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Corporate holiday charity? All part of the PR plan

December 30, 2013: 2:01 PM ET

'Tis the season, for companies to wash a year's worth of bad press by giving donations to charity. A look at the thinking behind corporate donations.

By Elizabeth G. Olson

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FORTUNE -- For companies, the holiday season offers an irresistible opportunity to soften the Scrooge-like aura that has enveloped them year-round.

Whether it's providing basics like food and clothing, helping veterans or active soldiers, or efforts like building homes for the disabled, company campaigns centered over the end-of-the-year holidays are ubiquitous. So much so that, for the first time, there is a Pinterest page that provides a panoramic glance at such charitable efforts, which include a growing number of social media and online campaigns to channel money and goods to the needy.

Home Depot's foundation, for example, is donating $1 to Operation Homefront -- which, among other things, retrofits homes for injured soldiers -- for each Home Depot (HD) customer who tweets with a #teamdepot hashtag before Jan. 1. The foundation is aiming to give $100,000 by the end of the year.

Hanes is partnering with the Salvation Army for its fourth annual virtual sock drive, which donates socks for each click on its Facebook page's "donate now" button. It plans to donate 250,000 pairs of socks, which are distributed to the homeless. Kraft Foods (KRFT) and other companies have programs to donate meals to food banks.

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Other companies have more traditional formulas. Subaru, for example, donates $250 to charity when a buyer purchases or leases a new car. It is the brand's sixth annual campaign, and it expects to wind up donating $35 million to groups such as Meals on Wheels, Teach for America, and the National Park Foundation. American Express (AXP) donates $1 to No Kid Hungry -- up to $1 million -- each time a registered card is used for dining out. DHL Express, for the tenth year, is shipping Christmas trees to soldiers on active duty.

Good causes aside, most companies do not donate out of sentiment. Increasingly, corporations hire professional consultants to help them make sure any charitable efforts line up with the company's business objectives. Food banks, for example, further Kraft's core food identity in a way that giving to other causes might not.

Most companies, according to a "Giving Beyond Borders" study released in October by the Lilly Family School of Philanthropy at Indiana University, said supporting their mission and values is the No. 1 goal for their giving. Following that, in order, are: giving back to their community, building and enhancing the company's reputation, helping to address social problems, and recruiting, retaining, and motivating employees.

"We see a real uptick in companies that want to align their business and philanthropic goals, and to engage their employees in meaningful ways," says Jamie Jaffee, managing partner for the Boston-based consulting firm The Philanthropic Initiative, which has worked with corporations like Boston Scientific, Liberty Mutual, and J. Jill apparel on company giving strategies.

"The holidays are a great time for companies to harness their giving spirit and then build on that momentum for the rest of the year."

Sometimes, even carefully planned giving can run into speed bumps, something Coca-Cola (KO) encountered during its 2012 campaign to support its Arctic Home commitment to preserve polar bears. The company changed the color of its iconic red cans to white and pledged to donate when customers used their cell phones to scan a product. But the change in can color was jettisoned after a few weeks when customers complained that the packaging was confusing.

The drinks giant committed to support the polar bear campaign with $2 million over five years, and this season rolled out a campaign on its two-liter soda bottles and certain drink packs, according to Lauren Thompson, a company spokesperson. So far, the company has raised $3 million in donations for polar bears, and it plans to continue the effort until Feb. 15, she says.

Despite efforts to strategically target charitable funds, many of the country's Fortune 500 companies are actually giving less to such causes, a trend that has continued for several years. An annual survey called Giving USA, by the Chronicle of Philanthropy, found that most companies planned only modest increases in cash gifts to charities this year.

In 2012, donations were up, to $5.3 billion, for the 106 companies that responded to the Giving USA survey, which was released last summer, but only 16% said they would give more in 2013 even though the stock market is soaring and the economy is recovering. The bulk of companies, more than 70%, planned to give about the same, and 6% said they would donate lesser sums.

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Instead of cash, companies are increasingly donating products. Last year, pharmaceutical giant Pfizer (PFE) was the top company for the fourth year in a row in giving, which reached $3.1 billion when cash and goods were combined.

Products that tout a company's charitable efforts serve as a visible reminder to consumers, the majority of which remain loyal to a brand that supports a cause, according to marketing studies. Almost 80% of consumers are likely to switch to a product associated with a good cause, according to a 2008 Edelman Good Purpose study.

When cash, goods, and services are combined, overall company giving grew somewhat in 2013 with many companies favoring branded products in front of consumers based on the belief that it translates into broader customer awareness. But more companies are also taking into consideration how they can enable their employees to donate more of their time to charities of their choice.

"This helps companies engage their employees in meaningful ways and ways they choose," says Jaffee.

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