What Can Individual Donors Learn From Corporate Philanthropy?

Feb. 25, 2009, The Wall Street Journal — What can individual donors learn from the philanthropic practices of big corporations? We talked with three corporate leaders at an annual gathering of the Committee Encouraging Corporate Philanthropy (CECP) to find out how big companies make charitable gifts and what their practices can teach individual givers. We also quizzed them about corporate social responsibility — the buzz-term for putting a good charitable or socially-aware face on your company — and whether it helps attract new, younger employees.

The Wallet discussed corporate-giving trends with Christina Gold, chief executive of the Western Union Co.; Steve Case, the America Online co-founder who now chairs his own foundation; and Sidney Taurel, chairman emeritus of Eli Lilly & Co.

Case has focused his charitable efforts on expanding access to technology and cutting-edge cancer research, among other things. When deciding who gets his money, “passion is important,” Case says. Case’s brother, for instance, died of brain cancer, spurring the former AOL executive’s devotion of more than $5.2 million since 2001 toward finding cures for the disease. Case also suggests philanthropists tighten their focus as they mull causes to support and consider pooling resources with others to maximize impact.

In an age of complex conflicts-of-interest and various scandals, studying charities before committing donor dollars is a top priority, says Gold, the Western Union CEO. “We do a lot of vetting,” she says. Western Union’s Foundation gives money to nonprofits in Mexico to spur job-creation and also gives money to disaster-relief efforts worldwide. The company’s corporate compliance staff examines nonprofits using similar criteria applied on the business side for deals and other partnerships. Gold says nonprofits her company partners with must be “perfect” — that is, free of major inefficiencies or other questionable practices.

You, Wallet reader, may not have your own corporate compliance staff but there are resources on the Web that can help you vet charities. Among them are Charity Navigator, which shows you how much charities spend on programs versus administrative costs. Guidestar is a one-stop shop for tax forms that offer plenty on information on charities, though at a cost in many cases.

The economic pressure has made it harder to write checks, says Taurel, the emeritus chairman for Eli Lilly, but companies are seeking other ways to contribute. For Eli Lilly, part of that is bringing personalized medicine to 170,000 patients at no cost. For individual donors, this could mean offering pro bono services — such as accounting or IT know-how — to charities you care about. Or teaming up with friends to pool resources and raise money.

All three executives agreed philanthropy — or, more specifically, corporate social responsibility — is no longer an option for successful businesses. The reasons: Today’s prospective employees (read: younger folks) want the company they work for to stand for something more than just the bottom line.

In competing for young talent, Gold notes that prospective employees do their homework on companies. “It really is: What is your brand? What do you stand for?” she says. “They’re looking for companies they want to be associated with.”

Case said more than half of 70 CEOs recently surveyed said employees are the primary motivation for their philanthropy.

Philanthropy also boosts business. Eli Lilly’s efforts help expose their products — medicines — to more markets. Case noted that companies with a strong philanthropic identity attract more customers these days. He pointed to 1% for the Planet, which we blogged about previously, as an example of a successful model. Member companies adorn logos on their merchandise alerting consumers that 1% of the sale will go toward an approved environmental nonprofit.

There is “no question” such strategies help draw business, Case says. “particularly [among] this emerging millennial generation.”

Overall, our roundtable said that corporations are trying to hold the line on giving amid the brutal economic downturn, though Gold conceded some won’t be able (Western Union’s giving is holding steady for now, she said).

Wallet readers, are you holding your giving steady during these trying times or pulling back? Do the above corporate strategies resonate with how you plan your giving? In this tight job market, does a company’s philanthropy or community involvement make a difference when you’re looking at a prospective employer?