Process of GivingStreamlining philanthropy in your business operation to get the most bang for your buckStory by Sean FitzgeraldLike any other aspect of running a business, giving money is a function every owner or manager would like to do as efficiently as possible. As with evaluating vendor bids or hiring a human resource consultant, you want the most bang for your buck.
But the aspect of community building – providing financial philanthropy to local services and capital campaigns aimed at improving the quality of life in a community – isn’t often included in the curriculum for a business management degree.
Why then – as opposed to carefully scrutinizing cash flow or writing up a meticulous marketing plan – is less careful consideration given to philanthropic giving?
For many smaller companies, corporate philanthropy is often an afterthought. Many simply give the same amount to the same favorite local charity year after year. Some companies throw a little bit of money at every charitable request coming their way. Some well-to-do businesses give nothing back to their community at all.
The role a business has in building community isn’t one that has to be done alone. Like bringing in an outside expert to provide financial or legal advice, businesses can get assistance from community foundations and United Way organizations to channel their charitable dollars meaningfully and efficiently.
The Community Foundation of the Fox Valley Region Inc. works with various smaller companies interested in bringing more structure into their philanthropy. Like similar community foundations in Oshkosh and Fond du Lac, staff begin the process by asking the donor why they give charitably in the first place. For some, it’s a sense of community or an outlet to support the causes their employees care about most. Sometimes charitable giving is done to improve an end-of-the-year tax position. Sometimes it’s done to generate and heighten name recognition.
“We tell them, ‘It’s OK to say that,’” said Cathy Mutschler, vice president of donor relations for the Community Foundation of the Fox Valley Region. “There’s so many small businesses who do their charitable giving out of their marketing budget. They often consider it part of their public relations or their community relations.”
Tweaking the giving process
Jewelers Mutual Insurance Co. in Neenah has a long history of giving back to the community which supports its 170 employees in the Fox Valley.
For years the company had been a pacesetter employer for the United Way Fox Cities annual campaign.
The insurer of jewelry-related businesses and individuals had always taken requests from schools, arts and cultural organizations, youth programs and local human service agencies for financial contributions to help these not-for-profit initiatives thrive, said Darin Kath, chief executive officer for Jewelers Mutual. Each month, a corporate contributions committee made up of company leadership would gather to evaluate the requests, ultimately deciding which efforts would be cut a check and which groups would be turned down.
More often than not, an organization would receive some proceeds. As a result, the company was making a substantial amount of smaller gifts, Kath said. It was difficult at times to evaluate the impact those gifts were making. And the giving decisions didn’t necessarily reflect the interests and concerns of the entire staff – just those of the few people on the corporate contributions committee making the decisions, sometimes arbitrarily. There wasn’t much strategic focus to Jewelers Mutual’s corporate giving program.
After Kath moved into the top role at Jewelers Mutual this past spring, he identified a number of changes he hoped to pursue within the organization, including its philanthropy.
“First of all, we needed to be giving more money,” Kath said.
Jewelers Mutual established a set amount it would donate to not-for-profits each fiscal year, designating a set percentage of its annual surplus. The company also decided to place a more strategic focus to its giving, and to give to initiatives that were important to Jewelers Mutual employees. To determine the latter, the company surveyed its employees by providing a list – by category – of all the groups that had received contributions in the past and other notable charities in the Fox Cities. Employees voted on the causes that had the most personal meaning.
“We took the top four categories and decided that’s what we would use to determine our giving going forward,” Kath said.
In April 2007, Kath and other officials from Jewelers Mutual met with Mutschler and the staff at the Community Foundation of the Fox Valley Region to establish a fund in their name. Jewelers Mutual writes out one large check to the fund each year, rather than issuing several small checks to individual charities and having to track down and administer the paperwork to ensure the tax deductibility status of the gift.
Requests for donations from Jewelers Mutual are directed right to the community foundation, where not-for-profits can go online to access an application for a financial contribution. The community foundation helps to filter the requests by determining which are a good fit for the guidelines Jewelers Mutual established when it set up the fund. Ultimately, the contributions committee at the company makes the final decision on who and how much to give, but the fund arranged through the foundation made the process of giving much easier.
