Corporations are evolving their general philanthropy approaches towards supporting causes more tightly aligned with other company initiatives. This reflects a desire to be strategically consistent, purpose driven, and to concentrate giving that produces the most impact. We see this first-hand with our progressive CyberGrants clients. But don’t just take our word for it. There are several industry studies that validate this trend.
A migration from the general to the specific.
In its 2018 Giving in Numbers report, the Chief Executives for Corporate Purpose (CECP) spell out how corporations are redistributing their dollars. Grantors are distributing funds to fewer grantees, but in larger amounts. While the number of individual grants decreased by 22% from 2015 through 2017, the size of those individual grants increased 19%. At the same time, the grantmakers on staff were focusing on fewer individual nonprofits. Each staff member worked with, on average, 52 separate nonprofits during 2015. This fell to 38 in 2017 — a 24% decrease.[1]
Fewer programs, more dollars.
There’s a bigger trend here. We are helping more and more companies concentrate their philanthropy toward focused funding programs. Giving in Numbers defines these as programs towards which a company allocates 20% or more of total giving. Companies have on average at least one or two such programs. Moreover, 40% of companies devote their highest percentage of total giving toward the strategic focused area that they identify as the top priority.[2]
Here’s a sampling of how industries are aligning to their chosen causes.
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The Energy sector gives its highest outlays of cash to K-12 Education and Higher Education for support of STEM programs, and to Disaster Relief.
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Consumer Packaged Goods figures highest in contributions to Environment and Culture and Arts.
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Healthcare devotes its greatest efforts to Health and Social Services.[3]
Less about pure shareholder value, more about purpose.
Why are some of the greatest corporate leaders in philanthropy adopting cause alignment as their best practice? Well, it’s good business. Both for the overall business, and to maximize philanthropic impact.
Our clients talk to us about “purpose.” In the CECP study, purpose reflects a broader category of constituents and stakeholders, with special attention to customers and employees.[4] How prevalent is this adoption of purpose? Among CEOs, 64% say their company operates with a larger purpose and it is a powerful motivator; 24% say they mostly operate with a purpose and it is becoming increasingly important.[5]
Operating with purpose is more than altruistic. It’s a growth driver. Institutional investors view companies with purpose as being able to look beyond the short view and create long-term value.[6] Indeed, 85% of purpose-led companies show positive growth, and 58% of companies with a clearly articulated and understood purpose experience growth of more than 10%.[7]
Purpose = signature initiatives.
Our clients translate purpose into executable “signature” initiatives. According to the ACCP, 28% of members have signature programs. Of those, 88% are directly tied to the company’s business objectives. Moreover, signature programs apply to both grantmaking and employee engagement. To best-support their signature programs, 36% of CEOs said they would seek deeper impact with fewer partners and bigger grants, while 28% said they would focus on employees’ volunteering and giving.[8]
Measuring societal impact.
Here’s where the rubber meets the road: Corporations that align their causes around strategic areas are more likely to measure the societal impact of their efforts.[9] And once they do, the impacts are potentially huge. IO Sustainability applied its Project ROI methodology in partnership with a Fortune 1000 company to assess the impact of a cause-alignment initiative. The findings? Taking such a leading edge, strategic approach could result in a triple-digit percentage increase in impact from a corporate citizenship portfolio.
Now that you know this, what can you do?
The studies above clearly illuminate the reasons for realigning your CSR portfolio. More portfolio agility can lead to greater societal impact: Agile Social Impact.
Where to start? The essential precursor to such a realignment effort is to have a clear picture of your programs and their disbursement channels. That requires a deep analytics and reporting capability. That’s us. Let’s talk.
[1] CECP, in association with The Conference Board, Giving in Numbers: 2018 Edition
[2] CECP, Giving in Numbers: 2018 Edition
[3] CECP, Giving in Numbers: 2018 Edition
[4] CECP, Giving Around the Globe: 2017 Edition
[5] CECP, CECP’s Investing in Society Report, June 2017
[6] CECP, CEO Investor Forum 3.0 Executive Report, [event held February 2018]
[7] CECP, CECP’s Investing in Society Report, June 2017
[8] CECP, CECP’s Investing in Society Report
[9] CECP, Giving in Numbers: 2018 Edition
Contact information:
Liz Bardetti
[email protected]
(978) 494-8045
Source: Corporate Social Responsibility, Sustainability and Cause Marketing News