Michael: Welcome back to the HaBO Village. I'm Michael Redman.
Kathryn: And I'm Kathryn Redman.
Michael: And today we're going to talk about marketing in a unique way. We're going to talk about philanthropic marketing, the values of philanthropy. Easy for me to say.
Kathryn: It's a hard word to say. If we add strategic in front of it, it gets even worse.
Michael: And so we just hope that for the next few minutes, this will be helpful to you as we talk about what it means to be philanthropic, how that helps your marketing, and the pitfalls to this and the incredible values to it. Welcome to HaBO Village.
Kathryn: The first thing we want to say about philanthropic marketing is that just as a philosophy as a company, we very much believe that if you're going to have a Passion and Provision Company, part of that is that you are going to be giving back to your community in some way. We believe we were designed to be in community. We're designed to help each other and to contribute. Whatever the causes are that you are drawn to, we would anticipate that for you to be truly passion and provision, you would be giving back in some way. We're going to talk a little bit through what that could look like.
Michael: Yeah. The idea that leadership and development and the development of your company come with a progression. It's probably helpful to just articulate a little bit more of the grid real quick.
Michael: You start a company or you go into business to gain financial freedom. You want to build something, and most people start a company to build something and to have financial freedom. What you find out is that the first challenge you run into is that financial freedom is not easy when you start a company. Then you move to the next level and you are realizing that you have financial freedom to some extent, but what you don't have is time freedom.
Michael: The first two steps that you have to get through in running an organization is, where is my time ... Do I have enough money to do what I need to do just to make sure that my family's taken care of, we're not worried about that, hit those minimum things of the lifestyle you want to have? But then time. So many people go, "I started a company or I run a company and I'm a slave to it." It didn't give you that freedom.
Michael: If you think about it as a triangle, I saw this ... Ryan Levesque showed me this triangle once, and it was pretty cool. It was in the beginning was an entrepreneur, and then you move to the second level where you had more freedom and control in your life. You move to a third level where after you do that, what's the next thing? You want to have impact. Fewer people, if you look at this triangle, fewer people make it up the triangle and make it up the ladder. Then when you hit impact, then it's like, "Okay. Impact happens today. I did it today, but is my impact going to make it through tomorrow? Is it going to matter tomorrow or the next day or the week or a year?" What you start to do is move into an area of legacy.
Kathryn: I think while it's not completely related, the other thing that I think is true is that people tend to think or have an illusion that you can't be philanthropic until you are big, until you've grown, until you are of a certain size as a company. Philanthropy gets tied to big dollars and big giving back and building huge things, as opposed to when you're a smaller company and you haven't yet reached that you can give millions of dollars back, are you still thinking through and inclined to be philanthropic in the way that you build your company?
Michael: Yeah. Also, I'm thinking about the folks that are listening to the podcast that are leaders in organizations. You're in senior leadership, you have a voice and influence over the way the budgets spent, but you don't have total control. You don't have total control over the way the budget's spent at the company. You also don't have total control over your life. The idea that you're growing in senior leadership in an organization of 10, 20, 50, 100 people or more, you have the ability to influence a lot of this stuff, but you're also not growing in an entrepreneurial fashion. You're in the leadership role.
Michael: What we're saying when we're talking about all this is thinking about where philanthropy goes. That idea that we hold to is we have a company, we have influence. At any level we have influence at all, our goal is to use that influence to help improve the quality of life of those around us, those that we're leading, that are following us, those around that aren't even involved in our community. Maybe it's the homeless. Maybe it's widows. Maybe it's orphans, less fortunate, or just other people. How can you use the resources you have and the influence you have and the favor you have to better the environment around you and the community around you? We think that's a normal thing.
Michael: Philanthropy, for us, is a very positive thing. We hang out with a lot of people who are philanthropic at some level. Some of them, literally folks, they are philanthropic at $400 or $500 a year because that's what their budget can afford, and then others are philanthropic at tens of thousands, hundreds of thousands of dollars a year because they've been able to grow their assets and their freedom to that level. They start giving away that kind of money because they can, because what they've found is they can make an impact.
Michael: Now that's just a background to what we're talking about here. We have a mindset of that, and we believe that when you're in business, you have those responsibilities. The next question is, is that a random thing? Should it be random? Should philanthropy be random? Should philanthropy just be kept in a closet and you don't tell anybody about it? What are those rules of philanthropy?
