When it comes to corporate giving, it seems reasonable to assume that most business leaders expect their donations to be as effective and impactful as any investment of time or resources made in their core business.
But in reality, apart from a small minority, most organisations routinely take an ad hoc approach to giving that regularly falls well short of achieving maximum impact.
Indeed, while corporate giving is widely seen as a good thing to do – both for society and the organisation involved – there is widespread and consistent anecdotal evidence that actual approaches taken frequently lack clear direction, are insufficiently resourced, poorly implemented and, as a result, under-achieve.
For many organisations, giving and broader sustainability efforts appear to be viewed as activities that should not intrude on their core operations and performance. According to this view, giving is good but not a priority and something that may done if there are excess resources, appropriate occasions, exposure opportunities or external pressures.
However, if leaders want their giving to deliver the highest impact, would it not be better to organise their giving along the same business principles that guide their primary work?
Best practices in giving and the management of social enterprises have shown that the application of sustainability principles is the best way to use resources effectively, efficiently and achieve maximum impact.
Therefore to increase the chances of giving having a real impact on the cause in question – and delivering some benefit to the organisations themselves – it is critical for business leaders to approach giving from a strategic perspective.
This approach has four elements:
First, it is leadership driven. The active involvement of senior leaders is essential for the success of all strategic activities and to rally support. Without this, giving will almost certainly be consigned to a fringe or publicity-seeking activity.
Leaders who believe their organisations should operate in a sustainable manner will accord giving – and other related initiatives – the priority and attention it warrants.
Second, there must be clearly defined objectives. In particular, senior leaders should identify a broad area or cause to influence and reflect the values of the organisation and what it sees as worthy of its efforts. These objectives and desired outcomes provide guidance to the organisation and a focus for its efforts.
Third, a strategy to achieve objectives. It is essential to formulate a strategy that specifies how the organisation will use its resources to meet the needs of the key stakeholders it seeks to assist. Ideally, this should build on the organisation’s core resources and capabilities.
Indeed the conditions that dictate the need for a giving strategy mirror those for business strategy: insufficient resources, the existence of many competing uses for these resources, uncertainty on how best to “satisfy customers” and the need to operate within changing environments.
And fourth, establish a structure to implement the giving strategy.
This is not a proposal to set up a dedicated or expensive structure to implement the strategy. Rather the primary focus should be to embed actions, resources, measurements and incentives within the existing management structure and not to assign them by default to human resources or public relations.
One approach may be to assign specific responsibilities to appropriate units within the existing organisation and to formulate policies and guidelines to guide these responsibilities.
There are two good reasons for giving: first that it is simply the right thing to do, and second that giving signals an organisation’s values and its commitment – both to a specific cause and to being a good corporate citizen.
Most people now understand their organisation’s broader impact and will infer their leaders’ values from how they manage this impact.
Leaders who espouse the importance of broader causes but who are unwilling to invest in them signal their true values and undermine their commitments in all areas. In a sense, leaders cannot selectively commit to doing right in matters related to customers, employees or firm performance, but not in the impact that their organisations have on other stakeholders.
Effective leaders understand that giving is something that should be done because it is right and because it is right for their organisations. These leaders should adopt a strategic approach to giving.
Leaders’ commitment to their espoused values is also viewed as a proxy for good management, while giving that is managed well is an indicator of effective management and longer-term financial viability.
While there is a danger of over-administration, the adoption of this strategic approach is not a prescription to over-formalise giving, to the point where administration consumes too many resources or distracts the organisation from its primary work.
Nonetheless most firms currently appear to under-elaborate how they will manage their giving.
Senior leaders who would not accept non-structured initiatives in their organisation’s core work should also reject a non-structured approach in their giving.
A strategic perspective to giving will ensure more effective outcomes, as well as signaling internally and externally that senior leaders are focused on success and on doing the right things.