WASHINGTON (RNS)--Corporate America has discovered that giving pays. Businesses increasingly see philanthropy as a chance to boost bottom lines by attracting customers, retaining employees and banking goodwill for future times of crisis.

The practice is called "strategic philanthropy," meaning everydollar or product donated must enhance a company's business objectives.Armed with new research, corporations have adopted a philosophy of"doing well by doing good."

A national study released recently showed companies are doingsignificantly better when it comes to donating charitable dollars. Their 1999 giving increased more than 14 percent from 1998, with at least some of the hike credited to strategic philanthropy.

If strategic philanthropy proves to be the "win-win" proposition itsadvocates claim, it could continue to provide a lift for the country's730,000 charities, and shareholders and society will reap dividends asthe charitable sector unleashes its creativity to tackle socialproblems.

But not everyone wins all the time with strategic philanthropy. Oneof the most successful broad-based corporate giving campaigns inhistory, the United Way, has suffered directly from strategic giving,according to another nationwide study.

A few critics fear strings-attached giving, in which big businessmight seize too much control of schools and other organizations inexchange for generous contributions. And isn't there something unseemlyabout giving to receive? Philanthropy has traditionally been defined asa desire to help humanity, not a scheme to fatten a company's bottomline.

"Strategic philanthropy' is an oxymoron," said Irving Warner, a LosAngeles-based author, writer and fund-raising consultant. "If you wantto say that using charity as a business tool is good business, that'sfine. Call it that. But don't equate it with righteousness."

Examples of strategic philanthropy abound. Viewing theirphilanthropy as investments instead of giveaways, Mitsubishi Electrichelped teach handicapped kids to ice skate, Home Depot built 25playgrounds in poor communities and Bally Total Fitness donated nearly$10 million in used exercise equipment as charity.

Corporations funded only 5.8 percent of the $190 billion-a-yearphilanthropic pie in 1999, compared to a 75.6 percent slice provided byindividual donors, according to a study recently released by Giving USA2000 and the American Association of Fund-Raising Counsel. The amountcorporations gave to charity increased 14.2 percent from the previousyear, following a 9 percent boost from 1997 to 1998.

The increased generosity is encouraging, but nowhere near whatcompanies could and should do, said Curt Weeden, author of "CorporateSocial Investing," a book on how companies can profitably give.

"If you continue to rely on tin-cup philanthropy where nonprofitsbeg for money from corporations, we're going to stay where we are,"Weeden said.

At first, Darell Hammond of Washington held a tin cup, not tocorporations, but to foundations that give grants. Hammond's vision wasto build safe and attractive playgrounds for kids.

"They thought it was a nice thing to do, but they wouldn't fund it,"said Hammond, who named his nonprofit KaBOOM!

As a second option, Hammond went to corporations. He proposedpartnerships in which companies could align their brands with attractivevalues--such as children, safety, communities and health. Heinvestigated companies' challenges and goals, and presented ways toachieve them through philanthropy. Hammond even found ways to measuresuch things as changes in sales, brand awareness and employee morale,"to see if we hit or missed the bull's-eye."

Since 1995, Home Depot has supplied plans, materials and an army ofvolunteers in trademark orange T-shirts to build 29 playgrounds in 28cities. Other corporate partners include Nike, Walgreens and Motorola.

The term "strategic philanthropy" has been around for years, but thepractice has only recently gained momentum nationwide, said FrankWalker, chairman of Walker Information, an Indianapolis-based marketresearch company. Walker said that while many companies have intuitivelyknown good deeds pay off in the long run, many haven't been systematicabout whom they give to, and even fewer have tried to quantify theresults.

"It's as if companies have said, `We have some funds. Let's do somegood. The CEO likes tennis, so let's sponsor a tennis tournament,"'Walker said.

The future is more sophisticated than that. With Walker's help, theCouncil on Foundations is developing measurement tools that linkcorporate giving with specific outcomes.

The hope is to make that widelyavailable by the end of the year.

"When CEOs figure out that philanthropy is imperative to success,corporate giving programs will become more accountable," said Walker."When giving becomes more accountable, it will be done better and moreefficiently and the amount of dollars given will grow. I'm just cornyenough to think this is going to change the world."