Michael: What happened over time for us is we started realizing ... I really started coming to the conclusion that being philanthropic actually has been good for our business. I realized that when I gave to causes, we gave to causes, that we believed in that potentially had ... those people or communities had influence. There were other people who could use our services that were involved in those organizations. Those organizations came to us. When we gave money to organizations that were small and tiny that had no influence, no control, very few wealthy people or business owners knew about those nonprofits, we didn't see as much from that.
Michael: Now there is some tricky stuff here. You may have some conflicting emotions right now as you're listening to this. You may be saying to the radio or to whatever you're listening to going, "Wait, wait, wait a minute. Now you're pissing me off, Redmans. Now you're starting to tread on-
Kathryn: It's only him.
Michael: ... this dangerous ground." We want to talk about this for a few minutes because really what it boils down to is we want to encourage first strategic philanthropy. Then we want you to realize that if you don't give or you have margins of money that you're going to spend on marketing and you don't know where to go, I would suggest you always take a portion of your marketing budget and you just give it away. There's a sewing and reaping type of model there that I just think is super powerful. It's not being this selfish, "I just give money so I can get." Have a budget where you just give money away and you don't care. Have a budget, also a thought or a mindset, that part of your marketing money is sewed into other people and other things in a philanthropic way and it comes back.
Kathryn: Part of the reason it matters to think strategically is that any organization that comes to you asking for money, and if you have established any kind of relationship, you have a company, you probably have already ... You're starting to get phone calls. You've gotten phone calls. You're trying to field the firefighters association and the Red Cross and whoever else is calling that day asking for money, but when you're strategic and you're able to think through, "Okay. Is this cause or group someone that I care about?", one of the things that tends to happen in the relationship is the folks that are coming to you and approaching you for money are like, "This is going to be a great marketing opportunity for you. We're going to put your logo on stuff. We're going to put your logo on a t-shirt, and you're going to get ... You're going to be on the TV when we do our spots", and blah di blah di blah.
Michael: It's just a bunch of sales hype sometimes just to try and get us to donate $100.
Kathryn: Yeah. Part of what we realize is that if we're giving to an organization because the final purpose is that we believe that it's going to have that kind of a return on investment because we have our logo on a t-shirt, then that's going to be really disappointing because most of the time, those kinds of tactics and techniques don't really result in anyone calling you as a direct client. There's no direct-
Michael: There's no direct ROI that we can ever see.
Kathryn: No. No direct.
Michael: And yet, we have clients that have come to us and go, "Why did you hire us?" "Well, we thought about you, so that means top of mind stuff was working. We needed something. We haven't needed it ever." We just had somebody walk in the office this last week. I've known her for 10 years, and she's in Rotary with us. I had no idea that her organization would ever need our help or use it. If they did need it, they wouldn't call us. She's like, "We're at the point where we need help. It was obvious that we would call you guys," partly because of relationship. We've demonstrated our competence. We've stuck it out and we've endured in the community, and so we're long lasting. We're not just a flash in the pan, but we also have a reputation of being good people, partly because we give back to the community.
Michael: As a friend of ours would say, "You're a douchebag if you make a lot of money and you don't ever give back to your community."
Kathryn: Douchebag. Wow. Really?
Kathryn: There it is.
Michael: He does. He says it all the time. Ryan, Ryan uses that term all the time. I know it's a little vulgar, and forgive me if I offended anybody, but it's that strong. It's like you're ... I could be stronger, but-
Michael: ... it's a PG show.
Michael: Maybe not completely family-friendly, but that's that whole idea of you want to give back and what does that look like. Strategic planning. A friend of ours who's been in nonprofits for years in leadership and coaching, Laura Cootsona, she's done consulting around the country for nonprofit organizations. Quite frankly, she started educating us a lot on strategic philanthropy.
Kathryn: Mm-hmm (affirmative).
Michael: Phenomenal because it's like, okay, the first thing when you're being strategic is, how are you going to leverage your money when you're giving it? That part that you're giving away, how are you going to get the most positive for the community? Where is it going to be ... Because you're a steward of this cash. The second is also at least thinking about your marketing budget. If you give a portion of your marketing budget into philanthropy too, then all of a sudden, you start going, "Okay. Those dollars that are separate from my normal giving, those dollars I'm going to spend on organizations that can use our money but we could also get a benefit from."
Michael: I don't think there's anything wrong morally, ethically. I think it's smart if you're being incredibly wise, as long as you're also giving a portion of your money to just causes that are never going to ... You never count on anything back from them. You have to give selflessly, but in your marketing budget, think about this whole idea about philanthropic marketing.
