New research proves the business case for product philanthropy
Researchers at Indiana University conclude that giving corporate product donations is economically superior to liquidation or disposal.
BLOOMINGTON, Ind. — New research from Indiana University concludes that businesses can do well by doing good through product philanthropy.
Donating products to charities helps corporate bottom lines, reduces waste in landfills and provides relief for people in need. With a record number of Americans living in poverty today, product donations allow people to use their limited resources to pay for food, health care, prescription drugs, utilities and other vital needs.
The study, released today by Indiana University’s School of Public and Environmental Affairs, provides the first detailed examination of the re”This research demonstrates that donating products can result in substantial financial and social benefits for minimal cost and risk,” said Justin Ross, assistant professor of public finance and economics and the lead researcher for this study. “Additionally, working with a nonprofit that can match companies with charities lowers corporate costs associated with product philanthropy.”turn on investment for donating merchandise as opposed to liquidating or destroying it.
Good360, a nonprofit that has worked in product giving for almost 30 years, approached SPEA last year do the study. As many retailers and other companies approach the end of their fiscal years on Jan. 31, the research provides new and timely information to help them make good decisions about their excess and slow-moving merchandise.
Additional findings include:
- Product giving presents a considerable financial advantage over cash donations because it can carry an enhanced tax deduction.
- Product donations can provide the same image-enhancement benefits as marketing and advertising programs and at a lower cost.
- Companies that engage in product philanthropy avoid fees and negative branding implications associated with disposal of excess inventory.
- Product donation is superior to liquidation in most circumstances, and the report provides a rule of thumb for companies wishing to make quick cost comparisons.
In addition to providing an economic justification for retailers, manufacturers and distributors to donate excess merchandise, the report gives managers a framework for analyzing the costs, benefits, risks and opportunities of implementing a product philanthropy program.
“We hope that the report will inspire more companies to consider product donation as a viable alternative to liquidation or disposal,” said Cindy Hallberlin, president and CEO of Good360, the nation’s nonprofit leader in product philanthropy. “For many there is an untapped strategic opportunity to use product giving to advance the business and have substantial social impact on the communities and causes about which they care deeply. Rarely is there such a win-win between business and social good.”