You might wonder, why would a business (big or small) give away money or resources to nonprofits?

Isn’t that counter to their profit motive?

In reality, philanthropy and grantmaking can benefit companies in many ways, making it a win-win situation.

In the United States, corporate social responsibility (CSR) and charitable giving have become mainstream in the business world – not just for Fortune 500 companies, but even for local small businesses.

Here’s a beginner-friendly rundown of why supporting nonprofits is actually in a company’s best interest, backed by recent stats and trends.

Better Brand Image and Reputation

Consumers today care about the values of the companies they buy from. Supporting charitable causes is a powerful way for a business to build goodwill with the public.

• In fact, about 77% of consumers say they prefer to purchase from companies with some form of social responsibility initiative.

This boosts brand trust and loyalty.

Think of how you feel about a local store that sponsors a youth sports team or a national brand that donates to disaster relief; it generally leaves a positive impression.

Companies know this.

• Many actively publicize their philanthropic efforts – for example, by sharing photos of employee volunteers or noting on their packaging that “10% of proceeds go to charity” – because it enhances their brand in consumers’ eyes.

A strong reputation as a “good corporate citizen” can differentiate a business in a competitive market and even insulate it somewhat from scandals or crises (people are more forgiving to a company known for doing good).

In short, giving back is a marketing and brand-building strategy as well as a moral choice.

Customers are not the only ones watching; investors also favor companies that demonstrate positive social impact.

• Approximately 73% of investors are looking to invest in companies that improve society or the environment.

So, philanthropy can even help attract investment by signaling long-term thinking and values alignment.

Increased Customer Loyalty (and Sales)

Beyond reputation, there’s evidence that doing good can translate into customer loyalty and higher sales.

Many consumers, especially younger generations, will switch to brands that support a cause they care about. Some are even willing to pay a bit more if they know a portion goes to charity.

• A recent global study (Nielsen) found 66% of consumers are willing to pay more for products from socially responsible companies.

For businesses, this means charitable initiatives can actually drive revenue in the long run.

Cause marketing campaigns (where a company partners with a nonprofit or pledges proceeds to a cause) often boost sales because consumers feel their purchase has a purpose.

• For example, campaigns like “buy one, give one” (Tom’s Shoes giving a pair of shoes to someone in need for each pair sold) have been hugely successful commercially.

Companies also find that supporting local charities endears them to the community, which can increase customer retention.

If two cafes sell the same coffee at the same price, but one sponsors the local school and the other doesn’t, some patrons will choose the one that gives back, all else being equal.

So, philanthropy can be a competitive advantage that attracts customers and keeps them coming back.

Employee Engagement and Talent Retention

Employees are a company’s most valuable asset, and businesses have discovered that giving back is great for employee morale.

People feel proud to work for a company that cares about the community.

• Surveys show that 71% of employees consider it important to work at a company that supports charitable causes through giving or volunteering.

Moreover, employees – especially Millennials and Gen Z – are seeking purpose in their work.

They often want opportunities to volunteer or know their employer is making a positive impact. When companies have philanthropy programs (like matching employee donations or organizing volunteer days), it boosts workplace satisfaction and loyalty.

• For example, one study found  83% of employees would be more loyal to a company that helps them contribute to social and environmental issues.

Engaged employees are more productive and less likely to quit, which saves companies money on turnover.

Additionally, offering philanthropic opportunities (like paid time for volunteering or donation matching) is a valuable perk that can attract top talent.

Many large companies now highlight their CSR in recruitment, knowing that candidates weigh these values.

In summary, a strong CSR program improves employee engagement, helps attract talent, and reduces HR costs. As a bonus, team volunteer activities can also serve as great team-building exercises, improving internal camaraderie.

Tax Benefits

The U.S. government essentially encourages corporate philanthropy through tax incentives. Businesses can get tax deductions for charitable contributions, which means giving to nonprofits can reduce their taxable income.

• Generally, corporations may deduct charitable donations up to 10% of their pretax income in a given year (with provisions to carry over excess to future years).

 During certain periods (like in 2020-2021) this limit was temporarily increased (to 25%) to spur more giving. While companies don’t give just for the write-off, it certainly helps that donations can also provide financial savings.

Think of it this way: a corporation might decide to donate $100,000 to a charity rather than pay that $100,000 in taxes – they’d rather see the money go to a good cause and get the PR benefits, versus to the IRS.

Small businesses, too, can deduct charitable gifts (if structured properly).

• Additionally, some contributions can be counted as business expenses (for example, sponsoring a charity event might be considered advertising expense), which can have tax advantages.

The takeaway is that strategic philanthropy can be financially efficient for a business.

They get goodwill and possibly a tax break, whereas advertising dollars without a charity angle might not be deductible.