Michael: Let's talk about a couple of examples. What are types of ways this can work, Kathryn?
Kathryn: For us, there's several different ways that we have found to contribute strategically to different organizations. One is just straight money. If they are somebody who's ... Especially if they're outside of our community and they're not somewhere we can easily access, but we really believe in what they're doing, then it's just straight cash.
Kathryn: Because we're a marketing company, we also have the ability to do some other things. One of the things that we do is we do some pro bono work for a couple of specific nonprofits in our town, and they give us the t-shirt thing and a couple of pieces, but we're doing way more than that sort of trade concept can cover because we believe in them. It's kind of a discounted rate maybe is another way of putting it. Maybe it's not straight out free, but a discounted rate to develop television or radio commercials or print ads or whatever for specific organizations.
Kathryn: Others, we just do straight pro bono because there's no benefit to us in it. We're just giving to it because we believe in it. It's been really fun in our world because we have several of those organizations that we've been doing this for years. We sponsor Run for Food, which is a local run that happens every Thanksgiving morning here in Chico. I think the last draw was like 8,000 people. It's really big. It's really fun.
Michael: Really fun because we were there in the beginning when it was-
Kathryn: When it was small.
Michael: ... the first year and they were like, "Is anybody going to come?"
Kathryn: Yeah. All of the proceeds go towards food for the homeless. Not the shelter, but the-
Michael: The soup kitchen basically in our city.
Kathryn: The soup kitchen in town, the Jesus Center. It's a really cool program. We've been creating the marketing aspects for them for close to 10 years. It's a really fun partnership where we completely believe in what they're doing, we completely support the cause, and we're able to use the talents and skills that we have inherently to help them be more successful. That's just a fun partnership, so that's one of the things that we do.
Kathryn: Then there's other nonprofits in town that have come to us for work. We provide a discounted rate, again, because we know that as nonprofits, they're maybe not quite making enough money to pay our standard rates, but they need the help. We'll give a discounted rate to those folks.
Michael: What do you think the biggest challenge is? As we're talking about this, I know we were talking earlier before we started the show today, what are the biggest challenges that people are going to have emotionally with this concept of philanthropic marketing?
Kathryn: I think that probably one of the biggest is, is it something that people are going to look at me like, "Well, you're only doing this to get your name out there. You don't really care about our community. You just want the marketing return"?
Michael: What happens for us, what have we seen, when, or you without me, what have you seen in places where that is only the case, that's the people's reputation?
Kathryn: There are people who have a reputation for, "I will support that, but only if I can have my name on it, only if I can own it." They build a building and they want the building named after them. There can be a lot of negativity that people have around that, like, "Okay. That's great that you're willing to give, but it has to be all about you?"
Michael: Is it always bad to have the name though?
Kathryn: No. We were having this conversation like, "Okay. Maybe that's the reputation and some of the challenge that comes back, but my goodness, if I have the capacity to build a multi-million dollar hospital wing, I think it would be okay to put your name on that and have that be part of the legacy of your family and your company and your history." I don't think it's necessarily a bad thing. I just think that people can perceive it negatively, and that's where some of the blow back can come.
Michael: I think there's a mindset in a lot of people's minds that true giving, true philanthropy, should be private, should be kept ... And that's a philosophy, and there are some good reasons for that philosophy, I think, but it's not ... I don't think it's a universal philosophy that it always has to be in private and kept away and the only value to giving is when it's hidden.
Michael: I think that's silly because there's plenty of people who ... Look at it this way. When you have that mindset, that's something you wrestle with. I totally get it. I understand. There's scriptures in the Bible that talk about that. There's even some texts and stuff in literature throughout history that talks about that perspective. But if you're standing in a room and, look, you're just trying to raise some money for a good cause, and somebody in your community, you're at church or somewhere else, and somebody's car got stolen or their house burned and you're trying to take care of them and you just go, "Hey. Could everybody just ... Anybody who wants to give money, throw the hat out and we'll pass the hat around", everybody can see that you're putting money in the hat. Is there anything wrong with that?
Michael: No because all of a sudden what you're doing is you're opening up your wallet and you're saying, "I'm going to be helpful." That's not secretive. You're also not doing it ... Somebody might say you're not doing that to gain favor, but you're not doing it to gain favor, but the fact is you do gain favor. It's a weird dichotomy when you selflessly give and you give because of the cause and you give because of the people. It's not less giving if you realize that that gives you status and favor in communities that value giving and contribution and supporting one another.
