Charitable donations by corporations grew by a record 22.5 percent in 2005 (the last year for which figures are available), according to the Giving USA Foundation, which also found that 59.5 percent of corporations increased their contributions. Even after the large increases, corporations still make only 5.3 percent of all charitable contributions in the U.S., compared to 76.5 percent for individuals, with foundations (11.5 percent) and bequests (6.7 percent) accounting for the rest. Hurricane Katrina and other natural disasters motivated much of the increase in corporate donations. But it doesn’t take tough times to create good opportunities for corporate philanthropy.
“There is a direct return on investment on corporate philanthropy,” says Dan Mahurin, chairman, president and CEO of SunTrust Bank Tampa Bay. “Your business benefits by investing in your community to make it a better place to live, work, play and grow.”
Smart Business asked Mahurin how philanthropy provides ongoing opportunities for businesses to help themselves in a variety of other ways and how companies can manage successful programs.
What does corporate philanthropy mean to business development?
With proper planning and forethought, philanthropy can have a direct impact on how you grow your business. It leads to improved standing in your community, improved stature with people you’d like to hire, and it provides many networking opportunities.
Do you have any tips for targeting and narrowing opportunities?
We recommend investing in interests related to your company, your employees, customers or others that you want to influence. Business is all about relationships. When you find common interests with employees and customers, it gives you a chance to build relationships. Philanthropy may start with an employee volunteering for an organization, which could evolve into the employee gaining corporate sponsorship, and a long-term relationship between the employee’s company and the organization they volunteered for.
You have two primary choices: direct donations or corporate sponsorships. Often you can manage your sponsorship, which means you have more control over your involvement and investment. These sponsorships also provide many opportunities for relationship-building but require your time and involvement.
In these tough times, what is a priority?
First, really get to know the organization you’re dealing with, understand exactly what they do and make sure it aligns with your company’s values and philanthropy goals. It’s also important to look for organizations that give a good return on what they’re providing. Expense ratios are an important indicator. The United Way, for example, gives back 87 percent of what it collects, which is very good.
What are the pitfalls of a company philanthropy program?
The biggest is not planning the program and setting goals for what you want it to accomplish. Planning is more than setting a budget and then responding to requests as they come in. It’s much better to play offense than defense, meaning go after what you want to do versus responding to what others want you to do. Corporate philanthropy should have a guiding philosophy and should be managed according to the philosophy.
Another big mistake companies can make is not getting involved. They may think they don’t have the time or budget to make a difference, but that is a mistake. They can make a difference. And don’t forget what a little bit of money can do with a lot of involvement from your employees.
A third common mistake is not doing enough work on the front end to learn about the organizations you’re getting involved with.
How will a business owner know that this effort is paying off?
Deep in your heart, you know philanthropy is worthwhile because it’s the right thing to do.
Sometimes there is a direct correlation. I’ve seen examples where new business could be traced back to sponsorships, at a ratio of about $4 in business for every $1 spent on sponsorship.
The impact of philanthropy is usually not so clear. You may see it when clients say ‘thank you’ for supporting something that’s important to them. You may see it when prospective employees want to work for your company, because it is known for being a good corporate citizen. You may see it with your existing employees, who feel good about coming to work for a company that helps their community.
Frankly, sometimes it can take a long time for philanthropy to pay off. If the community grows because of your support of it, the pie is bigger and you’ll get a bigger slice of it. You build your business by building your community.
DAN MAHURIN is chairman, president and CEO of SunTrust Bank Tampa Bay. A 30-year SunTrust veteran, he recently started the SunTrust Forum, which makes expert financial advice and insight available free to the community. Reach him at (813) 224-2021.