For many years, successful corporations operated their charitable contributions independently of their business strategies. This was true whether giving was handled through the corporation's foundation or directly through the corporation.
In the grand scheme, that approach was strained in the 1980s, as hundreds of companies came under wrenching financial pressures. The resulting cost-cutting hit everywhere, including charitable giving. "Anything that didn't show value was likely to face the ax-or at least cost-trimming," says Linda Gornitsky, president of corporate philanthropic consulting firm LBG Associates, Stamford, Conn.
But things have changed. Gone are the old ways, which in some cases were exemplified by reactive giving in response to requests, or supporting organizations favored by the CEO, says Gornitsky. "There is a more strategic approach to giving that takes into consideration the business objectives, community needs, and the interests of employees."
Cummins Engine: Community Focus
Diesel engine manufacturer Cummins Engine, Columbus, Ind., exemplifies a giving effort focused on local needs that benefit communities, and therefore Cummins. The Cummins Engine Foundation giving program is very much tied to the communities where the company has facilities, says Tracy Souza, executive director of the foundation. "We do most of our work in communities where we have plants."
Cummins concentrates its support in three areas: equity and justice, youth education, and community quality of life. The foundation has had a formal commitment in these three areas for about 20 years, according to Souza.
The foundation identifies the major projects and "gaps" within localities based on Cummins' knowledge and research by its staff in these communities.
Citigroup's Global Outlook
In contrast to Cummins, global financial concern Citigroup takes an approach not tied to specific localities, which makes sense given that it operates in thousands of locations around the world.
About 75 percent of its giving revolves around education-both K-12 and higher education-and community development. In both areas, there is a link with the "business interest" of the company, says Paul Ostergard, CEO of the Citigoup Foundation, New York. In the case of education, the business link is forged several ways:
- The charities support employee recruitment and diversity efforts as Citigroup emphasizes scholarships and educational programs for women and minorities;
- By specifically supporting "financial education" as a focus of its K-12 donations, the company helps to build financially literate consumers who may one day be customers of its various financial products and services; and
- As technology usage is emphasized for K-12 education, the company's giving strategy contributes to making future consumers more comfortable with using computers and telecommunications tools to access financial products and services.
With scarce resources, measuring the effectiveness of corporate giving efforts is increasingly important. LBG's Gornitsky recommends that companies set up goals for what they hope the total contribution program will achieve for the company. This could be viewed in terms of strengthening community ties, building employee commitment through their participation, or associating the company with an issue that advances an appropriate corporate and community interest.
Once measurement criteria are selected, make plans to revisit the metrics frequently. Given the nature of many programs and the limited resources that a company can apply, assessment often is still something of an art.
"The measurement process is continually evolving," says the Cummins Foundation's Souza. "We're never 100 percent comfortable" with what is being done.
Cummins is just beginning a major reassessment of its foundation, something it does about every 10 years. The process involves "a look at history, traditional giving patterns, and the issue of [whether to be] responsive as opposed to proactive."
As Cummins deals with the complex realities of working in a global economy, for instance, its charity experts are assessing international dimensions to its giving strategy.
At Citigroup, Ostergard says his staff assesses programs and priorities two or more times each year. "We try to step back and see if we are focusing on the right things for the company."
(Citigroup, 212/559-0173; Cummins, 812/377-3569; LBG, 203/325-3154)
Traditional vs. Strategic Giving
Traditional Giving Patterns
- Giving may not be in alignment with business objectives
- Contributions might support a panoply of issues and/or organizations
- Giving might be driven by personal preferences of the CEO
- Giving might be reactive
The New Model
- Causes and organizations are carefully selected for alignment with business objectives, employee preferences and community needs
- Contributions are focused in a few key areas
- Emphasis is on assessing results
Source: PR NEWS