Last year, U.S. corporations donated more than $18 billion to nonprofits — and billions more if you include the value of employee volunteerism.
Successful companies now recognize that philanthropy is a key component of corporate citizenship and overall business strategy. Too often, corporate philanthropy is random and uncoordinated. To be truly effective, it must be strategic.
To create a strategic corporate philanthropy program, or make an existing program more strategic, consider these seven steps:
1. Understand your company’s reasons.
Corporate philanthropy is motivated by different reasons than personal giving. In business and personal giving, the goal is to make a difference. In the business sphere, however, philanthropy also must contribute positively to an entity’s bottom line.
Numerous reputable studies document the positive impact of strategic philanthropy on corporate profitability. Internally, such efforts enhance (especially among millennials) employee recruitment, retention, productivity and engagement — thereby reducing a company’s cost of operations.
Externally, strategic corporate philanthropy improves customer attraction and loyalty, reputation (with regulators and others), brand awareness, risk management and overall community image. These benefits can increase sales and support a company’s social license to operate.
2. Identify your stakeholders.
Stakeholders are any individuals or groups who affect (or are affected by) your business and its activities.
Internal stakeholders include employees, executives, directors and (in closely held companies) shareholders. External stakeholders include customers, neighbors, activists, suppliers, regulators, investors, public shareholders, lenders, media, community leaders and nonprofits.
It is important to identify which of these stakeholders are most important to your business’ success.
3. Engage your stakeholders.
Then ask your most salient stakeholders what is most important in their interactions with your company. Listen closely to the answers and relate these concerns to your business and philanthropic strategy. Such conversations can develop stakeholders into allies and enhance your company’s growth and impact.
4. Align all of your resources.
Businesses have tremendous resources to contribute to good causes. Too often, however, these efforts are random and uncoordinated.
Aligning all of a company’s resources — including human and intellectual capital, products, skills and volunteerism, as well as financial capacity — in support of carefully chosen nonprofit partners promotes deeper stakeholder engagement.
In addition, aligning philanthropic strategy with a company’s products and operations creates synergy between philanthropy and business objectives.
Examples include health care company support of wellness, disease prevention and cure; resource extraction company support of sustainability; manufacturing company support of environmental issues; technology and other company support of STEM education; and food production company support of hunger-related initiatives.
5. Develop a comprehensive strategy.
Companies devote much time and talent to developing strategies for business success. Philanthropic strategy has rarely enjoyed the same rigorous analysis.
Community citizenship should be considered a key part of annual planning. Philanthropic values and plans should be elevated in importance and incorporated into every aspect of the business — to create a culture that empowers and engages all stakeholders in corporate philanthropy.
6. Communicate with stakeholders.
As part of your corporate philanthropy strategy, create and execute a comprehensive communications plan. Key internal and external stakeholders are too often unaware of a company’s commitment to community.
Developing real two-way communication avenues will create a feedback loop that informs all participants about what works and what does not. Advertising may be a component of a communications plan, but it should be the tail, not the entire dog.
7. Always be authentic.
In creating or refining a culture of corporate philanthropy, make sure that your plan is internally and externally consistent, authentic and transparent. Such efforts engender trust and goodwill among stakeholders. Espousing certain values on the outside and not “walking the walk” on the inside of a company can, in the long run, generate more harm than good. “Culture eats strategy for breakfast,” according to management guru Peter Drucker.
Great resources support strategic corporate philanthropy, including Boston College’s Center for Corporate Citizenship, the Committee Encouraging Corporate Philanthropy, Points of Light and A Billion Plus Change .
In today’s highly competitive environment, corporate philanthropy must be more than random acts of kindness. It must be treated as a critical element of business success — helping companies achieve the highly valued triple-bottom-line of people, planet and profit.
This post originally appeared in the Denver Post on March 8, 2015. It is reposted here by the author with permission.