Benefits of Becoming Donors/Sponsors for Foundations & Corporation

Part
01
of two
Part
01

Companies Donating/Sponsoring Charity

Several common ways that companies sponsor or donate to causes are matching gifts, volunteer grants, employee grant stipends, community grants, volunteer support initiatives and corporate sponsorships.

Matching Grants

  • According to Potomac Recruiting, Re: Charity, Givinga and Double the Donation, the most common way in which corporations sponsor or donate to causes is through matching grants.
  • For example, Potomatc Recruiting reports that approximately 65% of Fortune 500 companies have matching gift programs.
  • In this form of philanthropy, companies commit to match the donations that are given by eligible employees to eligible charities and non-profits, in either a 1:1, 2:1 or even 3:1 ratio.
  • Ultimately, this form of giving enables both the corporate parent as well as its employees to "maximized the impact" of every donation.
  • Notably, ExxonMobile has one of the more aggressive matching grants for employees, with the company donating up to $3 for every $1 given by employees, for a maximum of $22,500 in matching grants per employee per year.

Volunteer Grants

  • Industry experts (e.g., Potomac Recruiting, Re: Charity, Double the Donation) note that matching grants are closely followed by volunteer grants in terms of popularity, with Potomac Recruiting asserting that volunteer grants are the second-most popular form of corporate giving.
  • Similar to matching grants, volunteer grants are based on the employee contribution.
  • In this case, companies offer to donate a specific monetary amount to an eligible cause after eligible employees complete a number of volunteer hours.
  • Double the Donation adds that volunteer grant programs are typically structured with thresholds rather than an exact hour-to-donation ratio (e.g., an employee must volunteer for a minimum, predetermined number of hours).
  • One notable example of this is Microsoft and the company's volunteer grant program, which donates over 3 million hours to volunteer work each year.
  • In this case, Microsoft donates $25 to the charity of an employee's choice for every hour that he/she volunteers.

Employee Grant Stipends

  • Potomac Recruiting, Re: Charity and Double the Donation highlight employee grant stipends as another common way in which companies make donations or sponsor causes.
  • Specifically, Double the Donation describes this form of giving as one where corporations will award grants to employees, who are then allowed to donate those grants to the nonprofit of their choice.
  • Potomac Recruiting adds that while some corporations give their employees a list of causes to choose from, others have employees submit applications for these grants and approve them on a case by case basis.
  • Specifically for BP, the company's Fabric of America Fund gives employees $300 each to donate to the non-profit of their choosing.

Community Grants

  • According to industry experts (e.g., Potomac Recruiting, Re: Charity, Givinga, Double the Donation), community grants are a form of corporate philanthropy that are very common within large corporations.
  • In contrast to matching gifts, volunteer grants and employee grant stipends, Potomac Recruiting notes that community grants are completely initiated by the corporate parent, and involve the company setting aside funding for community needs.
  • Thereafter, non-profits and other community organizations (which are often located in the same geographic area as the company) apply for this source of funding and explain how their mission would benefit from the donation.
  • One notable example of this type of corporate philanthropy is State Street, which has donated over $20 million in grants to more than 40 communities globally.

Volunteer Support Initiatives

  • In some cases, corporate philanthropy takes the non-monetary form of organized employee volunteering, per Potomac Recruiting, Givinga and Double the Donation
  • While smaller companies may have workforces that are "stretched too thin" for this form of sponsorship, organizations ranging from small businesses to Fortune 500 companies actively participate in this form of giving.
  • In particular, some companies and their employees volunteer to support areas where they have specific expertise, such as a cybersecurity company offering free support to ensure the safe storage of patient data at a community center.
  • Kraft Heinz is an example of a company that combines such non-cash volunteering activities with marketing campaigns and financial contributions, such as within the company's partnership with Huddle to Fight Hunger.

