Corporate philanthropy is the act of a company promoting the welfare of others generally via charitable donations of funds or time. Are philanthropy and charity inter-changeable? For the purpose of this article, I will say yes, though there are some who say charity relieves the pains of social problems while philanthropy attempts to solve problems at their root causes.
Harvard Business Review reports that corporate giving was down 14.5% from 2010 to 2014 and more than 50% since 2000. The reasons are easy to understand. Publicly traded or private equity-backed companies have a major emphasis on earnings before interest, taxes, and amortization (EBITA) and maximizing profits. Gifts to endow the arts or community initiatives don’t satisfy investors. Most corporate giving is targeted and strategic, often seen as PR or advertising a company’s own brand. Take Ben & Jerry’s for example. They give 7.5% of after-tax profits to a variety of “progressive, grassroots projects,” and they advertise that on every carton of ice cream.
They want a brand image for whales versus wounded GIs, and that helps them sell more ice cream. Phillip Morris spent $75 million on local health care clinics, but many people view those contributions as merely a way to offset a negative PR image.
Milton Friedman’s famous book, Capitalism and Freedom, states that corporations should give less, return the money to stockholders, give raises to employees, and let them decide how to give the money away. I tend to agree that there are more effective ways to build a brand and employee engagement than just making owner-directed contributions in the name of the company.
At Tandem HR, we use three methods of giving: corporate giving, employee giving, and a hybrid approach of corporately incentivized giving geared to employees or teams of employees.
Corporate giving is often owner-driven and based on supporting client causes (many non-profits), and other causes ownership feels advances the company’s own mission. Some of our local causes support the Chicago Innovation Awards, local college entrepreneurial initiatives, and various other community projects.
A second and more effective giving strategy, which we at Tandem HR use, is to engage our employees in a “dollar for doers” matching program, as well as offering paid time off to volunteer in the community. This not only helps build a giving culture but also allows employees to leverage their charitable giving to causes that are important and meaningful to them. We match dollar for dollar up to $500 for any 501(c)(3) organization. In the early years, we only saw 5 to 10% employee participation. After deeper analysis, we realized that members of senior management were not participating in this offering and their indifference about this benefit trickled down to employees. To offset this, we have begun to incorporate questions during the interview process to gauge an applicant’s volunteerism and giving tendencies. To that end, we have seen our participation rise to 25 to 30%.
The third level, which is a hybrid approach, is a focused charitable project—often decided by the employees or teams of employees—that Tandem HR will sponsor. This approach to charity is more strategic and in line with the goals of the company while building teamwork among the staff. We often focus on our non-profit clients. While it serves as great marketing for us, it also strengthens our retention with that client. Many millennials have yet to adopt their own causes, and this helps spark an interest and reinforce the giving culture we are after. We have done large-scale food and coat drives and helped out at Habitat for Humanity. Done correctly, this builds energy within the staff. Add a YouTube video in the mix, and it is a great message to staff, prospects, and current clients!