“It streamlined the process so that we could focus on the decisions of where to donate, and (the foundation) could handle the administration of it,” Kath said. “Now we have guidelines that are followed instead of it being a decision that came from me or from one of the other executives.”
Kath said the company also made a strategic decision to make fewer grants, but with a more substantial dollar amount attached to each grant.
A gift that lasts forever
Businesses have traditionally been accustomed to giving to immediate needs, often in the form of assisting a not-for-profit with operating funds or providing a donation toward a capital campaign.
More than ever before, companies are establishing their own charitable funds – sometimes even setting up their own private foundations – as a means of ensuring long-term support for the community.
In the contemporary global environment where local businesses are sold to outside private equity firms and multi-national conglomerates, small, locally held firms have a greater interest in creating a lasting legacy for themselves, said Eileen Connolly-Keesler. executive director for the Oshkosh Area Community Foundation.
She said the community foundation in Oshkosh has experienced a sharp increase in the number of funds established by businesses, families and other community groups to provide some perpetuity to themselves.
“It’s to create some presence or permanence for their company,” Connolly-Keesler said. “It creates a legacy. It says that company was here.”
It makes sound business sense to support local arts and cultural organizations and human and social service agencies, said Sandi Roehrig, executive director for the Fond du Lac Area Foundation.
With an already tight labor force and an increasing demand for well-educated, highly skilled workers, employers are becoming more concerned about competing for employees as Baby Boomers transition into retirement. One of the most prominent attributes to attract top-notch employees from outside the region is a community with a high quality of life.
And there’s often a direct relationship between a high quality of life and well-funded local charitable organizations.
“The workforce of today is really looking for quality of place and looking for quality of life,” said Roehrig.
At the same time, employees today seem to be more aware than ever of the role their employer plays in community building. So much so, in fact, that human resource departments often tout the company’s philanthropic efforts among the other amenities it offers when recruiting new hires.
“Employees are asking the question more than ever before of ‘What kind of corporate citizen is (my employer)?’” said Curt Detjen, president and chief executive of the Community Foundation of the Fox Valley Region.
He stresses even smaller employers can be charitable partners in building a better community. A Future Fund through the foundation can be set up with as little as $1,000. Detjen compares the process to retirement planning, that by starting young and making regular contributions, a fund can grow to a substantial amount over a couple decades.
“It’s important to establish and set aside a particular sum that can be invested in the community,” said Detjen, who said contributions can often be pooled together with other existing funds established to address a particular community need.
Organizations like community foundations and local United Way offices have their nose to the grindstone in identifying the most prominent needs of the community at any given time. It’s their role to make the connection between the donor and the need. Detjen said his staff relies heavily on the most recent Fox Valley Region LIFE Study, which benchmarks community statistics in categories such as teen pregnancy rates, homelessness, child health or domestic abuse, as examples. Similar LIFE studies have been conducted in Fond du Lac and Winnebago counties.
“We use it to give advice on what needs to support in the community,” Detjen said.
Deciding what to give
Deciding how much to contribute to a charitable cause or fund is often more an exercise in bookkeeping than it is evaluating an investment.
Whether it’s a United Way campaign or other fund drive, larger companies often simplify the decision for themselves by offering to match funds raised by their workforce.
“More and more companies are beginning to honor their employees by matching their gifts,” Roehrig said.
While such a match simplifies the company’s charitable giving program, it often has the compounding effect of encouraging employees to give more than they might otherwise, said Sue Panek, executive director for the Oshkosh Area United Way.
“The dollar they donate actually grows,” Panek said. “Employees recognize that when their employer cares about the community they’re in, it provides those employees with a greater sense of security.”
Ultimately, meeting a bottom line expectation always has been and always will be the key objective for business owners and decision makers, Detjen said. Just like the tasks a business owner might outsource for accounting, legal or marketing advice, Detjen suggests it all right – and probably most often appropriate – to consider outsourcing corporate philanthropy and community enhancement initiatives as well.
“We’re happy to have a conversation with donors that are ready to get started on community building,” Detjen said. “That’s all part of our mission.”
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