More companies find charity pays dividends: Investors prefer companies that have community links, reports Roger Trapp

THERE can be few starker illustrations of the gap in understanding between company managers and their shareholders than the findings of a report on corporate attitudes to charities.

Only 7 per cent of businesses believe that shareholders are more likely to invest in companies that work with charities, according to the survey published last week by the National Children's Home. But 78 per cent of shareholders said they would rather buy shares in such a company. 'Clearly,' says the report, 'companies are underestimating their shareholders' support for charity links.'

The picture is not all gloom. More than three-quarters of businesses sampled felt that charity links enhanced a company's image in the community, with 40 per cent of them believing that charity sponsorship leads to increased awareness of the company.

These findings come against a background of a shift in emphasis from the 'spend, spend, spend' culture of the Eighties. 'Companies are today only too aware that their reputation is being judged not just on financial performance and product quality, but also on their relationships with suppliers, unions and staff, shareholders, customers and the local community,' says the report.

Since Heinz got together with the NCH in the Seventies for promotions, such charities as Save the Children, The National Trust, WWF and Help the Aged have undertaken a wide variety of promotions in a range of retail areas. This 'feel- good' factor is 'of crucial marketing importance' to companies in the Nineties if it really does influence purchasing decisions, says the NCH report. The problem is that research into the link between the two is at an early stage.

According to its findings, some charities still do not share an understanding of the marketing benefits a company looks for. There are still 'horror stories' of charity representatives arriving in the City dressed in T-shirts and jeans.

Sir Michael Checkland, NCH chairman, said: 'A steadily growing move by the business community to demonstrate social responsibility, combined with an increasingly high degree of professionalism from charities like NCH, means that in the Nineties corporate fund-raising is set to be big business.'

'In Business with Charities', NCH, 071 226 2033.