Giving a little to many or a lot to a few? The benefits of variety in corporate philanthropy

We examine the financial returns to specialization versus variety in corporate philanthropy. While specialization 'donating a lot to a few causes' may allow for greater effectiveness in giving, variety 'giving a little to many causes' enables the firm to serve a wider range of heterogeneous stakeholder preferences. We argue that the separation between the recipients and supporters of corporate philanthropy means that the benefits of variety will dominate those of specialization. Results from a uniquely detailed data on 726 US firms' corporation donation from 2003 to 2011 support our theory, with firms that give to more varied causes realizing higher profits, and this effect being stronger for non- local giving, giving by less reputed firms, giving in markets with more heterogeneous stakeholders, and for variety across rather than within causes.