Corporate Sponsorships

  • Finally, Re: Charity and Double the Donation also note the popularity of corporate sponsorships as a form of donating to causes and charities.
  • According to Investopedia, corporate sponsorships is a form of both marketing and charitable contribution, wherein a company commits to making a donation to a project or program in exchange for the "right to be associated" with it.
  • As such, companies and their causes mutually benefit from the arrangement, in the form of positive marketing and financial support.
  • A key example of corporate sponsorship is Papa John's partnership with the historically black university Bennett College.
  • Specifically, Papa John's provided the school with $500,000 in 2019 alongside other corporate resources, and received significant positive press for contributing to HBCU.
Part
02
of two
Part
02

Corporate Sponsorship/Donation Trends

Recurring giving, donor-advised funds and the tracking of giving impact are three current trends in corporate donations and sponsorships.

Recurring Giving

  • Recurring giving was selected as one of the top trends in corporate sponsorships/donations based on the fact that a preponderance of industry experts (e.g., Givinga, Classy, CAF America, CyberGrants) are currently highlighting this giving approach as a theme in corporate philanthropy efforts.
  • According to Givinga, monthly recurring giving by corporate donors increased by a striking 40% in 2018.
  • In parallel, Classy reports that recurring donors are up to five times more valuable than one-time donors and 42% more valuable than a fundraiser for charities.
  • This is in part because recurring corporate donors make an additional, one-time gift approximately 75% more often than one-time donors.
  • Notably, recurring giving by companies can take a variety of forms according to Givinga and CAF America, including that of monthly donations by corporate parents or donations that are made throughout the year by corporate employees.
  • Most recently, corporate recurring donation programs have been enabled by the rise of charitable automation tools, which allow companies and their employees to automatically donate directly from paychecks or other revenue sources.
  • Tencent, Google and Dropbox are all examples of companies that are embracing such recurring giving programs and automated tools.
  • Additionally, charity:water (The Spring), Watsi (Universal Fund), The Adventure Project (The Collective) and World Help (Child Sponsorship) are examples of non-profits and other charitable organizations that are leaning into this trend by establishing recurring giving programs.

Donor-Advised Funds

  • Donor-advised funds (DAFs) were identified as another trend in corporate philanthropy based on both the quantitative evidence of recent DAF growth as well as the fact that multiple industry experts (e.g., Givinga, Classy) are currently reporting the rise in popularity for this form of corporate giving.
  • DAFs are a form of brokerage account that allow donors to enjoy an immediate tax benefit when they contribute funds, irrespective of when the funding is actually donated or distributed to a specific cause.
  • Giving reports that there are now over 450,000 DAFs, with total assets in excess of $110 billion and annual new grants of over $20 billion per year.
  • This is up from $85 billion in assets in 2018 and only $29 billion in assets several years prior, according to Classy.
  • Givinga suggests that the opportunity for immediate tax deductions along with the administrative savings of working through an external third-party are major reasons for the rise in corporate giving through DAFs.
  • Moreover, as with recurring giving, Classy reports that the rise of DAF-related workplace giving software is increasingly enabling corporations and their employees to quickly and easily make donations through this mechanism.
  • Meanwhile, American Express, Dow and CarMax all examples of major companies that have embraced DAFs.
  • In parallel, Fidelity Investments (Fidelity Charitable), Goldman Sachs (Goldman Sachs Charitable Gift Fund), Schwab (Schwab Charitable) and Vanguard (Vanguard Charitable) are examples of companies that are leaning into this trend by creating DAF services.

Tracking Giving Impact

  • Lastly, the fact that corporations are increasingly tracking the impact of their philanthropic efforts was chosen as a key trend based on the insights of industry experts (e.g., Givinga, Good Returns, The Center for Effective Philanthropy), who consistently report that corporations are increasingly calculating the return on investment (ROI) of their sponsorships and donations.
  • According to Givinga, corporations previously viewed philanthropy as a "necessary cost" that provided "few measurable results."
  • However, at present, Givinga reports that approximately 87% of companies are actively measuring the results of their donations and sponsorship campaigns.
  • This trend in corporate philanthropy is somewhat driven by the increasing focus on corporate social responsibility, given that 81% of customers will make "personal sacrifices" to buy from responsible companies.
  • Additionally, the availability of tracking software is making it easier for corporations to capture and monitor analytics related to their giving campaigns.
  • Meanwhile, Salesforce and the company's Philanthropy Cloud tracking product is an example of a company that is illustrating this trend.
Sources
Sources