Give and take: the joys of generosity-based marketing

Wholly Bagels owner and founder Charlie Daily decided on his marketing strategy out of necessity: he had no budget for mainstream advertising, so, instead, he decided to use giving and generosity as his major marketing tool. And so far it’s proven to be a very effective approach.

Daily says Wholly Bagels, which began life as one Wellington bagel store in 1998 and is now a nationwide franchise employing hundreds of people, has always abided by the what goes around comes around philosophy.

He started giving from day one and tries to choose causes and organisations that match his company’s brand values, primarily being family oriented and healthy, like junior cricket, netball,  soccer and rugby, as well as female cycling, youth groups, churches and national organisations such as Plunket. It also gives away thousands of dollars worth of product and catering every year to junior clubs and groups.

“Probably three to four percent of our turnover goes to the community, which is a fair amount in the hospitality trade, as it doesn’t have high margins,” Daily says.

For example, Wholly Bagels funds the printing of the local Plunket newsletter, which usually includes a coffee voucher, which has had the effect of enticing coffee morning mums to Wholly Bagels in Thorndon.

As a result of his philanthropic dabblings thus far, Daily knows the giving market well: more female New Zealanders give ad hoc donations than male New Zealanders, which makes them a greater target for communication around planned giving. So it makes sense for the company to choose causes that connect directly with mothers.

“About 70 percent of our marketing budget goes to community giving. I sponsor the kids’ activities in the definite hope that they’ll get Mum or Dad into a store to buy bagels,” he says. “Giving certainly makes us feel good but there is also a strong business reason behind contributing to every group we do. Any company that denies that business case is kidding themselves.”

This generosity also results in a tax credit. As of April 2008, Wholly Bagels has been able to claim a deduction for all the donations it makes to the range of organisations, which means that for every dollar given, it can deduct that sum from its taxable income.

Research also shows that people on low incomes still often donate. The How New Zealanders give: Income & ethnicty supplement, produced by the Office for the Community Voluntary Sector from data collected in 2007, found that almost one quarter of people earning $10,000 or less per annum made planned, committed donations. This compares well to the overall committed donation rate of 33.6 percent for all people 10 years and over in 2007.

And there’s now a new, easier and cheaper way to to support the many organisations that rely on public support to maintain a huge range of services – from ambulances to care of the elderly – after Payroll Giving became available in New Zealand in January, opening the door to widespread benefits for community organisations, employers and the generous Kiwi public.

Employees in participating companies simply nominate a charity or organisation, as long as it has IRD approved status, to donate to from their pay. The employee receives an immediate 33.33 per cent tax rebate, so if someone gives $15, it only costs them $10.01, but the organisation receives the full $15.

Switching to payroll giving will enable many employees to get tax rebates they might not otherwise claim, making donations more affordable and potentially encouraging increased contributions to vital causes.

Daily says he’s interested in the new payroll scheme but is aware that many of his staff members are on relatively low incomes so it might be a difficult option for them.

“I’ll certainly look into it as a giving option but as a company, we’ll continue to give on the scale we do. It’s hard to formally measure how well giving works as a marketing vehicle but I constantly have people thanking us and recognising our community involvement. It might be intangible but intangibles count [Nielsen data shows that 84 percent of New Zealanders think more highly of companies that support charities and 57 percent would buy from a company that supports a worthy cause even if they are slightly more expensive].”

Revenue Minister Peter Dunne said he was delighted with the positive reception for the new payroll giving scheme, which is voluntary and is “about social conscience at the levels of both employees and employers”, from businesses.

“Kiwis are generous by nature, and Kiwi employers, both in the private and state sectors, now have a way to play their part in supporting their workers’ generosity. . . It really is a win-win situation.”

For more information on payroll giving and other giving tax changes, see www.ird.govt.nz or www.ocvs.govt.nz.

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