company through greater market exposure.”

He was then quoted as going on to say that the exception would be companies that had activities in South Asia.

That would appear to be a narrow minded view of benefit. Even if the money is going to South Asia, Australian companies can still benefit from making donations by publicising the fact in Australia – both immediately via press releases and associations with charities and aid agencies - as well as in the medium term via annual reporting arrangements.

While not a direct cash donation, one example that comes to mind is Grace Removal’s oversubscribed offer to transport donated goods for free from various locations across Western Australia and load them on a boat bound for Medan. I would think that gestures like that have the potential to have a powerful positive influence on a Company’s image in the Australian marketplace. It doesn’t really matter whether anyone in South Asia is a potential customer or ever becomes aware of who transported the goods. While the practical benefit occurs in South Asia, with a bit of associated PR, the company can also benefit back here.

I understand that these days some significant institutional investors consider aspects of a company, such as involvement in the community and environmental performance when making investment decisions – thus donations could raise the profile of a company with such investors.

I’m also bemused at the decision to go public on this issue at this time. While statements like that might impress some of their members, its not going to do much for their broader public image – almost the reverse of the effect that some of companies making donations are likely to benefit from.