If I told you that mobility industry companies could make $3 for every $1 dollar that they spent,
would you think that was outrageous? Would you think that mobility industry companies making 300% profits
Of course you would. However, what if I told you that while this business potential
is substantiated by the most esteemed economists, many mobility industry companies are largely ignoring
the opportunity, would you then think that some mobility industry companies are acting foolishly?
Indeed, 300% profits are possible in the mobility industry in one specific area, and it's being underestimated
by many: Charitable Giving.
That's right, charitable giving creates huge economic returns for
all involved, ultimately resulting in empowering the community and literally fueling business growth,
thereby allowing more charitable giving – and so the cycle continues, where everyone wins. It's the “Economic
Cycle of Giving,” as I've coined it, and it should be used more by mobility industry companies to directly
spur economic growth, especially in these tough times.
See, Baruch Lev, of New York University's
Stern School of business, and his colleagues from the University of Texas Dallas School of Management
found that for every tax-deductible dollar that a company gives to charity, it can expect a sales return
of $2 to $3 dollars. But, how can giving away money actually generate greater revenue, by multi-folds
As economist, Gene Epstein, notes, “That corporate charity has the potential to boost a
company's bottom line makes perfect sense.” For example, if sports apparel maker, Under Armor, supports
various sports programs, what brand do you suppose those athletes will know and feel loyalty toward?
Of course, Under Armor. The athletes will ultimately buy it, wear it, and indirectly promote it. It's
a win-win situation, where the sports programs receive charitable funding, and Under Armor sees sales
increase due to reputation and brand recognition.
What's more, professor Lev's study compared
the return on charitable giving to that of traditional marketing, finding that charitable giving came
to an expense of only 0.1% of average sales revenue, whereas the surveyed 251 companies each spent over
50 times more on traditional advertising. Put simply, every $1 donated to charity has the same statistical
return, based on the study, as $50 spent on traditional marketing. That's a staggering cost savings on
“advertising” – simply by giving to others.
Companies like Sears have been leveraging this strategy
of charitable giving as a way to both help others, reduce advertising costs, and boost its bottom line.
Sears donates its Kenmore brand appliances to the television show, “Extreme Home Makeover,” which helps
needy families by renovating their homes. Throughout each episode, there's no shortage of Kenmore appliance
shots, from refrigerator badges to logo boxes, all on camera. The result is that by donating, say, $20,000
in appliances, Sears' Kenmore brand receives far more air time than a 30-second, $200,000 commercial.
Sears helps families, and gets a budgetary boost in the process. It's a quantifiable revenue return on
a charitable contribution – and a huge one, at that.
Of course, such charitable donations must
be done with some savvy to produce returns – that is, the more related the charity is to the donating
company's mission or products, the greater the return. Under Armor donating cash to a soup kitchen is
a good deed, but wouldn't have the same branding impact as donating to a triathlon benefiting the family
of an injured veteran. What's more, it simply makes sense that companies donate to the individuals and
organizations that their business model directly serves.
All of this bring us back to the mobility
industry, and a vast gap – and the importance of resolving it – in charitable giving. Make no mistake,
much of the mobility industry is in tough times, from consumer funding constraints to manufacturer profitability.
A seven-year barrage of various forms of funding cuts have left consumers with less mobility, and providers
and manufactures with less sales. The result is a health and social toll on consumers, and an economic
down turn in the industry. At this writing, a trade publication estimates that another 300 providers
are on the verge of closing, and it all trickles up to job losses at most manufacturers due to decreased
sales. Everyone in the flow of product seems to be hitting an economic bottle neck, from consumers to
providers to manufacturers.
And, that makes this the ideal time for mobility industry companies
to prioritize charitable giving in their business models. I know, it sounds counter-intuitive – that
is, when there's less, give more. But, let's go back to professor Lev's economics study on how charitable
giving pays out a staggering return on “investment” – and see how such proven strategies benefit all
in the mobility marketplace.
We know that disability-related consumers and organizations are heavily
in need these days, with funding at arguably the lowest levels in decades. Therefore, the direct need
is there. Likewise, with the funded consumer pool smaller, providers and manufacturers are individually
vying for market share, where new business must be attracted to compensate for lost business (in addition
to heeding cost efficiencies, as well). Charitable giving then becomes an ideal for all – that is, a
solution for consumers most in need, and a competitive advantage for individual providers and manufacturers.
Here's an example of how charitable giving proves itself as an economic boost for all in the mobility
industry delivery chain:
A rehab clinic that routinely specs wheelchairs has a client, without
insurance, in desperate need of a rehab wheelchair. A local provider and national manufacturer team up
and donate a custom-fitted wheelchair. What's the result?
Firstly, and most importantly, the client
received needed mobility, and can pursue education, employment, and community – ultimately creating a
socioeconomic ripple that will benefit all who he or she comes in contact with.
clinics rightfully prefer working with responsive, supportive vendors. So, if a provider and manufacturer
support the rehab clinic, of course the rehab clinic will send more business their way because they're
companies of integrity.
Lastly, the media loves such stories, so the rehab clinic, provider, and
manufacturer all get great exposure. Again, everyone wins – the rehab clinic may generate additional
community and financial support, and the provider and manufacturer experience increased brand recognition
and customer base growth.
To summarize this scenario according to economists, donating one wheelchair
will result in the sale of several. And, on an even larger scale, when the mobility industry donates
to mobility advocacy groups – as with those striving to sustain mobility funding via lobbying Capitol
Hill – the return is exponential, where preserving funding ensures access to mobility products for consumers,
and thereby generates industry revenue.
Now, a cynic may say, Isn't using charitable giving as
a way to increase business revenue morally wrong?
Not at all – and, in fact, it's morally the
right approach on every level. The first interest is, of course, the individual or organization in need.
However, if in meeting that charitable need, a company increases its revenue, then it can continue the
“Economic Cycle of Giving,” helping more individuals and organizations in need. That is, if by giving,
you can increase revenue, you then have even more revenue to apply toward charity. Charitable contributions
should be a fixed percentage of a company's annual revenue, built into the business model, so as revenue
increases, so do charitable contributions. I can't say it enough: Everyone wins, and everyone grows as
the “Economic Cycle of Giving” repeats itself.
It is vital to note that charity can only be a
part of a business' model (otherwise it would be a non-profit). And, in fact, in the mobility industry
– or, more aptly, within the disability-related community – charitable need is so great that there's
not enough revenue to address it. Therefore, companies can – and should – only allocate a portion of
annual revenue toward charitable contributions (there is a point of diminishing returns, where if a company
gave too much, it would adversely effect its bottom line, decreasing not just the ability for future
charitable contributions, but potentially devastating the company, where everyone would lose).
with all points considered, unquestionably a key component to rebounding the mobility market – from consumers'
needs to provider and manufacturer revenue – is found within a dedication toward charitable giving. We
know the direct impact that charitable contributions have on individuals and organizations. And, now
we know the direct impact that charitable contributions have on those companies that give – a proven
200% to 300% return on the contribution, according to leading economists. With those facts, it's easily
seen how charitable contributions by companies within the mobility industry can help the recovery from
its current downturn: Supporting individuals and related organizations fosters support and revenue for
the industry itself, and the more the industry rebounds, the greater charitable contributions it can
make – and so the “Economic Cycle of Giving” flourishes, elevating all.
As Epstein put it, “[Such]
findings might spur investors, fund managers and corporate CEOs to ask not whether a company is doing
too much in the way of philanthropy, but whether it is doing enough.”
Published 6/2012, Copyright 2012, WheelchairJunkie.com