Five Key Ingredients for a Healthier Corporate Giving Program

Inequality

The inequalities that persist in our communities are palatable. The rich, the poor; the ‘haves’ and the ‘have-nots’. At a national or global level, these inequalities are even more pronounced. The United Nations has described it as the “defining challenge of our time”. [i]

In their seminal book, ‘The Spirit Level’[ii], authors Richard Wilkinson and Kate Pickett illustrate the social and economic costs that are aggravated by greater levels of inequality.

Their extensive review of global data and research consistently demonstrates that inequality poses a tangible risk to social cohesion (how well we cooperate and get along with each other), the strength of local and national economies (through a loss of human potential for lack of access, opportunity and means), as well as our own individual self-satisfaction and well-being (people at all socio-economic levels in a community are less happy and less healthy in more unequal societies).

Amplify What Matters

This creates an enormous opportunity for the future of business to play a defining role in rectifying the inequality we see in the world today.

Every company, big or small, is a microcosm of our society. A company represents a purpose and a core set of values. Good or bad, they are expressed in the services and products on offer; evidenced by the contracts and relationships negotiated with suppliers, distributors, and customers; and embedded in the policies and workplace culture used to manage employees and their day-to-day activities.

Management is tasked to identify and articulate what is important, and then to transform that vision into reality. They are the culture keepers.[iii] More and more, what is considered ‘important’ however, is stakeholder value – not just shareholder value. [iv]

Getting Started with ESG

Leveling the playing field requires commitment to act with integrity and with a greater sense of ownership and responsibility for the systems we create.

The business model chosen by management to drive their vision will determine, among other things, how value will be generated, for whom, and how the proceeds of that value will be redistributed among stakeholders.

To the latter half of this equation, more and more business leaders are initiating a corporate philanthropy program[v] as a first step towards developing (or to enhance) a more robust accounting of environmental, social, and governance (ESG) factors. [vi]

Sound complicated? It doesn’t have to be.

Where to Begin?

One of the first questions faced by the aspiring socially responsible CEO is, ‘How much should be allocated to corporate giving program?’. The automated response is that it is a personal decision, and that there are no hard & fast rules.

However, that is not exactly true. When faced with uncertainty, we humans look for a frame of reference, and there are a number of relevant social indicators to guide this decision.

Benchmark your Commitment

At an individual level, we might begin by comparing our own personal income with the rest of the world. This online calculator [vii] can show you where you rank as a percentile of the global population. Further, it allows you to customize the level of your contributions to visualize how it might affect your ranking, as well as the potential impact that amount could have on others.

Alternatively, for those who pride strong traditions, many countries and cultures around the world already have established norms for giving back to the community. In ancient times, a tithe was expected to be given to the church in many Christian societies.  This was equal to one-tenth (10%) of all annual production.

A similar practice is found in the ‘Zakat model’ of many Islamic countries in the Middle East, through which 2,5% of one’s wealth is redistributed each year to those in need. [viii] Giving at the level of countries, the 30 member states of the OECD Development Assistance Committee have used 0,7% of their Gross National Income as a target since 1970 to assist developing economies.[ix]

For publicly traded organizations, however, a more personalized (and telling) benchmark may be found in your own company’s annual report. Simply consider indexing your contributions to equal or exceed the amount of your annual shareholder dividend. This may be one of the best ways to demonstrate a genuine and authentic commitment to treat community stakeholders on par with your shareholders.

Integrate a Fulcrum

Archimedes calculated that he could move the Earth if he had a lever long enough, and a fulcrum to place it upon. But what is a ‘fulcrum’?

A fulcrum, according to the Oxford language dictionary, is “the point against which a lever is placed to get a purchase, or on which it turns or is supported. It is a thing that plays a central or essential role in an activity, event, or situation.”

Therefore, if corporate giving is the lever you want to employ to change the world, then you will also need one or more well-placed fulcrums to amplify your efforts and maximize the impact of your philanthropic strategy.

But what does a ‘fulcrum’ look like in strategic philanthropy?

F1: Engage Others

The easiest ways to amplify your corporate giving program is to spread the love. The benefits of engaging your employees through a workplace giving program are well established, from attracting (and keeping) top talent, to increasing productivity and ROI, to creating a healthier and happier work environment for all. [x]

One of the more popular approaches is to double (or triple or quadruple) the fun by creating a corporate matching program that allows employees to target their giving to causes and organizations that are most important to them.  Employees will love knowing that their donations can go 2x, 3x, 4x as far, and there are many online tools to help companies easily track and manage their matching program. [xi]

F2: Make it Personal

Witnessing the impact you are having is another way of maximizing the value of your efforts. Micro-finance institutions (MFIs) such as the non-profit Kiva.org connect lenders with recipients through an online platform, which allows a more personal connection to the impact of your investment.

