Labor of Love

Establishing a Company Giving Program

A corporate giving program can help attract and retain employees, increase staff morale, and reduce corporate tax burden. The Chillicothe-Ross Community Foundation has worked with numerous local businesses to create giving programs that serve the community. Call us to discuss your options for corporate philanthropic programs.

Corporate philanthropy is thriving in the U.S. despite tough economic times. According to the 2003 Giving USA study, a philanthropic survey compiled by the Center on Philanthropy at Indiana University, corporate giving rose 10.5 percent nationally in 2002, compared with a year earlier.

The rewards of a corporate giving program are well known: it can make a real difference in the community and help establish the company as a responsible citizen. A giving program can also help attract and retain employees, increase staff morale, and reduce the corporate tax burden.

Corporations are taking note that consumers and potential job applicants are expecting them to be more socially conscious. According to a 2002 survey sponsored by Cone, a Boston consulting company that links businesses to social causes, 84 percent of people surveyed say it is important that the companies doing business in their communities exhibit a commitment to social issues. Additionally, 77 percent of those surveyed would consider a company’s social commitment when deciding whether to accept a job offer.

Companies often establish a private foundation to accomplish these goals. However, community foundations frequently provide the same services at lower cost and with fewer administrative hassles. Additionally, community foundations can also provide strategic planning consulting to businesses that need assistance with assistance identifying their long-term philanthropic goals, and establishing employee programs such as scholarships and matching gift programs.

Matching Businesses and Local Nonprofits

Community Foundations are virtual libraries of information about every nonprofit in their respective communities. They know the programs that are working and those that are in need of special assistance.

Managers at community foundations can work with companies to align their core businesses with a special charitable focus. For example, if a paper company wants to focus its efforts on community recycling, the community foundation can help them identify appropriate community programs to support. Giving programs with this kind of special focus can help attract employees and boost morale by showing that the firm is a conscientious player in business and philanthropy.

Community foundations can also match companies with charities that are overlooked. A smaller company’s donation to a national philanthropic organization may be dwarfed by a million-dollar gift from a larger company. A smaller firm can really benefit from a community foundation’s knowledge of local issues and charitable organizations; their experience matching gifts with programs can maximize a company’s local impact and give community exposure that shows the company is a good neighbor.

Staying Abreast of Local Needs

Community foundations also keep their corporate partners up to date on important community needs. For example, in the hometown of one community foundation, the mayor proposed a revitalization of the city’s urban downtown area. The community foundation initiated a conference of many local businesses that give through the community foundation to create a strategic assessment for an urban renewal program. As a result, the meeting yielded a new urban renewal fund and a union of local philanthropic leaders.

The companies involved with the community foundation were invited to take part in a solution that pooled resources and affected real and immediate changes in the lives of local residents such as improving housing and education. For smaller businesses, this connection with the community foundations can be especially valuable; they are alerted to pressing issues and have a first shot at participating, keeping them visible within the community.

Cost-Effective, Flexible Philanthropy

In addition to making a valuable difference with local nonprofits, facilitating corporate philanthropy through a community foundation makes economic sense. In a private foundation, a company would have to grant 5 percent of the assets in that foundation each year to maintain the nonprofit status. But if the fund were through a community foundation, no annual payout amount would be required. This allows the corporation great flexibility in its giving program; the company could grant as much or as little as it wanted. In addition, a private foundation must pay an excise tax each year, which is equal to approximately 1 percent of its assets. A fund with a community foundation does not have to pay that tax.

Some community foundations also offer tax credits for sale at a discount. For example, a company might have an opportunity to purchase $1 million worth of tax credits for $900,000, saving $100,000 in state taxes for the year. Because of the affiliation with the community foundation, a company would have an opportunity to purchase these credits.

Setting Up a Corporate-Advised Fund

It takes about an hour to set up a corporate advised fund at a community foundation. Community foundations employ money managers, tax experts, lawyers and researchers, saving all the hassles of hiring a private staff. Community foundations also handle all of the tax burdens: they fill out returns each year, keep public notification forms up to date, and are completely responsible for any audits. Outsourcing the administrative aspects of corporate philanthropy to a community foundation saves thousands of dollars each year in these operating expenses. And because a community foundation is a nonprofit itself, it doesn’t factor its own profit in to any of its minimal fees.

Community foundations can handle gifts of stock, real estate, art collections or other nontraditional assets to establish a fund. With a corporate advised fund, the community foundation holds the assets and makes gifts as the company wishes. It looks and feels like a private foundation, and the community foundation can be as invisible or visible as the company wishes. The community foundation merely acts as a knowledgeable, nonprofit friend and expert in the administrative details and community programs.

Community foundations can provide philanthropically minded businesses with the resources they need to make a difference in the communities where they operate and in the lives of their customers and other neighbors.

Written by HNW for Community Foundations of America.
Copyright 2003. Used with permission.