Charitable Giving…A Wise Investment

As business leaders, we’re often asked to donate to charity. Whether it’s in the form of personal contributions, direct corporate giving or corporate sponsorship, we receive requests on a regular basis.

Having served the non-profit sector for 18 years, I’m continually involved with corporate giving, either as a business owner or charitable staff/volunteer. I’m frequently asked why businesses are called upon as often as they are. What I’ve grown to understand are two primary reasons:
1. Business leaders have direct access to marketing, advertising and charitable budget line items.
2. Business leaders understand non-profits and, in many cases, serve on non-profit boards.

As a result of recent economic pressures, business leaders are taking a closer look at their charitable giving activities. Some are decreasing their contributions and some aren’t giving at all. Interestingly, a growing number are developing strategic giving plans as a means of showing strength, representing goodwill and leveraging their giving to increase business.

In a report issued by The Economist in January 2008, 56% of global corporate leaders ranked corporate responsibility as a priority, an increase from 34% in 2005. The same survey revealed that 54% agreed that corporate responsibility is a necessary cost of doing business. Further research found through a 2006 NYU study reported “consistent evidence that, for firms in industries that are highly sensitive to consumer perception, corporate giving is associated with subsequent sales growth.” In fact, these same businesses realized a return of six dollars for every dollar contributed to non-profit organizations.

There are many reasons why corporate leaders invest in charitable organizations. During these difficult economic times, it makes even more sense. Businesses have an opportunity to make a difference and a dollar. Strong corporations invest in not-for-profit efforts to:
· recognize and celebrate its corporate values
· emphasize the importance of ethical business practices
· provide positive public relations
· build customer confidence
· enhance employee morale
· maintain philanthropic goodwill
· increase sales leads and transactions
· strengthen the community
· And, of course, it’s the right thing to do.

All of this points to responsibility…a responsibility of businesses to increase revenues and a responsibility to help others.

Positioning corporate giving to be effective for both the business and the supported organizations is not a difficult process. It can be easily blended with existing marketing strategies or function separately from existing plans. Regardless of its official capacity within your business, here are suggestions to maximize your corporate giving.
1) Assess current giving. Take a good, hard look at your past and current giving practices. What percentage of pre-tax profits is allocated for charitable pursuits? Review the organizations, purposes and methods of giving; then evaluate the benefits received. Can you identify a relationship to your corporate mission, marketing plan and staff connections?
2) Design a strategy. As you plan your giving, consider your charitable budget. Identify the projects, organizations or sectors you wish to support. Determine the benefits, particularly outreach, sales leads, visibility and impact you wish to gain.
3) Monitor contributions. Maintain relationships with the beneficiaries of your charitable investment to ensure proper delivery of benefits, use of funds and public awareness.
4) Assess and plan. Evaluate the effectiveness of the giving strategy and its execution. Make changes, design a new strategy, identify new beneficiaries; all are actions you will likely address to strengthen your charitable giving plan.

Corporate leaders recognize the difficulty in giving away money, particularly marked by a lack of information, guidance and tools required to make wise decisions. Being able to identify the best for-profit investments is a hugely valuable talent and a massive industry has grown up around it. Solid nonprofit analysis is just as valuable.

No matter what strategy you use to make your charitable giving decisions, it makes good business sense to ensure effectiveness, both to the beneficiary and your corporation. A properly executed giving program will generate tremendous value through community impact and revenue generation.