As you consider your focus for giving, you should also consider which financial vehicle you would like to use to handle the actual dollars. Over time, it’s not unusual for companies to have a mixed portfolio, looking to different options to support different programs.
But lets begin at the beginning…
Every company should have a corporate philanthropy budget managed by the person most knowledgeable about how and why you give. In the early stages, it’s likely that this person might not be called a CSR (corporate social responsibility) professional. What matters is that the company’s “give back” function resides with the person in the role; someone who can track what is given to what organizations. This pool is funded annually as a part of the company’s budgeting process. Keeping all contributions tied to this budget is helpful both to see what you are giving and to provide information to receive tax relief for your donations.
The budget may contain several categories, including donations given because of history, support for organizations where executives serve on the board, funding for a local grant program, and money to support employee-led initiatives. These categories will change over time as your program matures, but using them helps you better understand how you are giving and how to tell the stories behind your giving.
How much money you allot for giving is up to the leadership of your firm. Some companies strive to give away a percent of pre-tax profit, while others use a dollars-per-employee formula. More often than not, the budget evolves, first through discovery of how much you are giving already (as discussed earlier in the series) and then as you decide to take on new projects or donations. It is not unusual for the strategic argument behind how much to give, in total, to build over time. If the CEO gave you $1 million today to give away, it might end up being more of a burden than a help if you don’t have the infrastructure in place to handle the work and the thoughtful deliberation.
As you do add line-items to the budget, make sure you keep good notes about why you are adding each investment. What category should the donation be in (history, employee initiative, etc.). The better records you keep from the very beginning, the better off you’ll be as new people are brought into the giving process.
Next time we’ll touch on two other important financial vehicles that may be right for you as your business grows — establishing a fund at a third-party foundation (like a community foundation) and establishing you own foundation (which is a lot more involved).