LEARNING HOW TO GIVE CAN BOOST BUSINESS PHILANTHROPY
CityBusiness March 17, 2000

The December 19, 1999 Star Tribune reported that Minnesota’s traditional reputation as a leader in philanthropy was beginning to erode. According to the Newtithing Group quoted in that article appearing in the Money and Business section, Minnesotans could contribute an extra $1.5 billion without much pain. So why aren’t they?

Part of the reason might well be that some Minnesota businesses just don’t know how to do it.

Minnesota’s business leaders like General Mills, Dayton’s, and 3M have been in the giving business for nearly as long as they’ve been profitable enterprises. Over the years, they have learned the business of philanthropy and have been instrumental in defining it through their foundations.

Other businesses choose not to establish their own foundations. They prefer to work through community foundations or to give directly from annual profits. They give large grants to build hospitals and libraries. They give to small contributions to Scout troops and community food banks.

All of them give because they know how to give. In other words, giving is a part of their annual financial plan.

Why don’t many businesses know how to give?

First of all, most entrepreneurs start businesses in order to make money. Many entrepreneurs may think about giving on a personal level, from the profits they receive from a successful business. Giving money away is not part of their business plan.

Secondly, making giving a part of doing business is not something that appears prominently in the curriculum of most business schools. It’s not taught.

Thirdly, smaller businesses may think that there is nothing in it for them in giving. This is where they are wrong. They can truly benefit from learning how to give well and wisely. Then they can take what they’ve learned, incorporate it into their business plan, and do well by doing good.

What can any business, large or small, accomplish by making a plan for giving?

On the most fundamental level, giving to qualified non-profit organizations will generate tax deductions. All businesses give to charities on an involuntary basis, whether they know it or not. Some of their tax dollars are granted by government agencies to a variety of non-profit groups. A business owner may or may not agree with which group is getting how much. Voluntary donations are tax-deductible and give you the choice as to how your donation is used.

As tax time approaches, this alone should be enough to motivate a smart business owner to establish a giving plan.

Looking internally, a rational giving plan can make a real difference in employee morale.

When the boss makes all the decisions without a formal policy, giving can be seen as arbitrary, and it well might be so. On one day, the boss agrees to support an organization brought to her attention by one employee. The next day, she declines to respond to the request of a second employee for no other reason than she wasn’t in the mood. The two employees discuss their separate appeals. The result? At least one employee comes away disappointed, angry, puzzled, or demoralized. Well-defined policies and procedures eliminate vagaries and the appearance of favoritism.

Businesses uneducated in giving may be inefficient in the way they use personnel to administer what grants they do make. That may cost them more than the value of the grants they make to charities.

Smart giving can transform business philanthropy into social investing. Wise, planned social investments will reflect the company’s values and goals, help to create a community that offers a better quality of life for employees, and builds an economy that will provide a stronger market for the company’s products and services.

Just as individuals and businesses develop financial investment plans to ensure their own stability and growth, businesses need to learn what is best for them and their communities as they create social investment plans.

Is the company strictly local in its production and sales? Are there particular institutions that provide entry-level employees? Make social investments that make sense in these areas.

A basic tenet of ethical business is delivering value for the purchase price. Purchasing managers do comparison shopping to make sure that the company is getting the most for its investment. Why should it be any different when a company is making a social investment? Which organization is doing the best job in its field? Putting money into a sure thing avoids the risk of the organization losing or abusing the investment. On the other hand, a wise social investment could help make or break a new initiative.

Are you sure you are getting everything you deserve for your investment? Are you even getting the minimum? The National Society of Fund Raising Executives has issued a Donor’s Bill of Rights. Find out what they are and make sure you are getting them.

How about publicity and recognition for giving? If a company wants visibility, that should be part of its giving strategy. Those who choose to commit to giving over two percent of their pre-tax profits can qualify for the Minnesota Keystone Program. Trade and business associations grant awards to good citizen members. A company that doesn’t give doesn’t win such awards.

Learn how to give. Learn what organizations exist that promote your company’s mission. Learn from the example of others that have successful partnerships with nonprofit groups. Learn what are your donors rights. Then make a plan to give and stick to it. When all parts of the business community give, not just the traditional leaders, we will recover and maintain our proud philanthropic reputation.