Coherent philanthropy: Seven tips for effective business giving

U.S. corporations are a strong force for good – above and beyond their recognized role as drivers of employment and the economy.

In 2017, U.S. corporations donated almost $20.8 billion to nonprofit organizations — an increase of eight percent over the prior year. This amount represents 0.9 percent of corporate pre-tax profits in a year when both profits and GDP rose a healthy 4.1 percent. It does not include the additional multi-billion dollar value of services provided by generous company volunteers.

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

The same holds true for employment. Millennials will soon comprise 50 percent of the U.S. workforce. Eighty-three percent of these employees claim more loyalty to a company that helps them contribute to social and environmental issues. Eighty-eight percent of millennials say such opportunities make their jobs much more fulfilling.

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 andcoherent.

“Coherent” philanthropy 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 seven key lessons we’ve learned. (In last month’s column, I discussed key lessons for families.)

Engage internal stakeholders at all levels. From the C-Suite to entry-level, it is critical to communicate giving and volunteer opportunities to all employees. Listen to their voices when establishing philanthropic priorities and selecting philanthropic initiatives. Purely top-down or bottom-up philanthropic efforts are less successful than those that engage everyone in the business.

Consider other business stakeholders. Directors and shareholders, customers, neighbors, activists, suppliers, regulators, investors, public shareholders, lenders, media, community leaders and nonprofits — all of these stakeholders have an interest in the corporate citizenship of every business. Their voices should be heard.

Identify reasons for giving. Corporate giving is not the same as personal giving. It is motivated by different reasons – in particular, an entity’s bottom line.

Reputable studies document the positive impact of coherent philanthropy on corporate profitability. Especially among up-and-coming millennials, such efforts enhance 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 – increasing sales and supporting a company’s social license to operate.

Use the SDGs as a roadmap. The United Nations’ Sustainable Development Goals offer a detailed roadmap for businesses and other philanthropists to make essential progress on the continuing challenges that people face at home and abroad. Businesses can use the SDGs to achieve greater impact for themselves as well as the causes they care about — while at the same time synergistically contributing to targeted global efforts.

Align all of your resources. Align all of a company’s considerable resources — including human and intellectual capital, products, skills and volunteerism, and financial capacity — in support of a select number of carefully chosen nonprofit partners. This promotes deeper stakeholder engagement and a better return on investment.

In addition, alignment of philanthropic strategy with a company’s products and operations creates coherence between philanthropic 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 the development of strategies for business success. Effective philanthropic strategy deserves similarly rigorous analysis and planning around objectives, deliverables, outcomes and metrics.

Execute an authentic communications plan. Key internal and external stakeholders – including prospective employees – are often unaware of a company’s commitment to the community. The development of genuine ways to tell the business’ philanthropic story is essential to the accomplishment of key internal and external metrics.

In today’s highly competitive environment, corporate philanthropy must be much 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 that benefits people, improves the planet and enhances profit.

Nonprofit of the Month

Since 2006, Denver nonprofit restaurant So All May Eat (SAME) Café has taken an innovative approach to food insecurity with a donation-based model. Running on donations of time, produce, or money in exchange for a meal, the Café serves a healthy, delicious meal to everyone, regardless of ability to pay, building community across the socioeconomic spectrum. In March 2019, SAME will become mobile with a donation-based SAME Food Truck.