Cash or Kind: What’s your take?

A news story caught our attention. The headline screamed Coke Suspends Ad Campaign For Best Reason You Could Imagine. The mystery was soon revealed; Coca Cola is suspending its brand advertising in the Philippines so that it can donate its entire advertising budget to Haiyan typhoon relief efforts. Other companies are donating too – Walmart, BNY Mellon, Isuzu, Nidec, Itochu, Omron Singtel etc.

Then, there are several others that are contributing to the cause in different ways:-

– AT&T, Verizon are waiving call charges to Philippines

– United Airlines offering bonus miles to passengers who donate to American Red cross and Operations USA is rewarding customers with a gift of up to 1,000 bonus award miles

– The NHS will aid returning nurses to Philippines

– IBM is offering technology and manpower support

A comprehensive look at how companies react to natural disasters reveals four key approaches:

Donation of funds: The most common type of philanthropic engagement to disaster relief is to donate money to international organizations, civil society organizations or directly to governments.

Volunteering and delegation: Companies take part in volunteering programs in which they exempt their employees from work so that they can participate in relief efforts

Application of key expertise: Companies bring in their core expertise to disaster relief efforts. This is done by offering knowledge, material resources, or both.

Using marketing budgets to drive consumer and employee behaviour: has recently emerged as an interesting way to respond to natural disasters. Not only does it spread the message that the brand is supporting the disaster survivors it also focuses attention on changing customer and employee behaviour.

As is evident from the table below the most common way to contribute towards natural disasters is to donate. In order to facilitate immediate relief and life saving activities the use of immediate one time donation remains the most common approach for companies. Cash is also highly valued by humanitarian organisations because of its speed, flexibility and usefulness in supporting recovery. Companies are gradually moving towards skill-based volunteering. This is however slow and relatively low key.

Several dimensions that need to addressed:-

– Giving cash is easy and helps in immediate humanitarian assistance. Yet areas struck by natural disasters need more long term and strategic support.

– Consistency of support is essential. Once a new disaster area is identified the focus on old disaster areas shifts.

– Active partnerships among companies (private-private partnership) can ensure that significant support and a combination of capabilities are available for disaster relief.

– Public private partnerships too can be a significant means of supporting disaster struck areas.

Another interesting observation that comes from the table is the fact that both calamities in India have seen less than enthusiastic response from corporates. Support has come in myriad ways – some cash donations and some volunteering and key skill support but is that enough? Why this reticence? Does contribution from local charities make up the shortfall? Or, is it a belief that cash contributions will be mis-spent like it happens with many government and NGO-led projects?

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Article coauthored with Utkarsh Majmudar and originally published in Economic Times.

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