A step-by-step guide for corporate funders has been published by think tank New Philanthropy Capital. Much of the advice in the guide applies to both corporate funders and individual philanthropists.

The guide identifies five key steps to effective giving: defining objectives, identifying focus areas, selecting effective charities, developing a package of support and measuring impact. There is also a section on ending the funding relationship. It says: “The right time to think about an exit strategy is before you begin funding.”

In terms of defining objectives, the guide says it is important to be able to communicate objectives clearly as often charitable funding is diverting money away from the company or shareholders.

It says funders should look at six elements of a charity:

• ·        Activities – what the charity does
• ·        Results – the impact the charity has on people’s lives
• ·        Leadership – strong management and governance
• ·        People and resources – does the charity manage its resources effectively?
• ·        Finances – does the charity manage its money well?
• ·        Ambition – does the charity have realistic, achievable goals?

There is a section on measuring impact, giving an example of Aviva’s Street to School campaign. Aviva measures leverage of other funds, awareness raising and the impact on beneficiaries. The guide says: “By measuring their impact, corporate funders can assess the value of their funding programme to the company and understand what difference their giving is making on people’s lives.”

The guide recommends focusing on a specific issue or geographical area in order to build up specialist knowledge. It says: “This should also help to take a strategic approach to achieve change.” There is a section in the guide on how to understand need in a local area. The guide lists some organisations and resources that can help to identify need and lists questions to ask such as:

• Are problems focused in particular neighbourhoods or with particular groups of people?
• What role do local charities play in addressing these problems?

The report also recommends helping charities to measure their impact, for example, by investing in electronic monitoring systems or by getting expert advice from an evaluation consultant. Another suggestion is to agree milestones. It says: “Agreeing milestones is a valuable discipline and means that funders have the option of ending funding if there are serious problems with progress.”

There are numerous examples of corporate giving throughout the guide to illustrate different aspects of funding. For example, creating shared value – the idea that businesses can become more competitive in a way that also creates value for society by addressing its issues and challenges. It gives the example of Unilever and its approach to water, sanitation and hygiene promotion. The company provides financial and non-financial support to the Water and Sanitation for the Urban Poor, a partnership that addresses the global problem of inadequate access to water and sanitation.

Unilever takes a ‘shared value’ approach by focusing on two areas – creating innovative household sanitation approaches and promoting handwashing with soap through TV advertising and campaigns in schools and clinics. These campaigns contribute to the reduction in diarrheal disease while driving business growth for Unilver’s products.

Other examples of corporate giving are drawn from Barclays Capital, Nationwide and Zurich Community Trust.

 Download the guide