What Is Corporate Philanthropy and Why Should You Care?
If the words “corporate philanthropy” call up images of pink ribbon campaigns, big donations to very visible causes, and big brands improving their image through charitable donations, hang tight.
There’s a lot more to the picture than big-dollar donations to well-known charities and causes. In today’s business world, businesses of all sizes and in all sectors are committed to giving back to their communities through some form of charitable giving — and “charitable giving” takes on many forms.
In fact, as of 2021, 85% of U.S. companies have a formal corporate giving program in place, and they donated a combined $20.77 billion to charitable causes.
But what is corporate philanthropy, exactly, and what are the best ways for your company to give back to the community? The answers to those questions are evolving as a society — and employees — become more knowledgeable, engaged, and interested in how the companies they deal with affect the world around them.
What Is Corporate Philanthropy?
Corporate philanthropy refers to activities and investments voluntarily made by businesses to make a positive impact on the community around them.
That’s a very broad umbrella. It covers everything from giving money to donating expertise and encouraging employees to volunteer for community organizations. If your company hosts a food drive for Thanksgiving, buys uniforms for a local soccer team, or offers a matching donations program for charitable giving, it is engaging in corporate philanthropy.
Learn more about corporate giving and why it’s important in our resource section.
Who Benefits From Corporate Philanthropy?
The benefits of giving back are many, and not just for the organizations on the receiving end of donations. The business also reaps benefits, as do the employees and the general community.
In a world where consumers increasingly expect companies to be socially responsible partners in our world, having a formal corporate giving program in place is a vital part of doing business. Charitable donations aren’t just a sunk cost of doing business, though. There are clear benefits for the company when they make the choice to give back. Those include:
- Improved reputation of your brand
- Higher employee engagement and satisfaction
- Higher employee retention
- Improved employee recruitment
- Stronger customer loyalty
- Reduced taxes for your business and employees
7 Types of Corporate Philanthropy
The face of corporate philanthropy has been evolving rapidly, especially in light of the last few years of upheaval and technological advances. These are the seven most common forms of corporate giving. Many companies engage in more than one, and many more are rethinking their strategic corporate philanthropy plans as corporate social responsibility takes on more importance to customers and employees. More on that later.
Employee and Board Stipends
Some corporations provide cash stipends to employees or board members, which they can donate to the charities or causes of their choice.
Companies may organize, support or give paid time off to employees who volunteer for organizations in their community. The support may be technical — an accounting firm may provide training and expertise to a startup nonprofit, for example — or more general, such as gathering a team to help paint houses or build playgrounds in the neighborhood.
The Little League team, a fundraising event by the local food bank, a fashion show put on by a local charity — these are all examples of businesses using corporate sponsorships as part of their overall corporate philanthropy strategy. The corporation makes a donation to charity in return for being prominently mentioned during the event.
A company may offer grants to community organizations that apply for them and meet specific criteria to qualify. Walmart, for example, offers grants ranging from $250 to $5,000 to local community organizations. Often, the grants are given through a foundation established by the company for the purpose of making corporate donations.
In-kind donations are donations of goods or services instead of cash. This type of donation is more common among smaller businesses, such as restaurants donating pizza to a local homeless shelter, or providing coffee and donuts free of charge to a weekly parents’ group meeting. Similarly, many companies donate a “portion of x sold” gifts to charity. Stop and Shop, for example, donates a dollar to a local organization for each reusable shopping bag purchased by customers.
Donor-advised funds — DAFs — are a variation on making grants to charities and causes through a foundation. In a nutshell, a DAF is like a personal charitable giving account, similar to a health savings account. The donor can make donations at any time and receive an immediate tax advantage. The funds sit in the DAF until the donor decides to disburse them to the charity or cause of their choice. DAFs offer several benefits that make them the fastest-growing charitable giving vehicle in the U.S.
We saved this one for last because matching donation programs are among the most common corporate giving programs — 9 out of 10 companies have employee matching programs.
Traditionally, an employee makes a donation to a charity or cause, and then either they or the nonprofit submits a form to the company, which then makes a second donation to the charity, effectively doubling — or sometimes tripling — the original amount.
Despite their popularity, matching gift programs account for only about 12% of cash donations received by nonprofits, and an estimated $4 to $7 billion in matching gift money is never distributed. That’s because the entire process can be cumbersome, both for your HR department and for the nonprofit receiving the donation.
A New Kind of Corporate Philanthropy — Philanthropy as a Service
Groundswell believes that it’s time to rethink how matching donations programs work. Groundswell makes it easy for companies to launch a charitable giving program that takes advantage of all the benefits of a DAF for them and their employees. The Groundswell platform unlocks the potential of DAFs reimagining corporate philanthropy using the x-as-a-service model.
Philanthropy as a service — PHaaS — lets you skip the complicated process of setting up a foundation, hiring accountants and handling all the day-to-day nuts and bolts of managing a charity.
Instead, you get a simple, transparent platform that allows your company and your employees to support the causes they believe in without all the friction that accompanies traditional matching donation programs.
Your company reaps the benefits of having a defined charitable giving program. Your employees are more engaged, with their privacy protected and their autonomy honored, and the causes they support get their donations without the hassle of chasing down the matching funds.
It’s a win-win-win solution that empowers everyone in the equation.
Corporate philanthropy has evolved over the years, and it’s evolving faster than ever thanks to technological advances and changing social attitudes. If you’re ready to take the next step in corporate philanthropy, reach out to us to learn more about what PHaaS can bring to your company.
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