Businesses can do well by doing good through product philanthropy, research from Indiana University concludes.

The study, released in January by the Bloomington, Ind.-based university's School of Public and Environmental Affairs, examines the return on investment for donating merchandise, as opposed to liquidating or destroying it.

"This research demonstrates that donating products can result in substantial financial and social benefits for minimal cost and risk," says Justin Ross, assistant professor of public finance and economics and the lead researcher for the study. "Additionally, working with a nonprofit that can match companies with charities lowers corporate costs associated with product philanthropy."

Good360, an Alexandria, Va.-based nonprofit that has worked in product giving for almost 30 years, approached the school last year to do the study.

Additional findings include the following:

•Product giving presents a financial advantage over cash donations because it can carry an enhanced tax deduction.

•Product donations can provide the same image-enhancement benefits as marketing and advertising programs and at a lower cost.

•Companies that engage in product philanthropy avoid fees and negative branding implications associated with disposal of excess inventory.

•Product donation is superior to liquidation in most circumstances, and the report provides a rule of thumb for companies wishing to make quick cost comparisons.

In addition to providing an economic justification for retailers, manufacturers, and distributors to donate excess merchandise, the report gives managers a framework for analyzing the costs, benefits, risks, and opportunities of implementing a product philanthropy program.

"We hope that the report will inspire more companies to consider product donation as a viable alternative to liquidation or disposal," says Cindy Hallberlin, president and CEO of Good360. "For many, there is an untapped strategic opportunity to use product giving to advance the business and have substantial social impact on the communities and causes about which they care deeply."

For more information on the research collaboration and links to research findings, go to about.good360.org/productdonationresearch.

Indiana University's School of Public and Environmental Affairs claims to be the largest school of public administration and public policy in the United States. In the 2009 Best Graduate Schools report by U.S. News & World Report, the school ranked second and is the nation's highest-ranked professional graduate program in public affairs at a public institution. Six of its specialty programs there are ranked in the top 10 listings.

Good360, formerly Gifts In Kind International, is ranked as one of the top 10 most efficient charities by Forbes magazine. Working with many of the large retailers and brands, Good360 provides products to more than 23,000 qualified nonprofit organizations. During the past 28 years, Good360 has delivered more than $7 billion of donated products. From retail store donations in thousands of communities to employee product giving programs, Good360 says it continues to seek out new ways to move resources to communities that need help.

In 2010, the IU School of Public and Environmental Affairs and Good360 worked together on research that analyzed the social and environmental impact of The Framing Hope Product Donation Program, a program that was created by The Home Depot and Good360.