Corporate Philanthropy

Does corporate philanthropy make a difference?

Can a small business owner with limited discretionary charitable dollars provide benefit to their community? Is there any difference between large corporate philanthropy and small company giving?

While there is no doubt that the largest companies have the wherewithal to donate millions of dollars, both in money and goods and services, there is also no doubt that the small local entrepreneurial company can also have significant impact in the community.

Large company names are often associated with major charities as their benefactors and key contributors. These are the companies that grab the headlines regarding social philanthropic efforts. What we don’t often see is the direct and indirect impact that smaller companies have on those same charities, as well as many non-for-profit organizations within their local communities. Without the efforts of smaller companies and their employees, many local charities would cease to provide their valuable services and fail to remain in existence. This is true for a number of reasons.

While large companies provide major endowments and substantial annual giving to selected national charities of their choice, the smaller company typically focuses their giving on a diverse grouping of local charities. These particular charities typically have small annual budgets and the benefits they receive from local companies go a long way. In addition, local small businesses, as an aggregate group, are typically the largest employer base in any community. Their employees, who also donate on a regular basis, follow the lead of those for whom they work when it comes to deciding which charities to donate to.

In general, corporate giving provides the funds that are typically restricted or dedicated with specificity. Normal corporate philanthropy provides funding that covers overhead expenses and sponsorships for general funds. This is extremely important because many times personal giving is earmarked for specific projects, locations or is pledged currently to the charity; however cash is received later upon some future event such as death. Given this to be true, and the fact that most corporate giving provides current cash flow, the loss of this source from small companies can have a dramatic detrimental impact on many local charities.

As most small and medium-size companies focus their philanthropic efforts within their local communities, should they cease to exist or dramatically reduce their giving based on economic decisions, a ripple effect is felt throughout the community. When a reasonably sized regional employer either moves out of state, is acquired and shuts down its local operations or simply goes out of business, most of the employees find themselves unemployed and stressed. That happens to be the time when many locally supported non-profits are needed for job searches, faith based counseling, psychological counseling and general assistance. Therefore at a time of highest need for these charities, if one of their funding sources has dried up, it causes a significant strain.

Finally, in the case of the situation just described, the employees of that company who had previously personally supported many local charities, now find themselves dipping into savings and retirement funds to exist, and eliminating their charitable giving. The long-term impact on local charities obviously is far from positive, causing many charities to go out of business or reduce services substantially.

Given all of the situations, it is clear that while the small business owner may not realize both the direct and indirect impact they have on supporting the local non-profit community, they do in fact have the wherewithal to make a tremendous difference in the strength of the social services provided within their community, to their neighbors and to their employees.

In the same way that a small business owner stands at the helm of his ship providing leadership, direction and vision, so too can he lead by way of example in terms of charitable and philanthropic efforts. It has long been proven that there is a strong link between giving back and what one receives. By making charitable giving a component of the annual budget discussions, an entrepreneur and business leader can put themselves in the path of clearly profiting in business and prospering in life.