Corporate Philanthropy

The Changing Culture of Corporate Philanthropy

Facebook is full of references to its founder’s historic philanthropic commitment of $46B. No matter the unusual structure of the pledge, it highlights the corporate sector’s growing interest in supporting the nonprofit community. For many companies, though, there’s more to the story than donating dollars — beyond the big business bucks, companies are increasing activities in serving and even partnering with nonprofits to promote and leverage employee engagement, not to mention mission impact.

In a study released this month by America’s Charities, trends in corporate employee engagement and workplace giving are encouraging. Research in Snapshot 2015: The New Corporate DNA – Where Employee Engagement and Social Impact Converge shows that volunteerism among corporate employees has evolved from isolated instances to a “central component of employee engagement,” as noted in Forbes. Since giving back has become an “expected cornerstone of every company’s DNA,” employers must integrate new ideology into their corporate goals, culture, messaging, and HR practices. Furthermore, corporate philanthropy must be led from the top and include various opportunities to engage employees while leading to actual impact.

Forbes identifies key themes from the report:

  1. Getting involved fosters full engagement – Companies are building employee engagement strategies and programs around volunteerism. Such intentionality serves as a “catalyzing force within companies…(and) on-ramp to full employee engagement” as well as strengthened partnerships with nonprofits.
  2. If it’s not authentic, it shows – As a now integral aspect of employee recruitment and retention, efforts will seem superficial unless they are authentic and supported by leadership.
  3. Leadership must be involved – It’s not enough to talk about the importance of giving time, money, and skills to a cause; leaders must GIVE them, too, as evidence of the fact that employee engagement and workplace giving programs are integral in a company’s identity.
  4. Millennials have influence – Simply stated, “no other generation has entered the workforce with such high expectations of their employers,” as millennials have broken barriers between what happens inside and outside the workplace.
  5. All eyes aren’t just on large companies – Small and mid-sized companies also are expected to promote corporate philanthropy and empower employees to give time, talent, and money.
  6. Alignment of corporate goals, employee interests and nonprofit needs is essential – Corporate philanthropy is intended to benefit all parties, so it’s important to ensure respective goals and needs are aligned, not skewed.

The report provides a clear glimpse of how times have changed. Corporate culture has been altered by a new generation of workers, a new definition of work-life balance, and low unemployment rates that have empowered workers with raised expectations about perks and job relevance. Employees of nonprofit organizations are not the only ones who want their jobs to matter.

In addition to donating time, corporate employees give financial gifts that can inform their employers’ charitable priorities. Employees appreciate a corporate match of their contributions. In the context of financial giving, the Snapshot 2015 report also touts modern technology as an increasingly popular tool for supporting “an interactive, social, and mobile giving experience,” also essential in the new culture of corporate philanthropy.

Another study released this year by The Conference Board and CECP, a coalition of CEOs who believe that societal improvement is an essential measure of business performance, offers additional insight about corporate giving. According to CECP, the responses of more than 250 multi-billion dollar companies inform us that:

  • Corporate giving grew for more than half of companies between 2012-2014 and increased by more than 10% for 42% of companies.
  • 85% of companies are measuring and tracking the societal outcomes and/or impacts of their investments and starting to use to the data to inform their core programs.
  • Pro Bono and nonprofit board leadership are the fastest growing volunteer programs.
  • Education (K-12 and Higher Education) is the most popular funding priority for the average company (29%), followed by Health and Social Services (25%).
  • 59% of companies provided paid-release time volunteer programs in 2014, up from 54% in 2012.
  • 51% of companies provided pro bono service programs in 2014, up from 40% in 2012.

The study shows that corporations are capitalizing on the tangible benefits of charitable giving as a sustained, not episodic investment activity. While the impetus for the shifts in corporate philanthropy might be employee-based, it seems clear that corporate and employee generosity also plays a central role in boosting participation in and the variety of corporate giving programs. That said, generosity is not enough.

“The purpose of philanthropy must be not only generosity, but justice.”

In a recent opinion in the New York Times, Darren Walker, president of the Ford Foundation, reminds us during this season of giving that “the purpose of philanthropy must be not only generosity, but justice.” As he explains, the origins of formal philanthropy date to 1889, when inequality had reached extreme levels and American industrialist Andrew Carnegie argued that such large-scale inequality is unavoidable in a free-market system. He believed it was beneficial if the promise of wealth incentivized hard work and that philanthropy would ease the pressure of the social unrest that resulted.

In the last century, his model of institutional philanthropy flourished through endowments and foundations that invested billions in the social and economic structures of the US and other countries. Now, Walker remarks, fewer than one in 10 humans lives in extreme poverty for the first time in history. At the same time, he adds, society’s challenges might have finally outpaced philanthropy’s resources, signifying the need for a “reimagined charter of philanthropy” for the 21st century that addresses the underlying causes that perpetuate human suffering. Philanthropy must tackle not only what is happening in the world, but also why and how.

Walker reminds us that we can “inadvertently widen inequality in the course of making money,” even when we make effort to give some of it away. Giving back, he explains, is necessary but not enough. While corporate and individual giving at year-end (and any time) provides essential support to worthy causes, we must consider what our donations contribute to larger social change. That question must be explored, of course, in partnership with the nonprofit sector.

The rise of pro bono volunteers and nonprofit board leadership programs, among others, in corporate America suggest that the corporate and nonprofit sectors are seeking each other out for mutual benefit — and global gain.

Sonia J. Stamm

Sonia J. Stamm is Governance Consultant at BoardEffect. Since almost our inception, she has shared a best practice perspective on governance with our team and clients, partnering to guide boards toward optimal implementation of our software. As founder and principal of a nonprofit leadership consulting firm, Sonia supports the evolution of mission-based organizations through her work in board development, leadership transition and succession, and organizational effectiveness. A seasoned facilitator, trainer, and consultant, she enjoys guiding boards and organizations through critical junctures in their development.