Philanthropy Impact

Inspiring philanthropy and social investment across borders, sectors and causes

Corporate philanthropy

 

Highlights

  • Corporate philanthropy takes a range of different forms, depending on the type of business.
  • There are five common steps for businesses to go through when establishing effective corporate giving, detailed below.
Read more about Corporate philanthropy

 

Corporate philanthropy takes a range of different forms, depending on the type of business. It may involve financial support—for example a company may commit to donating a proportion of its profits to charitable causes. Financial contributions may be supplemented by fundraising or payroll giving by staff members. In addition, staff time, skills and in-kind contributions can be also donated to support these projects.

Corporate funding has the opportunity to make a real difference to people’s lives through the substantial financial and non-financial resources at their disposal. It is crucial therefore for companies to think about how to best use their resources to address the needs of the individuals and charities they want to help.

There are a number of reasons businesses choose to engage in corporate philanthropy, ranging from the personal values of the founder or management team to positive publicity and a virtuous reputation. Often businesses will engage in corporate philanthropy as a way to motivate staff and to attract high quality candidates, as well as giving back to the community in which they operate.

There are five common steps for businesses to go through when establishing effective corporate giving. These are stages which all funders should go through, but which have specific applications for corporate funders.

Define objectives
As charitable funding is likely to divert money and resources from the company, businesses need to be very clear about their objectives for giving. Clarity on objectives means the organisation can target resources to achieve these objectives, articulate the benefits of their corporate philanthropy, and ensure the support of key stakeholders such as the company’s board, clients, staff, and shareholders. Objectives may include:

  • achieving charitable impact;
  • attracting and retaining talent;
  • developing employee skills through providing pro bono support in a different context;
  • building brand profile and loyalty;
  • reflecting corporate identity and culture to encourage stakeholders to participate in corporate funding programmes;
  • enhancing client and stakeholder relationships for example through match-funding or joint work on a pro bono project; and
  • creating business development opportunities: some companies will only work with organisations that have a good track record of corporate responsibility.

Identify focus area and need
Corporate funding programmes are usually most effective if they are focused on particular geographic areas or social or environmental issues, such as health or education. These are often related to the sector or geographies in which a business operates. A clear focus will make it easier to build up knowledge and relationships in the area, decide which charities to support and to take a strategic approach to achieving change.

Look for opportunities to align your business and charitable interests. If your funding is linked to your company’s identity, culture and strategy, you will be able to develop a coherent and compelling story about what you are funding and why.
Once you have chosen a broad focus area, you can narrow your funding further based on what are the most pressing needs which exist in the areas you want to fund. When conducting a needs analysis, make the most of your company’s business acumen using market research, financial analysis, due diligence and problem solving skills to create an effective programme.

Select effective charities
By investing time analysing charities you can minimise the risk of making poor decisions, which might have reputational risk as well as wasting money.

Analysing charities takes time, as does managing relationships with grantees. Think carefully about the time you have available and how many relationships you can realistically manage. Information about charities quickly becomes out of date, so it is important to have regular contact with grantees and to encourage them to notify you of any significant developments which might affect your support.

Develop a package of support
When thinking about how to package support for a charity, consider how financial and non-financial resources fit together, and bear in mind that non-financial support (such as providing staff as volunteers) will not be appropriate for every charity.  It is also important for the corporate to realise that managing volunteer days can take a lot of time and resource for charities so should be arranged carefully.  While most corporate funders will give grants, there are a range of different types of support which can be provided, including social investment.

Think carefully about the appropriate size and length of any grant. Although it can be attractive to fund a specific project, unrestricted funding is far more valuable to most charities. Multi-year funding is also recommended as it allows charities to plan ahead. Ensure that the funds provided are sufficient for the activities the charity is committing to, as under-funded projects are likely to be unsuccessful and may damage the wider organisation. However to avoid the organisation becoming dependent on your funding, avoid providing a high proportion of their overall income in any year.

Measure impact
Corporate funders should think about why they want to measure their impact and who their audience is, as this will inform the type of data they collect. Communicating impact allows corporate funders to be transparent about how they are using company resources, and justify the use of this resource. Funders should measure impact against the objectives they established, both charitable and corporate, and this will help define what information you should be collecting.

Be clear with grantees at the beginning of the funding process how you want them to feed into your impact measurement. Do not impose complicated and resource intensive monitoring requirements on grantees; instead use the systems already in place, or encourage them to develop reporting which is useful for all their stakeholders. Any reporting that you ask for should be proportionate to the size of the grant and you should only request information that you will use.

Corporate philanthropy may be just one part of an organisation’s wider strategy for social and environmental responsibility. See Nicky Amos’s expert opinion on Corporate Responsibility to find out more.

Glossary: payroll giving, social business

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