July 6, 2021
For many companies, giving back is fundamental to who they are. Whether it’s an annual day of service, volunteer time off (VTO), or direct grants to nonprofits, a commitment to giving back not only benefits the recipients and the community, it helps build a strong culture and can even help attract and retain talent.
For companies ready to take the leap to a full charitable giving program, or upgrade an existing one, here are four areas to consider:
Align giving with your strategy
Many companies find that aligning their giving decisions with their corporate strategy is a logical and effective way to kick off a new program or refresh an existing one. What factors are important to the success of your business? For a bank, it might be financial literacy, an engineering firm might emphasize STEM education and a manufacturer might choose workforce preparedness. Find the areas meaningful to your business and zero in on those.
Clearly defined areas of focus provide important “guardrails” for your program. They also allow grant seekers to determine if there is a match with their work – before committing to a full proposal.
Build governance that fits your culture
Some companies worry that being open about charitable giving will result in a deluge of requests. In reality, being unclear about the program and its focus will only result in misaligned, nonstrategic funding requests. Governance should be transparent, and areas of focus and the cadence of grant-making (quarterly, semi-annual, yearly) should be clearly communicated.
While final funding decisions may rest with senior leadership, engaging a cross-section of employees in the grant review and prioritization process will help build buy-in and a sense of shared purpose. If giving is distributed by geography or business unit, local input will enhance the relevance of any giving to the supported communities.
Find your funding formula
In 1985, Ben & Jerry’s famously committed to giving 7.5% of annual pretax profits to charity. For most companies, that level isn’t sustainable, and a more common target is between 1% and 2% of pretax profits. The idea is to set a giving budget that can expand (or contract) with the fortunes of the business. Doing so on a rolling, multiyear basis helps smooth out performance swings and makes planning simpler.
Your program should also be able to flex to help address critical, unforeseen needs that may arise, as many companies, foundations and other institutions did during the pandemic.
Track your impact
Charitable giving may be a “feel-good” activity, but the goal is to have real, positive impact. Ask grant seekers to provide specific, measurable goals in their proposals and require grantees to follow up with program updates and performance metrics. They will be more than happy to do so.
Lastly, be sure to track giving across the entire organization and roll up reporting to the corporate center. This not only makes budgeting sense, it helps integrate data on charitable giving, volunteerism and other community service initiatives into your organization’s ESG reporting and provides a holistic view of your efforts.
A charitable giving program, tailored to your company, can be a great source of pride for employees, create a lasting impact in your community and build a legacy of giving back for your business.
Contact me at email@example.com if you want to talk through options for charitable giving and figure out what’s best for your organization.