What’s Wrong With Corporate Giving?

Large companies give huge amounts to charity. Last year the FTSE 100 handed over a combined total of £2.1bn in charitable giving, approximately 1.6% of their pre-tax profits. And companies are doing great things for, and with, charities – Sainsbury’s alone has donated over £100m to Comic Relief since 1999. Lots of money flowing, professionally managed relationships and plenty of good ideas. All at a time when the charity sector is feeling the pinch. What is not to like?

Quite a lot. In fact, we’d go so far as to say the system is broken, and at risk of being first in the budgetary firing line during turbulent economic times. Nothing which follows belittles or denigrates the good things which companies and charities do together. Corporate giving does a lot of good. But it could do so much more. Here are three things that are wrong with corporate giving:

1. The “Charity of the Year” model is a lottery, and one that only millionaires can play.

The nearest thing to a lottery win in the third sector is being picked for charity of the year by a major retailer. The typical approach is one of leveraged giving: the corporate provides seed funding and, by enabling fundraising through its customers, staff and suppliers, significantly more is raised. Multiples of 20:1 are not uncommon, leading to donations in the £ millions rather than thousands.

However, this golden ticket is only available to charities that meet strict requirements such as wide appeal, national reach, professional pitching skills and a heart string-pulling cause. Kids, cancer and animals preferred.

At a time when large charities are experiencing growth at the expense of shrinking small-medium sized charities, the same big charities win again and again and again.  Most eligible charity partners have an annual income of at least £5 million, which means that the charity of the year model excludes around 98.7% of UK charities.

2. Corporate volunteering paints the windows shut, leaving valuable skills at the doorstep.

Most major companies have employee volunteering programmes in place. The UK government has even pledged to introduce a standard three days of paid volunteering leave. This amounts to a huge investment by business, and by the ‘receiving’ charities.

However, when corporate volunteers wearing identical t-shirts decorate school halls and revamp community gardens, the standard of their work leaves much to be desired. The impact is far greater when volunteers give the skills they have spent years honing in business: be it as coaches, marketing consultants, business mentors, trustees or school governors. This pays back to the employer too. Volunteers learn new perspectives on their day-to-day job: seeing first-hand why SMEs struggle to pay invoices on time, what marketing techniques work best in local communities, or finessing their coaching skills with a young person struggling to access the job market.

Companies should accept unskilled volunteering for what it is – not an exercise in social impact but a fun, culture-building day out with a social element – and, accordingly, pay fair, commercial rates for the privilege.

In the UK, recent research by Three Hands suggests a big discrepancy between what charities really want from corporate volunteers (support with fundraising!) and what they get (unskilled team projects!). But beggars can’t be choosers.

3. Community investments attempt to pay shareholders’ returns in warm feelings.

Community investment, done right, produces business benefits: improving employees’ skills and their company’s reputation, giving access to new markets, bringing people into employment, to name a few. However, sloppy thinking has created a perception that social investment is a ‘good thing’ and therefore impact measurement is simply a nice to have.

By focusing on inputs (say, £s invested) and outputs (say, the number of beneficiaries) rather than impacts (what has actually changed), companies have about as much of an understanding of their community impacts as a theatre critic would have of a play by studying the price of the ticket, the number of actors and the duration of the performance.

“Measurable”, of course, does not always mean numbers. Lives transformed, or even saved, cannot always be successfully analysed by questionnaires to tell their story (“Please tell us, on a scale of 1-10, how hopeless and depressed you felt before your visit. And, again on a score of 1-10, how hopeless and depressed were you afterwards”).

Becoming a bit more serious about measuring impacts not only provides an incentive to do better in the future, sharing findings openly can help others make smarter decisions too. In a brave move, and frustrated by the lack of openness among charitable foundations, Shell Foundation tracked the impacts of $78m worth of its grants. The conclusion: 80% of the projects it supported failed to achieve either scale or sustainability.

What to make of this?

Just like “no one ever got fired for buying IBM”, by overly limiting their charity choices, companies miss out on a world of wonderful partnership and impact opportunities.

Our contention is that for the corporate-giving Cinderella to attend the fundraising ball, and significant investment to flow, partnerships must be strategically important. It is hard to shake the suspicion that some charities just managed to get their proposal onto the right desk at the right time. There are some excellent fundraisers out there, able to pitch schemes to excite community managers, even with tenuous fit.

Companies must think laterally and deeply to tackle social problems, which may lead to counter-intuitive pairings:

– Deutsche Bank helps art school graduates act more like entrepreneurs, growing the SME market that is a mainstay of their banking client base;

– Samaritans partners with Network Rail to identify, approach and respond to potentially suicidal people on the rail network; and

– Timpson’s, the key-cutting and shoe repair business, works with prisons to give ex-offenders a ‘second chance’ and in return gets more loyal employees.

Ultimately, for corporates to realise the potential value of community investment, they need to have honest conversations about impact rather than inputs. Only then can they build a robust case for deepening relationships and for maintaining, or even increasing, the level of giving. And that is something worth fighting for.

Simon Hodgson, Rosie Towe, Christian Toennesen – Carnstone Partners LLP