Realigning Charity
In the face of recession, many organizations are finding creative ways to give back.
By Celeste LeCompte
At BB&T, the 10th-largest full-service U.S. bank, employees saw effects of the global economic crisis on a daily basis, responding to customer calls, complaints and cries for help. In response, the bank launched its “Lighthouse Project.” Aimed at giving employees a way to respond to the distress they were seeing day in and day out at work, the Lighthouse Project offered each employee US$100 and two hours of paid time off to engage with charities of their choice.
The interest was overwhelming.
“We had more enthusiasm than we expected,” said Cynthia Williams, senior vice president and chief corporate communications officer for BB&T.
Over the two-month 2009 campaign, 19,080 employees donated 53,000 hours and a total $3 million to more than 1,000 projects in their communities. The program reached more than 1.6 million people in the 13 states in which BB&T operates. According to Williams, 43 percent of participants volunteered additional hours beyond those donated by the company.
As with many organizations, the bank’s community outreach activities have traditionally been managed by its foundation. According to Williams, the $3 million Lighthouse Project was in addition to the typical philanthropic activities of BB&T and the BB&T Charitable Foundation.
Giving Despite Loss
Indeed, $3 million is a sizeable figure on its own, but the BB&T Charitable Foundation provided just shy of $6.5 million in grants and other donations during 2008. Despite taking a hit to its net worth, which fell from $22 million at the close of 2007 to $17 million at the end of 2008, the foundation and BB&T continued to give.
The BB&T foundation wasn’t alone. Organizations, philanthropic groups and foundations around the world all felt the impact of the economy’s tumble. According to nonprofit consultancy the Giving Institute, philanthropic efforts in the U.S. dipped 5.7 percent (adjusted for inflation) in 2008.
And the picture painted by economic data from 2009 wasn’t a pretty one, either: unemployment rates, stock prices bottomed, lending for businesses and individuals disappeared and corporate budgets shriveled. For nonprofits, the impact was brutal: more demand for services with fewer resources to go around. In March 2009, the LBG Research Institute estimated that corporate and foundation giving would fall a further 3 percent to 5 percent in 2009—hundreds of millions of dollars in lost revenue for nonprofits.
However, as exampled by BB&T, the news isn’t all bad. For many companies, the economic crisis has helped bring charitable activities out of the foundation and into the plant, marketing office and executive suite. And groups are digging deep creatively to ensure their gifts have the greatest impact.
Re-envisioning Opportunities
The recession realigned charitable activities. Many organizations increased their emphasis on providing basic needs services—food banks, homelessness and housing and health, for example—where they previously emphasized education, the environment or the arts, according to Linda Gornitsky, president and owner of corporate social responsibility consultancy LBG Associates.
Companies such as BB&T that have a strong local presence are most likely to respond to these kinds of direct community needs. Other donors, meanwhile, doubled down on their long-term priorities—but how they support their ongoing initiatives has changed. It’s part of a broader recognition that organizations have more than just dollars to offer nonprofit and community partners.
“I’ve always espoused that you need to look at all the resources that you bring to the table,” Gornitsky said. “Companies will say, we don’t have much cash. You can be cash poor yet resource rich.”
The meaning and potential impact depends on the industry, size and market.
In-kind donations are one popular option for groups strapped for cash. While manufacturing companies are among the most visible donors of in-kind goods, nearly every organization has resources that can be donated, from allowing nonprofits access to meeting and event space in large corporate campuses to donating underused fleet vehicles to local charities.
And, of course, organizations have people power. The last few years have seen an increase in corporate-supported employee volunteerism, from paid time off for direct service activities to skills-based volunteerism and pro-bono work.
In a Parade magazine poll released last month, 91 percent of respondents said they have engaged in at least one activity to make a difference in the past 18 months. Sympathetic employers backed many of these activities, and became more generous with their volunteer time.
However, according to Gornitsky, skills-based volunteerism is a more impactful way for organizations to leverage their manpower for the benefit of communities. Pro-bono professional work and skills-based volunteerism allow nonprofits access to professional skills and services that they need that they wouldn’t be able to buy in the marketplace.
Both are great ways for companies to support nonprofits during a downturn. With reduced financial giving from foundations and more demand for services, many nonprofits see an increase in work at the time when they can least afford to scale up their offerings.
The United Way has long relied on skills-based volunteerism through its Loaned Executive program. During major periods of activity for United Way chapters, regional employers loan United Way an executive for 3 to 4 months. They continue to collect pay through their primary employers, but spend their time planning and managing fundraising events and efforts at United Way partner organizations. According to the United Way, the “program helps put dollars toward member agencies rather than using the dollars to pay for more salary expenses within United Way.”
From 2008 to 2009, the United Way of Dane County (Wisconsin) saw about an 8 percent increase in the number of volunteers for the Loaned Executive program, according to Tom Kuplic, the group’s director of communications.
While the extent of skills-based volunteerism doesn’t reach quite as far as the United Way’s program in many recession-driven examples, organizations with a focus on business services—from accounting to legal help to IT support—may be able to provide a portion of manpower time as a critical piece of their giving initiatives. For meeting professionals, the time is particularly ripe for this approach. Many nonprofits have seen sharp declines in financial returns from major fundraising events; donating time to help plan and organize these events can help increase the funds available for programmatic expenses.
This approach, which can be leveraged by providers of all scales, may have positive outcomes for the donor, as well: Building strong relationships with nonprofits and their partners may help donors build reputations and garner recommendations, potentially earning paying work in the future.
Win-win Approach Winning Favor
This sort of win-win scenario is at the heart of another shift that creative giving experts have seen over the past few years. With reduced budgets overall, organizations are looking to get more bang for their bucks in all expenditures—and community giving can be one way to acrue extra value.
