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The Importance of Corporate Donations to Charity

By Bless

Corporate social responsibility (CSR) is the common term used to describe steps taken by pro-profit businesses to appraise and take responsibility for the company's impacts on environmental and social wellbeing. CSR consists not only of corporate donations to charity, but also employee engagement, environmental issues, and corporate governance. Numerous studies have shown that clients prefer to patronize businesses that show social responsibility. 

When it comes to corporate donations to charity, corporations give in several ways, including grants or cash donations, cause related marketing,in kind gifts,sponsorships,and pro bono services.Companies also love to promote workplace donation through employee matching gifts programs and other endeavors that motivate their employees to give their money and/or time to charity.

Grants or cash donations are often distributed either through a company-sponsored foundation or directly through the company via a corporate giving program.

  • Company-sponsored foundation – The Company can establish a separately-administered private foundation. A company-sponsored foundation follows to the same rules as other foundations and must compile IRS documents that reveal their giving. It is more likely to have a website or webpage, explaining what they will and won’t finance, and application procedures– but is not always the case. Like any private foundation, a company-sponsored foundation can decide to only support pre-selected organizations.
  • Corporate giving programs – These are issued by the company itself, often via a dedicated department such as Community Relations or CSR. It may be hard to find information about an in-house corporate giving program, such as who they’ve given to, how much they’ve given, and what they support, unless the company chooses to make it public.

Some companies have both. The corporate giving program gives them more caution about how much to give and who to give to, since it is not subject to IRS foundation obligations. A company could also give through a donor-advised fund or organize a public charity. How a corporation arranges its giving is principally determined by tax and legal factors that cannot really impact donors.

Motivations

Grant seekers should always remember  when approaching corporations that, unlike foundations, they don’t operate to give away cash. Many often look to benefit in some way from their philanthropic activities. A proposal to this type of funder should highlight how funding for your project will help the company achieve its own goals.

Corporate donation is motivated by a combination of self-interest and altruism. Most companies tend to prefer:

  • Causes or Organizations that their employees uphold with their own money and time. Sometimes a CEO’s beloved cause guides the company’s contributions; for instance, founder of the Wendy’s chain, Dave Thomas, was adopted as a child and the company is a key supporter of adoption and foster children.
  • Causes that tie with their business interests – for instance, Home Depot gives assistance and grants to build houses for veterans.
  • NGOs that are located and improve the quality of life in the geographic regions in which they operate.

While many individuals enjoy the glow of being a good corporate citizen, some companies are careful about revealing too much information about their philanthropic activities, to avoid:

  • Raising the hopes of prospective beneficiaries in a good year, because a bad year may follow.
  • Being over flooded with requests they cannot fill.
  • Losing public support by making donations to something considered controversial.
  • Angering shareholders who may consider the company's charitable activity as reducing profits, or who are not in favor of the organizations or causes supported

While giving $100 to your precious charity or volunteering to help at a homeless shelter will make you feel good and provides a classical example to others in your neighborhood, there is a practical limit to the social impact and the long-term benefits we can all personally have on our neighborhood through giving.

But when hundreds or thousands of people come together and organize their giving, as occurs during a well-planned corporate giving campaign, formidable and lasting good can be done for the community.  This impact is further enhanced as the corporate social responsibility program continues over months or years.

Beyond the gain to the community, nonetheless, charitable donation provides essential benefits to the business itself as well, both externally and internally.

External Benefits

When a company creates a corporate charity event, they will start to see positive results in the commercial world almost instantly in various ways:

  • Social Media: While some organizations are concerned about the potential kick back from negative comments on social media, a company that organizes a corporate charity event will be harvesting the benefits of positive social media sharing and mentions.  The effect of this kind of publicity cannot be overemphasized.
  • Public Relations: The Company’s philanthropic activity catches media attention.  All fund-raising events and charitable organizations rely on the media to make publicity about their work, so any corporation having a large part in that domain will be included in the intense media coverage.
  • Profit: All of the above gears eventually to more profit as positive media sentiment and public perception influences branding as well as purchasing.
  • Reputation: While it is less tangible than social media coverage or PR, one cannot deny the fact that many clients make buying decisions based on how much feelings they have for a company as well as its products.

Internal Benefits

The gains of a corporate charitable donation program are not only limited to external results:

  • Morale: With employees more involved in their work and more happy with the corporate culture, their morale will consequently be higher.  This leads to less time and productivity lost because of tardiness, illness, or extended lunches and breaks, as well as lower production rates.
  • Team work: This generally positive air in the workplace extends far beyond the file-and-rank of employees.  When a corporate giving program assembles individuals from all levels of the organization – from the mail room to the C-level – everybody feels like they are working in unison towards the same goal.  This feeling of effective team work goes beyond the CSR program to positively affect other areas of their work.
  • Employee Engagement: Employing top-performing employees and keeping them well is of prime importance to all thriving corporations.  Charitable donation ameliorates employee involvement by boosting productivity, gratitude to the organization, ethical behavior, and pride in their work.

 

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