Loosening the Reins in Philanthropy Could Mean Better Outcomes
Corporate philanthropy has trouble responding quickly to urgent needs, but that could change if they worked well with nonprofits and the communities they serve.
"But … we had a plan."
In the world of corporate giving, even the most experienced can find themselves stuck uttering these famous last words when a philanthropy initiative fizzles unexpectedly.
What’s the biggest reason?
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Success in the nonprofit world requires agility, which could mean being flexible enough to revise — or ditch — a plan to meet the needs of the community.
Corporate philanthropy typically follows a strategic roadmap built upon high-level, neatly aligned-to-business objectives that often show little variance year in and year out. Favor is given to those who can best color inside the lines. Leaders are leery of loosening the reins, afraid to let those operating on the ground take some measure of control and make decisions as they see fit. There is a built-in risk-averse inflexibility.
An example of corporate philanthropy’s limits
The limitations inherent to most corporate philanthropy programs took center stage during the COVID-19 pandemic. One prime example is the regrettable development that took place when schools shuttered, and students began studying remotely. While supporting virtual learning was an obvious priority, many corporate programs dedicated to improving educational outcomes had difficulties making the pivot. Students, particularly those in underserved neighborhoods, fell behind, with many lacking laptops and even internet service. This failure to quickly respond to an immediate need exacerbated the achievement gap.
Nonprofits, on the other hand, are well known for their agility; in fact, they must be flexible to survive. Their success lies in maintaining a deep understanding of the changing needs of the communities they serve and reacting dynamically to produce the most ideal outcomes. And when they are staffed and managed by people from the communities they serve, the connections to their clients are even stronger.
And herein lies an important dynamic: Corporate philanthropy, nonprofits and the communities they support should have a symbiotic relationship to keep the flow of information moving and a similar ethos in their respond-to-need speed. At the core of this relationship is a bond of trust as well as a willingness to accept some risk in order to truly achieve the impacts we profess to want to support.
Strengthen bonds and actively listen
The strongest bonds are formed from a place of empathy, where listening and learning take priority over solving and fixing. To achieve meaningful change, it is important to engage people who have expertise in philanthropic priorities, and strong connections and lived experiences, in the communities served.
Granting managers need to build relationships and show up; by being visible and interacting with organizations, leaders and neighbors, they can authentically serve as eyes and ears in the community. They should be trusted equally by their nonprofit partners and corporate business partners who ultimately rely on their expertise. As such, they will be perfectly positioned to identify organizations with actionable ideas for the kind of program development, improvement and resource management that is most responsive to the needs of a community.
Eliminate red tape and rethink stringent rules
Another way corporate philanthropy might rethink flexibility and the symbiotic relationship with nonprofits and communities is in reassessing the stringent requirements around data reporting and other administrative tasks. While it is true that support is difficult to measure without metrics, there needs to be a balance.
For decades, rule-makers in corporate philanthropy have demanded to see reams of data to prove a return on investment; it’s not rare to see impact reports with 25 pages of data points. Of course, this can prove burdensome for nonprofits; crunching the numbers at a granular level requires funding and personnel, and this is exacerbated by every funder needing unique data to meet their particular needs.
Organizations spend significant time and money to meet the needs of funders to better understand the impacts of the dollars they invest rather than directing those resources into actually achieving those impacts. This drain on resources effectively reduces the impact of money donated to critical programs, which amounted to almost half a trillion dollars in 2020 alone. Those who implement such requirements often find their money didn’t go as far as it could have to help the community.
Another instance where corporate philanthropists need to be flexible is in the funding cycle. An organization might give out money at specific times of the year, but when those periods don’t coincide with nonprofits’ needs, it can represent another lost opportunity.
I'm hoping we see a trend where more in corporate philanthropy become willing to drop the status quo of exclusively funding mega-charities with large administrative operations that can easily meet their requirements. Instead, more time and effort should be put into building relationships with diverse-led, smaller and newer nonprofits, lowering their barriers to entry and supporting innovations to help them boost capacity.
Implementing ideas, such as standardizing and streamlining data collection and reporting among organizations working in a specific sector, could be adopted as a means to both reduce reporting burdens and encourage resource-sharing.
We're committed to serving our communities, so let's do everything we can to engage the ones best positioned to understand their needs. And let's continually ask ourselves the question: How can we do it better?
Related Content
- Philanthropy Needs Innovation to Help With Social Problems
- How to Maximize Your Impact With Strategic Philanthropy Tools
- Six Charitable Giving Strategies: Feel Good and Cut Your Taxes
- How to Find Room for Philanthropy Despite Challenging Times
- Five Ways Companies Can Boost Charitable Giving by Employees
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Shelley R. Sylva is the Head of Corporate Citizenship at TD Bank, where she also led the "TD Ready Commitment," a billion-dollar philanthropic initiative focused on social and environmental issues. Shelley is a 2021 Philadelphia Business Journal "Women of Distinction" honoree.
-
A Modern Guide to Money Etiquette: Gifts, Tips, Splitting Bills and More
What is modern money etiquette? The customs for splitting a restaurant check, purchasing a wedding gift, tipping and more have evolved. These guidelines can help.
By Emma Patch Published
-
Want to Give Money to Your Adult Children? 10 Things You Should Know
It’s less taxing to give money to your adult children than you might think. A good plan can help you avoid certain pitfalls — and drama.
By Jeremy Greenfield Published
-
Potential Ripple Effects of Taxing Unrealized Capital Gains
The proposed tax on unrealized gains would be limited to those with a net worth above $100 million, but some see a broad impact on markets and businesses.
By Brian Skrobonja, Chartered Financial Consultant (ChFC®) Published
-
Succession Musts: Thoughtful Planning and Frank Discussions
When it comes to passing on the family business, you don't want anyone to be surprised about who will control or inherit the business after the owner's death.
By David Handler, J.D. Published
-
Here's How to Find Your Way Out of the Inherited IRA Maze
To navigate complex rules on inherited IRAs and RMDs, start by breaking down key terms and common scenarios. A clearer picture of your next steps will emerge.
By Evan T. Beach, CFP®, AWMA® Published
-
Should You Move Your 401(k) to an IRA Once You Hit 59½?
Some 401(k)s allow for in-service withdrawals at age 59½, opening up greater investment options. Here are three reasons for taking the plunge.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
When It Comes to Insurance, How Much Risk Can You Take?
Either you or an insurance company takes on the risk of protecting your belongings from loss or damage. Can you afford to self-insure?
By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS Published
-
Five Ways to Minimize a Higher Capital Gains Tax Rate
With Harris’ proposal to raise the capital gains tax rate (which would require congressional approval), investors might want to consider tax-lowering options.
By Michael Aloi, CFP® Published
-
Collar Investing Strategy Can Help Protect Your Nest Egg
Here are some key considerations for using the collar strategy of put options and covered calls to safeguard your wealth in retirement.
By Matt Amberson Published
-
Understand Your ESOP Benefit: The Diversification Option
You can sell your shares back to the company during your employment years, called diversification in ESOP terms. What are the pros and cons?
By Peter Newman, CFA Published