Of course, tax laws have specifics and limits, but the overarching point is charitable giving is incentivized by tax policy.

Community Goodwill and License to Operate

Companies, especially local ones, benefit from strong communities.

By investing in local nonprofits, businesses help improve the communities where their employees and customers live.

This can create a virtuous cycle.

For example, a company that supports local education and job training is essentially helping build a better local workforce from which it can hire in the future.

• Small businesses often understand this well: 91% of small businesses believe they should give back to their local community, and an overwhelming majority actively do so.

The result is often community goodwill – people want to support businesses that support the community.

A restaurant that donates meals to a local shelter may find that the locals are more inclined to eat there because they appreciate its generosity.

Additionally, being engaged in philanthropy can provide a “license to operate” in the community: when tough times hit or the business needs support (say, a zoning change or during a crisis), the community is more likely to rally behind a company they see as a partner and benefactor.

Businesses also reduce the risk of opposition or boycotts when they maintain a positive image through good works.

Corporate Grants and Partnerships Spur Innovation

Many large companies have corporate foundations or grant programs.

By giving grants to nonprofits (or even social enterprises), businesses can further causes aligned with their industry and learn from these projects.

For instance, a tech company might grant funds to nonprofits teaching kids to code – this aligns with their industry and might cultivate future coders (a talent pipeline).

It also generates stories and content the company can share, highlighting innovation and impact.

Some companies engage in skills-based volunteering (employees lending expertise to nonprofits) that helps employee development and can spark new ideas that even benefit the business (employees often return with new perspectives and skills).

In sectors like healthcare or environmental services, companies sometimes partner with nonprofits on research or pilot programs, benefiting society and potentially uncovering insights relevant to their business.

So philanthropy isn’t always just writing a check; it can be a form of R&D or community engagement that circles back tangible benefits.

Meeting Consumer and Investor Expectations

CSR and philanthropy have become so prevalent that not participating can actually be a competitive disadvantage.

• 94% of major U.S. corporations plan to increase or maintain their charitable giving in the coming years, indicating that big companies see no end in sight for corporate philanthropy – it’s now expected.

Consumers might actually distrust a large company that doesn’t demonstrate any giving or social responsibility. Similarly, institutional investors and younger shareholders often push companies to have environmental, social, and governance (ESG) goals. Being active in philanthropy is one way to check those boxes.

It shows the company is aware of its social impact and is actively contributing positively.

In some cases, failing to give back can hurt a company’s brand or invite criticism.

On the flip side, companies that lead in philanthropy can win awards and media coverage (like “Best places to work” lists often consider community involvement, and media love highlighting generous corporate donations).

All of this boosts public relations.

Corporate Philanthropy is Increasing

Lastly, it’s worth noting the trend – corporate giving has been on the rise.

• In 2024, U.S. corporate philanthropy was about $44.4 billion, up 9.1% from the previous year. This growth suggests that businesses are seeing enough value in giving that they are allocating more funds to it each year.
• And it’s not limited to cash donations; many companies have robust programs for matching employee donations (about 65% of Fortune 500 companies do), offering volunteer grants, sponsoring community events, etc.

We also see small businesses contributing a lot relative to their size – one SCORE survey noted small businesses donate 250% more locally than larger businesses (perhaps because big firms spread giving nationally, while small firms concentrate on local needs).

• The high participation rate of small businesses in charity (nearly all surveyed did some charitable action in the past year) shows that even at a modest scale, businesses feel a responsibility and reap benefits from local philanthropy.

Philanthropy Makes Good Business Sense

In summary, companies engage in philanthropy and grants not only out of altruism but because it makes good business sense.

The benefits span from enhanced public image and customer loyalty, to happier employees and tax advantages, to long-term sustainability of the communities they depend on.

It aligns the company with social good, which in turn resonates with consumers, employees, and investors – all key stakeholders in a business’s success.

• As one report succinctly put it, CSR is a win-win for all: it boosts employee engagement, strengthens brand loyalty, and increases social impact at the same time.

Businesses large and small have recognized that doing good is good business.

So next time you see a corporation sponsoring a charity run or a local shop supporting a food bank, remember that aside from helping the community, they’re also building a stronger company through those acts of generosity.

It truly is in their best interest to give back.

Level Up Your Fundraising Skills

If fundraising feels hard, that’s because it is — even for the pros.

But you don’t have to figure it out by yourself.

With expert guidance, practical tools, and support from those who’ve been in your shoes, you can turn these common challenges into real progress.

Want to raise more with less stress?

Explore Oregon State University’s online, self-paced Fundraising Certificate Program — built by experienced fundraisers to help you develop, strengthen, and support your fundraising success.

Your mission matters.

Let’s help you fund it.