DiversityInc Top 50 Companies More Philanthropic

A recent academic study makes the business case for diversity in a new way: It links having a diverse workforce to increased corporate philanthropy.

By Barbara Frankel

DiversityInc Top 50 companies, which have significantly more racial and ethnic diversity in their management and workforces and more gender diversity in their management than most companies, average 1.46 percent of their gross revenue going to charitable contributions. By contrast, Giving USA notes that the average for corporate America is 0.09 percent of pretax profits going to charities.

DiversityInc's Web Seminar on Multicultural Philanthropy, featuring Prudential Financial and Ingersoll Rand, demonstrates best practices in charitable giving to underrepresented communities and the business benefits of these strong relationships.

According to a Reputation Institute study, positive perception of philanthropy and corporate-citizenship initiatives is directly correlated with overall business value. A 10 percent improvement in perceived corporate citizenship can translate to an 11 percent improvement in overall reputation and up to a 14 percent improvement in a company's market value.

Academic Support

A recent academic study makes the business case for diversity in a new way: It links having a diverse workforce to increased corporate philanthropy.

The research by Lisa M. Leslie, Mark Snyder and Theresa M. Glomb of the University of Minnesota, entitled "Who Gives? Multilevel Effects of Gender and Ethnicity on Workplace Charitable Giving," found that organizations that hire more women have higher charitable giving by both women and men. And while Blacks and Latinos tend to donate less per person than whites, workplaces with more racial/ethnic diversity have higher donation levels and increased corporate philanthropy. In more racially diverse workplaces, higher representation of Black employees is the key to increased philanthropy.

Specifically, when there is more racial/ethnic diversity in the workplace, especially more Blacks, charitable giving goes up. The study found specifically that an organization (business unit) that is 35 percent nonwhite had 19 percent more charitable giving than an organization that is 11 percent nonwhite.

The researchers studied 16,429 people at the University of Minnesota who were employees of academic departments or university functions in 487 work units. Fifty-four percent of the participants were women and 84 percent were white. The racial categories were: Asian, Black, white, Hispanic, Native American and nonresident "alien" for noncitizens without green cards. The average age was 45.76 years old and the average salary was $58,812. The researchers checked the amount each employee donated during the organization's annual month-long charitable-giving campaign.

The researchers had two fundamental theories—one around gender and the other around race/ethnicity. They hypothesized that women would donate more than men and that when there were more women in the workplace, donations would rise. Coworker interactions and social role-modeling (women being more nurturing and more concerned with helping those in need) were the prevalent factors.

For race and ethnicity, the findings were more complex. The researchers had hypothesized that because charitable-giving studies find Blacks and Latinos (who have lower average incomes than whites) give less to philanthropy, their increased presence in the workforce would have a negative effect on charitable giving. The study, however, found that while Blacks and Latinos individually give less in the workplace, organizations with higher percentages of nonwhites, especially Blacks, gave more overall to charities.

"The results suggest that the consequences of workplace diversity extend beyond organizational boundaries and that diversity in organizations can impact the broader society," the researchers wrote. "From a practical standpoint, our findings highlight synergies between two popular workplace initiatives—efforts to increase diversity and efforts to build a reputation for corporate social responsibility. We found that increased representation of women has positive consequences for workplace charity at both the individual and work-unit levels. Alternatively, the consequences of increased minority representation are less clear; minorities gave less than whites at the individual level, but work-unit percent minority was positively related to workplace giving."

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