Defining Strategic Philanthropy

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Update: While this blog was written when our old consulting company was up and running, we’ve moved on to bigger things. Check out our new watch company called Diefendorff to find out how we’re implementing some of the things we’ve written about. 

With increased global competition and diminishing profits due to the current economic climate, companies have less money to give to causes and non-profits. More and more frequently, corporations have to reject the majority of donation requests and be more careful in their approach to charitable or philanthropic giving. However, strategic philanthropy allows for a company to not only say yes, but to have an expectation of a positive return. How is this possible?

Strategic Philanthropy:

Definition: the practice of companies by which they target their respective charitable and philanthropic activities around a specific issue or cause that will in turn support their own business objectives. In other words, companies look to use philanthropy as a means to simultaneously and directly benefit their business interests and those of a beneficiary organization.

(for other good definitions, see here: http://www.putnamcic.com/pdf/StrategicPhilanthropy.pdf)

Attributes:

• Strategic philanthropy is affiliated with corporations, not individuals, and usually involves participation from the board of directors and multiple departments.
• Has an expectation of increased company profit, recognition, or other direct/indirect benefits.
• The act of giving in any form is based on research, creative planning, careful execution, analysis of the results, and strategy revisions if company is not seeing their desired results.
• Is mutually beneficial for both the donor company and the non-profit.
  • The donating company (or brand) can increase its reputation in the eye of the consumer as well as participation by leveraging the positive imagery affiliated with the recipient non-profit.
  • Likewise, the non-profit stands to increase: brand value through affiliation with a corporation, a higher level of awareness of the cause with which they are involved, attract new sponsors, donors, and volunteers.

Examples:

• General example: a company donating money to a non-profit organization, such as Junior Achievement, in order to support an executive’s participation on the Board of Directors. If the organization was selected specifically to position that executives to network with other Board members, then it is a strategic philanthropic arrangement.
• Chrysler: Chrysler drastically altered its giving priorities from the general field of education to specifically training prospective employees. Not only were they giving skill training to workers who needed skills to entire into the automotive industry, but they also ensured more efficient employees would be available for hire and reduce the need and cost of in-house training
• Wachovia: Wachovia paired with Teach For America and has seen an increase in employee engagement, retention, and satisfaction. Teach for America allows Wachovia employees to help train incoming teachers at Teach for America’s Summer Training Institute and also volunteer in classrooms across the country. Thus Teach for America has gained access to the knowledge of experienced professionals whose participation, for example in from Humans Services employees, has shaped how Teach for America is run. Likewise, Wachovia employees accepted to Teach for America can defer their employment for two years to teach, thus gaining significant work and leadership experience. Wachaovia also looks to hire Teach for America participants for internships and full time positions.
• Kmart: Kmart partnered with the March of Dimes in 1984 and since then, through corporate volunteerism, fundraising, and sponsorship (don’t worry, a term I will define in a later entry) the company has raised over $55 million dollars for the cause. In addition to supporting the March of Dimes, through this partnership Kmart has also increased its consumer traffic, brand image, and employee satisfaction levels.¹

¹IEG Guide to Corporate/Non-Profit Relationships, 2008