Kathryn: I love having a reputation for being generous.
Kathryn: Who doesn't want to have a reputation for being generous? You can't always just be generous and ... You're not going to get recognized for generosity if everything is-
Kathryn: ... private and anonymous, right?
Michael: Here's the other part about the whole recognition issue. Sometimes being recognized you just got to accept it. You take it humbly and you don't go, "Look at me, look at me, look at me." That'll get you in a lot of trouble. If you don't let it be seen out front, you don't teach other people. One of the things Kathryn and I have realized a very long time ago is that if we don't demonstrate our generosity, our daughter would never have learned to be generous.
Kathryn: We don't model it.
Michael: Our staff wouldn't see the value and importance of it. Then when it comes along, if we're not there, they would see ... If we'd hidden it all the time, they'd go, "Well, we don't do that." We might say, "Oh my gosh. Yes, we do." We would want them to integrate and act and behave the way we would behave, and we have to do those kinds of things.
Kathryn: The more that you gain a reputation in your community, the more that you are known as your company grows, you're also saying, "This is a cause that's valuable", and you're throwing your weight behind that cause, which also helps that cause. There's a name ... If you have name recognition as a company, and you throw your weight behind a particular cause, and they make that known, that actually benefits them, assuming your reputation is solid and good. That's also a benefit.
Michael: One of the examples for us is Kathryn mentioned earlier we work with the soup kitchen here in town called the Jesus Center. We do that big fundraiser every year for Run for Food. How many years has that been going again?
Kathryn: We just did year 11.
Michael: Year 11. We just show up every year. We participate the years we're in town because it's right after, it's on Thanksgiving day.
Kathryn: Yeah. We don't really run for food. We stroll for food with coffee.
Michael: We get a cup of coffee and just-
Kathryn: But, you know.
Michael: We get to see people we haven't seen in years. When you imagine 8,000 people are walking a 3.5 mile loop together-
Kathryn: It's super fun.
Michael: The other thing that happens is we show up and do commercials for them. We help their media buy. We help organize all of that kind of stuff because we're good at it and it's easy to do. You know what? We're considered part of the team, and we consider them part of our team, one of our teams of giving and making a difference in the community and making sure that we are effectively helping different areas of need in our city. We're always looking at things like that because we look at, "How do we make a difference in our own personal community, in our city, in our region, in our country, and internationally?" That's kind of Kathryn and I's thing. We look at those. We believe those core principles in our lives.
Michael: I want to land us here because I think we've talked about this well. I think everybody, hopefully everybody's, got an idea of what's going on. If you don't, we'd really like it if you guys would come to the website and leave questions on the show notes page for this on our blog at halfabubbleout.com and dialogue with us. Tell us stories. I want to hear how you interact with philanthropy.
Michael: How has giving, whether you realized it or not or whether you intended it or not, how has it impacted your business and your organization? Do you do business, even if you don't think about it that way, do you do business with the community of people, at least some of them that you give money to, the organizations that you give money to? Do any of those people/organizations that you give money to, do they refer you out ever to their other board members or somebody else when they have a need? Because those are the things that happened.
Kathryn: Yeah. We've had interesting things where a board member of an organization that we give to will step out of that role as board member and back into their company, their community, and they will hire us for their company. The only reason they know about us is because of our involvement with a nonprofit.
Michael: Yeah. The woman that came in this last week, the main reason we interact with her is because we're involved in Rotary, which again is another nonprofit. It's a group of people, business people and business leaders, who are, if you don't know about Rotary, for the last 100 years, started in America but is now global, who just come together to say, "Let's build relationship and let's see what we can do for our community." Service above self is the motto. It's a great organization. You meet lots of neat people. Through that, business never came quickly, but over time, just giving back to the community and people say, "I want to work with people that I respect." That's part of it.
Michael: I want to kind of land us here and see what ... Anything else you want to add, Kathryn?
Kathryn: At the risk of landing-
Michael: Too early?
Kathryn: At the risk of landing for you, I think the biggest thing if you're asking the question, "Can philanthropy be an effective marketing tool? Can philanthropy and the ways that I give and who I choose to give to and how I choose to talk about that be effective for marketing?", we think that the answer is yes, it can be. It's typically a longer term return on investment, but the reality is it can be incredibly effective for building your reputation in a community. The bottom line for us is that it has to be done with sincerity. It has to be done with a sense that if you got nothing back, you would still want to support, you would still want to give back to your community, even if there was no immediate, obvious return for you in that place.
