Is Your Donation Matching Program Inclusive and Equitable? Probably Not.
Corporate employee gift matching – where an employer matches an employee’s gift to a charity – has been a mainstay of major companies for decades. It has unlocked billions of dollars of community funding and helped donors double their impact. It’s also inequitable and lacks inclusion as matching programs currently operate. Fortunately, there’s a solution.
But first, a history lesson.
In many ways and for many reasons, GE is one of America’s most iconic companies – though notably its star has dimmed since its peak several decades ago. GE was born by Thomas Edison, became a founding member of the Dow Jones Industrial Average (where it stayed from 1907 to 2018), and was awarded countless patents for innovation across aviation, healthcare, and energy.
However, an innovation GE rarely gets credit for is its innovation in corporate philanthropy. In 1954, GE rolled out what is often credited as the first workplace-giving program. In the nearly seven decades since GE reports that it has matched over $1.5 billion in employee gifts. That’s an astounding number.
Yet GE’s program has not evolved much since its inception. Sure, it uses a software platform to help facilitate gifts (one that could use a good ol’ fashioned overhaul) and they’ve probably increased the amount they’ll match (it’s currently a generous $5,000 per employee). But the basic construction remains the same – and therein lies the problem.
Today’s standard matching gift program works like this:
An employee gives money to a charity; they then submit that donation receipt to someone on staff (often in HR, finance, or perhaps a dedicated corporate social responsibility or CSR function). That staff member then must vet the charity to ensure it’s a registered 501c3 with the IRS and that it meets the company’s stated program requirements (for example, many companies won’t match gifts to places of worship – like a church – despite them being tax-exempt organizations). Finally, if all goes according to plan, a form is submitted to the accounts payable department and a check is issued from the company to the nonprofit – often weeks or months later.
Many folks would rightfully point out that this process seems like an administrative nightmare – and it is, both for the employee and the employer. But what’s often not discussed is that it is also by nature exclusionary and therefore inequitable.
How so? Let me explain.
The existing process – even if supported and enabled by software platforms that ease (but don’t eliminate) some of the administrative burdens – requires the employee to disclose where they have given to charity. On the surface, this may not seem like a problem – how else would the employer know where to send the matching money? But spend a moment and imagine all the reasons that someone may not want their employer or work colleagues to know the specific charities you are supporting.
For many people, their philanthropy is deeply personal and inspired by lived experiences. An employee that grew up in an abusive household may support a local domestic abuse shelter. A member of the LGTBQ community that is not yet open about their sexuality certainly wouldn’t want their coworkers knowing they support the Trevor Project. A recovering alcoholic may not want to submit the receipt for their monthly donation to Alcoholics Anonymous.
So what happens?
They simply don’t participate. They feel excluded.
The inequity is further exacerbated when companies determine that some causes or issues are worth matching, but others are not. In GE’s example, the determination that the company will not match contributions to houses of worship – churches, synagogues, mosques, and others – is akin to telling GE’s employees that what matters to them is not worth matching.
Now, we should be fair to GE. Because of GE’s matching program design, any matches sent to charities are coming from GE. Iconic brands like GE must be very careful in creating a perception that they are affiliated with or endorse any specific organization, or in this case, faith. That’s certainly reasonable – but it’s demotivating to the practicing Catholic who dutifully tithes 10% of her paycheck each week to her church.
(As a disclaimer, we draw the line at any nonprofit, religious or not, that stands for hate, and you won’t find any classified hate groups available to fund in the Groundswell app.)
Essentially, today’s standard matching program makes about as much sense as if an employer chose not to deposit employees’ paychecks into bank accounts, but instead forced those employees to submit receipts for all of their expenses so that their cost of living could be reimbursed. How comfortable would you be with inviting someone into your personal life in that fashion?
So is there a better way? Yes, there is.
Modern matching programs must evolve to reflect the capabilities of our modern tax and financial technology ecosystem. Groundswell (www.groundswell.io) is doing this by making donor-advised funds (DAFs) accessible to anyone, and by specifically creating a corporate benefits platform that provides one to employees. By providing employees with Personal Giving Accounts built on top of donor-advised funds, our platform can disaggregate someone’s decision to be charitable (the moment they contribute to their Groundswell account) from their decision on what charity to support (sending their Groundswell funds to a nonprofit).
With Groundswell, employees contribute to their Personal Giving Account and companies can match those contributions according to their matching program rules. At that point, the employee controls the funds – they can direct the full amount to whatever qualifying charity they choose when they choose.
Because funds sent to charities are distributed by the Groundswell Charitable Foundation, companies no longer have to restrict where their employees give – because the company is never directly associated with the gift.
Information provided back to the employer is anonymized. They will know all the charities that were supported but will not be able to associate them with individual employees. The result is that companies can better understand what their employees truly value, without violating their privacy.
With Groundswell, employers can take meaningful action that drives home their commitment to DE&I initiatives while providing a unique employee benefit that allows employees to freely be their authentic, charitable selves.
Let’s have a conversation – what do you think?
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