When Paul Martin, the managing director of Waterbrands, a bottled water company, was looking to set up a new charity brand in 2007, it was pure chance that led him to Pump Aid. “I typed 'water charities Africa' into Google and Pump Aid came up,” he said. “I had never heard of it.”

At the time, not many people had. The small charity, supported by this year's Times Christmas Appeal, was started by three teachers in Zimbabwe in 1998. Its aim is to install “elephant pumps”, simple contraptions that have provided clean drinking water for more than a million people in Zimbabwe and Malawi. Pump Aid spends little on advertising its activities but enthusiastic business support has helped it to grow rapidly over the past ten years.

Waterbrands already supported the British Heart Foundation through its Harrogate Spa brand, but Thirsty Planet, the new brand, needed a charity with a closer link to water. After speaking with Ian Thorpe, one of Pump Aid's founders, Mr Martin was “tremendously impressed” by what the charity had achieved. “What makes them compelling is the way they integrate with their communities,” he said.

Thirsty Planet is now the market leader in its field. Mr Martin attributes this to the fact that it is the only such product to declare on the label how much of the retail price is donated to charity: from 5p for a small bottle to 50p for a multipack. While competitors promise that a proportion of their profit will go to charity, some are not in profit and give nothing, he said.

The cost of launching Thirsty Planet means Waterbrands itself is not yet in profit, Mr Martin explained. “It was a tough decision [to commit to donating before being profitable] but we didn't want a hollow proposition,” he said. “From the beginning we knew that it had to stand on its own two feet commercially. If the supermarkets didn't get an average return, they wouldn't stock it.”

At a time when donations are falling, how charities use their funds is likely to come under closer scrutiny. It is testament to Pump Aid's effectiveness that it receives substantial support from another corporate sponsor, AquAid, a family-run water cooler business that donates about £800,000 a year to the charity. “If Pump Aid was a commercial entity, it would be making a fortune,” said Paul Searle, AquAid's managing director. “It delivers such tremendous value for money and its business model means they spend very little on fundraising compared with large charities.” AquAid has pledged to donate £2 to Pump Aid for every £1 donated by readers.

As the charity brands show, corporate endorsement of good causes has evolved into many forms. Action for Children, another of The Times's Christmas charities, has a more conventional sponsor: Barclays Bank, which will match the first £50,000 donated by Times readers. Barclays is entering its third year of association with the charity through its Financial Futures programme, which provides financial education for socially excluded groups, as well as home starter packs for children leaving care or families fleeing domestic abuse.

Alan Hands, the sponsorship and donations manager for Barclays, said: “We expect [our employees] to be involved [with a charity] but it's up to them how they do it.” Staff in bank branches across the country can support any charity they choose, but Action for Children emerged as one of the most popular several years ago after more than 1,000 employees volunteered.

At a national level, Barclays wants to ensure that projects are sustainable even after its investment ends. “We try to pinpoint what the issues will be in five years' time,” Mr Hands said.

Supporting charities makes business sense, too. “There is a definite commercial return for any business to be involved in volunteering,” Mr Hands said. Employees involved with charities move through the grades quicker because they are more motivated, he added. “To see the impact a charity is providing at a local level is very powerful. Action for Children have the trust of the people who go to their centres. That's hard for any charity to achieve.”