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On Philanthropy: 6 tips for effective business giving

McClathcy-Tribune Information Services

August 27, 2018


In 2017, U.S. corporations donated $20.77 billion to nonprofit organizations, an increase of 8 percent over the prior year. This figure represents 0.9 percent of corporate pre-tax profits in a year in which both those profits and GDP rose 4.1 percent, and doesn’t include billions of additional dollars in volunteer services.

78 percent of U.S. consumers want companies to address important social justice issues. Eighty-seven percent will purchase a product because a company advocated for an issue they cared about and, conversely, 76 percent will refuse to purchase a company’s products or services if it supports an issue contrary to their beliefs.

Eighty-three percent of millennials — soon to comprise 50 percent of the U.S. workforce — claim more loyalty to a company that helps them contribute to social and environmental issues. Eighty-eight percent of millennials say their jobs are more fulfilling when they are provided such opportunities.

Today, successful companies recognize that philanthropy is a key component of corporate citizenship and overall business strategy. Too often, corporate philanthropy is random and uncoordinated. To be truly effective, it must be strategic and coherent.

Philanthropy is "coherent" when it is logical, well-organized, well-planned and sensible — as well as easy to understand and articulate.

Over the years, we have helped dozens of families, foundations, businesses and family offices achieve coherence in their philanthropy. In the realm of business philanthropy, here are six key lessons. (In a recent column, I discussed key lessons for families.)

—Engage all levels of internal stakeholders. From the C-Suite to the entry-level employee, it is critical to communicate volunteer and giving opportunities to all employees and to encourage their voices to be heard in establishing philanthropic priorities and participating in philanthropic initiatives.

Experience shows that top-down or bottom-up philanthropic efforts alone will be less successful than those that involve and engage all levels of employees.

—Listen to the voices of other business stakeholders, too. Directors and (in closely held companies) shareholders, customers, neighbors, activists, suppliers, regulators, investors, public shareholders, lenders, media, community leaders and nonprofits all have an interest in the corporate citizenship of every business. Their voices should be heard, too.

—Identify your company’s reasons for giving. Corporate philanthropy is motivated by different reasons than personal giving. In the business sphere, philanthropy must contribute positively to an entity’s bottom line.

Numerous reputable studies document the positive impact of coherent philanthropy on corporate profitability. For example, internally, such efforts enhance (especially among millennials) employee recruitment, retention, productivity and engagement.

Externally, coherent corporate philanthropy improves customer attraction and loyalty, reputation (with regulators and others), brand awareness, risk management and overall community image. These benefits can increase sales and support a company’s social license to operate.

—Align all of your resources. Businesses have tremendous resources to contribute to good causes. Aligning all of a company’s resources — including human and intellectual capital, products, skills and volunteerism, as well as financial capacity — in support of carefully chosen nonprofit partners promotes deeper stakeholder engagement and promises a better return on investment.

In addition, aligning philanthropic strategy with a company’s products and operations creates coherency between philanthropy and business objectives. Examples include health care company support of wellness, disease prevention and cures; technology company support of STEM education; food production company support of hunger-related initiatives; and beverage company support of clean water.

—Develop a comprehensive strategy. Companies devote much time and talent to developing strategies for business success. Philanthropic strategy rarely enjoys, and deserves, the same rigorous analysis and planning around objectives, deliverables, outcomes and metrics.

—Create and execute an authentic communications plan. Key internal and external stakeholders — including prospective employees — are too often unaware of a company’s commitment to community. Businesses sometimes shy away from "tooting their own horn." Developing genuine ways to tell the business’ philanthropic story helps accomplish key internal and external metrics.

In today’s highly competitive environment, corporate philanthropy must be more than random acts of kindness. Rather, it must be treated as a critical element of business success — helping companies achieve the highly valued triple-bottom-line of benefitting people, improving the planet and enhancing profit.