Whether you’re a global company executive, the founder of a family business or the owner of a chain of local shops, you’re invested in your community. That usually means not only providing jobs and delivering a valued product or service but also supporting the charitable causes that make your community a better place to live, work and grow up.
“Philanthropy helps you invest in the health of the places where your employees and customers live,” says Dianne Chipps Bailey, national philanthropic strategy executive at Bank of America Private Bank. “For many businesses, giving back is not an afterthought, but a core value that’s embedded in the company’s business plan.”
What’s more, a philanthropy program based on a clearly articulated mission can be good for business, strengthening your company’s culture, helping you recruit and retain employees, building brand loyalty and differentiating you from your competitors in the eyes of potential clients and customers.
“Corporate philanthropy is a dynamic catalyst of employee engagement and a powerful demonstration of shared values,” says Holland Dunn, philanthropic strategist at Bank of America Private Bank. “As research illustrates, philanthropy not only boosts employee productivity, retention and morale, but also serves as a compelling differentiator in competitive markets, attracting top talent, expanding stakeholder engagement and advancing long-term organizational success.” While any halo effect you receive may be seen as a happy by-product of your giving — not its purpose — some benefits could be seen:
Enjoying these benefits, however, takes a plan. If you want to make a genuine, substantial investment in your community and your employees, it may be time to institute a more structured and formal corporate philanthropy program. Here are some key questions that can help you make that happen.
What does a corporate giving program look like?
There are many options. Your program can include making direct grants to nonprofits, sponsoring local events and organizations, offering employees matching gifts for their charitable donations and encouraging volunteer opportunities with paid time off.
In thinking through how to execute your plan, you might find it valuable to begin by creating a mission statement. An advisor can help with that. “When we work with clients on a philanthropic program, we start with a series of curated conversations to help businesses discern and then articulate the values the company has, which should always be the foundation for their giving,” says Bailey.
Can a philanthropy program matter to employees?
“Philanthropy – when done correctly – builds trust and shapes a compelling and authentic narrative, which resonates internally and externally,” says Dunn. Research confirms, this is particularly effective with your workforce, especially the rising generations — nearly nine out of 10 Millennial and Gen Z workers report having a sense of purpose in their job is important to their satisfaction. 1
Engaging your employees can deepen both their connection to the workplace and your company’s philanthropic commitment. Employer-sponsored volunteer projects can bolster team building and collaboration among departments, giving employees a greater sense of belonging and trust in the company and their colleagues.
Pairing company projects with employee-directed matching gifts and incentives to volunteer outside of work, such as paid time off, helps ensure that your philanthropy program amplifies your employees’ priorities and values, not just your own. Building flexibility into your giving programs can empower the individual passions of your employees.
What’s involved in setting up a philanthropy program?
Once you’ve defined a philanthropic mission for your business, the next step is deciding how to activate it. What will the program look like, and how will it function day-to-day? You’ll also need to determine where the funds will come from, how you will allot them and which staff members may be involved.
Many companies use direct expenditures and marketing sponsorship budgets to do this work. But as programs become more complex, some create giving vehicles to manage their grant making. Most commonly, corporate funders use private foundations, but operating charities and donor-advised funds are other options.
Private foundations are generally used to manage corporate grantmaking programs. One of the primary advantages of private foundations is that you retain complete autonomy over grantmaking decisions and investment strategies. A foundation necessitates an administrative structure, including the recruitment and management of support staff and a board of directors, usually members of senior management. Also keep in mind that private foundations are required to file an annual tax return that is subject to public disclosure.
“To manage a private foundation well does require human capital,” says Bailey, who cautions, “If the program is somebody’s partial job or not within that person’s core competency, you may quickly find yourself farther from achieving your goals.”
Operating charities are not commonly used for corporate philanthropy, but may be the best fit when the company receives outside funding to support active charitable initiatives (beyond simply making grants) that the company manages. In addition, third-party vehicles may be leveraged for specific purposes, including providing emergency relief for employees.
An advisor can help you settle on a course of action that reflects your giving goals and desired level of involvement. They can also help provide resources to keep it running smoothly, such as assistance with back-office operations and governance, hands-on grants administration, due diligence and compliance.
What’s the best way to measure success?
However you structure it, your corporate philanthropy plan needs to have a way of measuring the impact your efforts are having in the community and the world. Before putting a plan into action, you might want to define what success would look like to you — a certain number of people helped, for instance, or a desired outcome. Doing so will help you evaluate over time whether your approach is the best way to achieve your philanthropic goals. This is another area where your advisor can be a critical sounding board and source of ideas.
Seeing that your giving is making a tangible difference can be a powerful incentive to maintain your program over the longer term or even build upon it. As Bailey says, “Knowing where your efforts actually created discernible good is critical — and can be a source of genuine satisfaction and cohesion for your team.”
