Monday, April 13, 2009

How Does a Corporate Philanthropy Program Bring Its Stakeholders Together Instead of Driving Them Apart?

Many nonprofits are scrambling to find revenue and many corporate foundations are being swamped with requests. Corporate foundations have to weigh not only the "worthiness" of the request but also the public relations ramifications of their response to the request. Janet Nava Bandera tells how her corporate client changed the way they consider causes. Interesting (and perhaps more democratic) way to decide which worthwhile cause receives both money and attention. Bunnie

How Does a Corporate Philanthropy Program Bring Its Stakeholders Together Instead of Driving Them Apart?

by Janet Nava Bandera
Founder and President, Foundation Mentors

In the early years of the decade the economy was booming and people were generous in their charitable giving. Companies also started showing that they could be good citizens and give back to the communities that helped them thrive by starting a corporate philanthropy program. The programs took the form of foundations, giving programs and employee volunteer programs.
In addition to making executives feel good, it was good business.
A 1999 Cone/Roper Cause Trends Report found that:

76% of consumers indicate they would switch brands or retailers to one associated with a good cause, when price and quality are equal; and

87% of employees at companies with philanthropic programs feel a stronger sense of loyalty to their employer.

What companies did not realize was that along with such programs came the competing interests of their stakeholders. Suddenly, executives that funded the programs (directly or indirectly) wanted a say in how funds were distributed, employees wanted to know if programs sponsored by executives got preferential treatment and customers started asking how to request funds for their favorite charities.

Couple that with declining revenues and suddenly, for some companies, what started out as a way to do good turned into a PR quagmire.

When faced with this situation recently a corporate foundation client of mine decided to change the nature of its program. Ten years ago company executives founded a foundation and supported it through payroll deduction. As revenue increased so did gifts to the foundation. The foundation grew quickly, but so did the number of requests for funds from community organizations, employees and clients. The result, more grants denied than approved. With each turn down came the inevitable question: Why? It is touchy to explain to a good client that his favorite charity did not live up to the administrative to program expense ratio formula that the foundation required.

The solution: No longer accept grant requests. Sounds like overkill, but the internal result has been profound. Instead of accepting outside requests, the company now has a completely bottom up employee volunteer program (executives still count as employees). The program encourages and rewards employees through supporting gifts and matching funds from the foundation. Within weeks of adopting the change there were 4 “projects” in the works.

How does it work? An employee captain puts together a team of volunteers and the team then solicits support from the foundation. The board still uses the same criteria to evaluate the recipient charity, but in addition, the request is evaluated based upon how many employees have signed up to participate and how the project fits with the corporate culture.

For this financial services firm: The first project--- “JA in a Day”. For the upcoming event, twenty-five employees have signed up to teach for a day at a local elementary school. Other projects with pending requests include a team of 30 signed up for a walk supporting a local cancer support group and a group of 20 outfitted in jeans and hammers for the day.

Although still funded by executives, the foundation serves to bring together the stakeholders. Employees from every department and at every level work together to support a common cause. This team effort gives new meaning to the term “employee happy hour”.
Contact Janet at or 314-691-4386.

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