Cause Related Marketing and Corporate Philanthropy in the Privately Held Enterprise

By:
Karen Maru File
Russ Alan Prince

ABSTRACT. Owners of businesses represent an interesting case in the study of the intersection of personal and corporate philanthropic values. Because individuals who own businesses have the means and the ability to act on philanthropic motivations through the medium of their businesses, it is interesting to explore the extent to which their corporate contributions to nonprofits are philanthropic in nature or instrumentally motivated, as in the instance of cause related marketing. The trade-offs between cause related marketing and corporate support of nonprofits are complex. Although larger firms are increasing their investments in cause related marketing, the extent of and motivations for adoption of cause related marketing among privately held businesses is less well understood. This study of 478 businesses which are supporters of arts organizations shows that privately held businesses of medium size (300 to 500 employees) are participating in cause related marketing to a significant degree. The adoption rate of cause related marketing is about 40%, and the primary benefits sought are company image enhancement and product marketing support. Adoption of cause related marketing among privately held and smaller enterprises will grow as CEOs exhibit satisfaction with the results of their program, intend to engage in positive word of mouth about it, and plan to allocate more resources to it.