A series on building a giving plan.
When businesses start up and begin to market themselves – whether they’re a new store in the shopping center down the street or an IT company – people come calling, asking for money, asking for involvement. This is all good, but it can be overwhelming if you haven’t thought through what to do and what not to do.
The typical business responds case by case, selecting an event to support, a nonprofit to help or a school to champion. Often these decisions are made by the founder or owner of the company and have a lot to do with what that person cares about. Make no mistake, this isn’t bad. It’s where most businesses begin when it comes to philanthropy, and it can help you learn what works and what doesn’t.
Over time, it’s easy for a lot of money, effort, time, and even product to be used to support the requests you receive – more resources than you might expect. So when you are seeking to be more strategic about giving, deciding to drive it versus respond to requests, it’s important to stop and figure out the actual amount of giving you do. This is kind of like going on a treasure hunt.
How To: How much are you giving?
Review your company’s spending, working with the people who lead key areas marketing, product fulfillment and accounting. Ask everyone to document, the best they can, what the company does for free. This may include:
- Philanthropic donations – If you have a specific budget established for this, great. That makes your life easier. If you don’t, then figure out where the donations are hitting your General Ledger. Are they being assigned to marketing? Or does the CEO have a discretionary fund that’s tapped here and there? This is anything but scientific. You may need to dig through details with your financial team and ask follow up questions to understand why the company spent money on certain things. You are literally building a philanthropy budget line by line.
- Sponsorships - It’s not unusual for companies to mix sponsorships and donations in the same budget. The language people use when they ask for money can be confusing. For example, a nonprofit may ask you to sponsor an event. Is that a marketing expense or a donation? It depends. Ask why the money is being invested. If it is being spent to promote the company and drive business, then it’s marketing (which usually comes with promotional opportunities, logo placement, tickets, and so on). If it’s a charitable gift, done to support the nonprofit because you believe in it and you want to do good in the community, then it’s a gift.
- Employee/community relations – Another area worth exploring is the HR budget where you may spend money on events or efforts that are aimed at connecting your company or employees to the community. For example, you might belong to the local Chamber of Commerce or the Rotary Club. Again, ask yourself why you are involved and whether the money is about benefits you receive in return or about giving. It’s easy to get confused. For example, you may have a membership at the local children’s museum so employees can take their kids to visit. That’s a membership and a company benefit for employees, which is an HR investment. The children’s museum asks you to sponsor an event. You decide to do it because the museum store is a potential customer for the products you produce. That’s a marketing investment. The museum’s executive director then asks you to make a donation to the annual fund, supporting the museum’s operations. That’s giving.
- Products or Services – The final area to consider is the actual products and services you provide to the market. I’m talking about what you, as a business, sell. Say you are a local beverage company, making a new organic product. How many bottles of this product do you donate to nonprofits for their events? What, in dollars, does this equate to? The same applies for professional services. If you provide a service, like Web design, how much of this do you do for free, for charitable reasons (not to help appease an unhappy customer)? Assign the appropriate dollar value to the donation, and count this in your giving total.
Adding it all up!
|Philanthropic donations||$ ________|
|Donations disguised as sponsorships||$ ________|
|Donations disguised as employee relations||$ ________|
|Donations of products or services||$ ________|
|Total giving =||$ ________|
Now that you have a good sense of what you’re giving (and what that totals up to in terms of $s), it’s time to think about what kind of cause you’d like to adopt – what makes sense for your business, your employees, your community. Tune in to the next post we continue the focus on building a giving plan.