With Kiva.org, rather than donating to a cause, you create an international portfolio of small no-interest loans to individuals and entrepreneurs in under-banked communities. The recipients pay back the loan over a set period of time, which allows you to re-lend the amount to someone new. With a 96%+ repayment rate, it genuinely works out to be a hand-up rather than a hand-out.

Inspired by Grameen Bank’s Muhammad Yunus and supported by Premal Shah (Paypal) and Reid Hoffman (LinkedIn), Kiva.org currently partners with hundreds of smaller MFI organizations in over 80 countries. You can also create a Lending Team on their platform, which adds an interactive social dimension to your program and enables your employees to engage even more deeply with your giving initiatives. Set targets (number of new loans, new team members recruited,

F3: Maximize Impact

In a world of increasing transparency, we know it is actions (not words) that are the currency by which companies are judged. Similar in philanthropy, it is outcomes (not outputs) that matter most.

With literally millions of deserving causes and organizations, it can sometimes be difficult to be sure that you are making the right choice, or to trust that the choice you’ve made is having the level of impact you desire.

[Enter Effective Altruism.]

Effective Altruism is rooted in crunching the latest real-world data and research to make evidence-led decisions that have tremendous and exceptional results. Independent organizations like Charity Navigator, Giving What We Can, Give Well, and Founders Pledge all exist explicitly to serve this need and to help donors learn about, identify, and engage with the people and projects that make the biggest difference.

F4: Go Direct

Alternatively, if poverty alleviation is your priority, we can also take some direction from the experts. Global INGOs engaged in humanitarian and economic development projects with the world’s most vulnerable are adopting unconditional direct-cash-transfers with great success.[xii] One example is Give Directly, a top-rated not-for-profit that operates a cash-transfer program for the extreme poor, no strings attached.

The objective with a cash transfer program is to enable and empower households to meet their own basic needs for food and non-food items, and to help them quickly (re-)establish normal economic activity. It is based on the idea that you know best what you need, and that every purchase is also a sale – so local economies will prosper more quickly.

And research has shown that it works. Poverty Action Labs, a non-profit co-founded by economist and Nobel Prize recipient Esther Duflo, has demonstrated that direct-transfer programs minimize intermediaries and psychological stigma often associated with other forms of giving, while at the same time maximizing the social and economic impact for recipients.[xiii]

F5: Ride the Wave

Momentum is the last secret ingredient on our short-list to amplifying your corporate giving program. Adding your efforts to, and becoming a part of, something larger than yourself creates a virtuous cycle. Pay attention to the ebb and flow of the world around you, and ride the waves others are creating. When is your local food bank running their annual food drive? When are the relevant UN International Days & Weeks observed this year? Which holiday season is on the horizon next?

An obvious place to get your feet wet happens each year near the end of November. Based on the idea that the suffering of others should be as intolerable as our own, Giving Tuesday[xiv] is a global movement of solidarity built upon the ideas of a shared humanity and generosity. It actively operates in over 80 countries around the world and their website is a compendium of resources, activities, and events that can help you get started.

REFERENCES

[i] https://www.un.org/en/desa/inequality-%E2%80%93-defining-challenge-our-time

[ii] Wilkinson, R., and Pickett, K. (2010). The Spirit Level: Why greater equality makes societies stronger. Bloomsbury Press, New York.

[iii] https://www.thecultureprint.com/blog/2019/3/29/creating-an-intentional-culture-part-3-culture-keepers

[iv] https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans

[v] https://www.forbes.com/sites/timothyjmcclimon/2020/01/16/corporate-giving-by-the-numbers/?sh=5be2973b6c51

[vi] https://www.forbes.com/sites/georgkell/2018/07/11/the-remarkable-rise-of-esg/?sh=7e8c26381695

[vii] https://howrichami.givingwhatwecan.org/how-rich-am-i

[viii] https://www.ictd.ac/blog/zakat-wealth-redistribution-role-state/

[ix] https://www.oecd.org/dac/development-assistance-committee/

[x] https://www.charities.org/news/employee-benefit-give-your-company-competitive-edge-workplace-giving

[xi] https://alayagood.com/guide/donation-matching/

[xii] https://www.poverty-action.org/impact/cash-transfers-changing-debate-giving-cash-poor

[xiii] https://www.povertyactionlab.org/evaluation/improving-economic-and-psychological-well-being-through-unconditional-cash-transfer

[xiv] https://www.givingtuesday.org/