Michael: Yeah. As we've been sitting here thinking about it, I've been thinking a little bit more about how I think it structures out. I think you can be greedy and selfless and still get benefit out of philanthropy.
Kathryn: That's true. I just don't want you to be.
Michael: No, but here's how I've been ... As we've been sitting here talking, it's kind of unfolded a little bit more for me, and this is the way I think I would structure it fairly quickly for us. When you give, it's a positive thing no matter what. The fact is there is a need being met. Whether you give to a soup kitchen or you give to the hospital, if you give to a needy organization that does good in your community, no matter what the reasoning at the moment, the money is going to a good cause.
Michael: Right off the bat, that's a good thing. That itself has value immensely because you don't have to give. You give for some reason. Quite frankly, if you're giving just to try and gain favor to a nonprofit, it's not the most efficient way to gain favor and reputation in a community. It's way better to be a little bit more manipulative about that.
Michael: But when you get into philanthropy and thinking about this, you go, "Okay. I can give, and I'm going to get some favor." There are certain things, like sincerity, that will increase the potential value of it for you if you're going to think about it at all as a marketing tactic. One of those, the core [inaudible 00:25:05] is the more sincere you are, the more effective it's going to be. It's not that it will be effective and if you're not sincere it won't be effective, but I would think thinking about it that way.
Michael: Here's the other thing I would encourage you to do. Said it before, but I want to say it again more concisely. I would recommend that a percentage of your revenue on your books is always to giving away money. There is a certain amount, whether you give away cash in kind, pro bono, or discounts. You are thinking about giving back to needy causes, from the Girl Scouts and Boy Scouts in your community to something that is disaster relief. Just think through that, and think long term, like, "We're going to build a relationship with this organization and support a couple of organizations." It's good for you financially. It's good for your relationship with customers. It's good for you to tell your employees this. It's good to have a reputation that what you do is part of what you give. You get, you give back. It's just a common practice.
Michael: Then I would recommend that you take a percentage of your marketing budget ... Tricky part, you actually have to have a marketing budget. Once you've got a marketing budget ... If you don't already have a marketing budget, start your marketing budget, and then allocate a small percentage of that budget to philanthropy. Don't call it giving. Don't call it donations because you're going to give the philanthropy donations part just because that causes a good cause and it means it could get nothing back for you. You don't evaluate it at all that way.
Michael: Your marketing budget, then you look around and you go, "If I were going to spend some of my marketing dollars, where would be the most strategic place in this city that I could give where I believe in the program and I believe in the people?" Make sure that it's a subset of that because I think you're going to be in a lot of trouble if you start giving to organizations that could potentially bring you customers, but it doesn't resonate with your core values or your company's core values. What do you think about that?
Kathryn: I think that's absolutely right.
Michael: I think if it boils all down, there are some very quick statistics or tactics that you can apply to, "How do I do this?", and start thinking about this. I would encourage you to think about this, talk to your leadership team in your organization. What does that look like? Even if you are a company who's a giving company, how can you strengthen this up and be more strategic about how you use your donation, philanthropic money straight, and use it to leverage more good in your community strategically? Then how can you leverage the idea of philanthropic marketing out of your marketing budget?
Kathryn: Seems good.
Michael: Anything else we need to add?
Kathryn: It just popped into my mind that one of the things that I've seen companies do that's an interesting approach is that they pick, or they give, their employees an hour a month or two hours a month where they can go and volunteer at the nonprofit of their choice.
Kathryn: I think that's kind of a cool way to go too, just a way to say to your employees, "We value this community." You're giving, obviously, as the owner because you're still paying them for those two hours that they're volunteering, but it's kind of a cool way to go, especially if you're struggling with maybe you don't have any cash to give. Maybe whatever, but there are causes that your employees are passionate about and you can help them gain that sense of purpose and meaning in the giving place by paying them for going to volunteer where they want to.
Kathryn: Kind of a cool idea.
Michael: I think there's room for a whole other show on this and how to use philanthropy in your company and how to get your employees involved because I think you're right. We have several stories on that. What does it look like and the strategies? And there's some pitfalls that we've seen that we could probably talk about.
Michael: That is it on philanthropic marketing and strategic plans for today. Thank you very much for joining us at HaBO Village Podcast. I'm Michael Redman.
Kathryn: I'm Kathryn Redman.
Michael: If you ever need any help, come check us out at halfabubbleout.com. We'd be glad to talk with you. Bye bye.