In one example, the San Francisco office of Hoboken, N.J.-based book publisher John Wiley & Sons swapped an annual company picnic for a collective volunteer shift at the Friends of the Library book sale. Rather than canceling the social event in tough economic times, the company was able to give back to the community, further its reputation as a good corporate citizen and still offer employees an opportunity to get together in a non-office context.
Kuplic says the United Way of Dane County has also worked with groups in providing a greater incentive to give. A collection of organizations sponsored a Harley-Davidson Road King motorcycle as a giveaway prize—a move which brought 6,000 new donors to the nonprofit.
Marketing budgets are also an opportunity for organizations to achieve some of the two-for-one pop. The approach, commonly known as cause marketing, isn’t a new one (check out the plethora of pink, Susan G. Komen-branded products on store shelves), but it has gained greater currency in the cash-strapped economic climate. Natural disasters in Haiti and Chile have brought even more attention to this approach, as everyone from multinational corporations to local artists pledge to share proceeds from the sale of their goods with victims in these countries.
Organizations still advertise and market their products, and aligning your brand with positive social activities can have a halo effect that improves returns on marketing campaigns through increased sales and customer loyalty, according to Jim Yunker, vice chairman of the Giving USA Foundation and president and CEO of Smith Beers Yunker, a Cincinnati-based management and fundraising consulting firm.
At the small end of the scale, Yunker says companies that are less able to donate in a down year may offer nonprofit partners a mention in their usual advertising. In Cincinnati, for example, he notes that some car dealerships have added a small tagline to their newspaper ads, encouraging donations to a local food bank or homeless shelter.
Galley Eco Capital (GEC), a San Francisco-based green finance consultancy, leveraged its e-newsletter to reach a wider pool of potential donors.
“We feature art from a nonprofit community partner in our newsletter,” Founder and Managing Principal Lisa Galley said.
Instead of advertising the company, GEC provides prime advertising real estate in the e-mail, along with a short article encouraging its audience—bankers, investors and real-estate professionals—to support that nonprofit.
“The nonprofits love the exposure and the fact that we really champion them to our [audience],” Galley said.
Increasingly, big companies with multimillion-dollar advertising and marketing budgets are tapping into what the Parade magazine study called the ongoing “compassion boom.”
Pepsi, which launched its Pepsi Refresh Project last year, initially intended to capture what Nicole Bradley, corporate spokeswoman for the Pepsi brand, called the “optimism” of 2008. The buildup to the presidential election and the Barack Obama campaign’s hope-filled messaging created a climate in which Pepsi wanted to capture its customers’ enthusiasm for re-imagining (or “refreshing”) the world around them.
The campaign—which solicited consumer suggestions for projects with positive social impact—took off, and in 2009, Pepsi introduced a grant-making element, pledging more than $20 million in donations to projects submitted, nominated and voted on through its Web site. Submissions and voting happen on a month-to-month basis; the first month’s campaign received the maximum number of submissions in just 16 hours. And Pepsi has even teamed up with socially conscious Good magazine to help promote their giving program.
As with BB&T’s Lighthouse Project, funds for the Pepsi Refresh Project aren’t coming from the PepsiCo Foundation, which handles most of the charitable activities for the corporation’s distinct elements. Refresh is strictly a “Brand Pepsi Program,” and the budget for the program comes from Pepsi’s Super Bowl advertising allocation—2009 was the first time in 23 years Pepsi did not run a Super Bowl ad.
Again, cause marketing is nothing new. But, as Giving USA’s Yunker points out, when times are tough companies return to proven strategies. The uptick in interest among individuals in giving back to their communities has added fuel to the fire.
“We’ve seen a shift toward active participation in this country,” Pepsi’s Bradley said. “People want to take an active role in making their world better.” One+
CELESTE LECOMPTE is a business and sustainability writer based in San Francisco.
5 TIPS FOR GETTING CREATIVE
If your company is ready to undertake new approaches to corporate giving, here are a few things to keep in mind.
Align actions with your brand.
To get the most bang for your buck, select projects that reinforce your company’s brand values. When the BB&T banking firm launched its Lighthouse Project, it aimed to connect employees with community-based solutions to people’s problems. Therefore, only projects with a human impact were considered. In the case of Wiley & Sons participation in the Friends of the Library event matched both the company’s business (publishing) and sustainability ethos by supporting reuse.
Set clear boundaries.
The limited pool of resources available to many nonprofits and charities today may mean new programs will be overwhelmed with interest. Set limits before you get started: How much total cash and administrative time are you willing to spend? If you’re donating physical space in an office or on a campus, set limits on when and how often you’re willing to make room for non-business activities. “When do you say no, and to which group do you say yes?” asked Linda Gornitsky, president and owner of corporate social responsibility consultancy LBG Associates. “Once it becomes known that companies have spaces available, how do you regulate their use?”
Apply the rules fairly.
In a competitive grant-making environment, failure to apply the rules fairly can land a donor in hot water and limit the effectiveness of a campaign. Pepsi’s Refresh program got off to a rocky start when it was discovered that Pepsi had edited one of the top nominated charities’ pitch pages after voting had started—which was against the rules. To make matters worse, the charity was the celeb-backed Joyful Heart Foundation. The outcry led Pepsi to promise to award three $250,000 prizes, rather than the planned two.
Ask your lawyers.
Donating office space, company resources and employee time may seem like straightforward propositions, but some businesses may need to check with their lawyers about liability and security requirements for having non-employees on the premises. Managing potential risks can add to the expense of this kind of donation.
Be prepared to promote.
If volunteering is part of your strategy, be prepared to gather and share employees’ experiences both internally and externally. “We had more enthusiasm than we expected,” said BB&T’s Cynthia Williams. Lighthouse Project volunteers submitted pictures and stories to the communications office, which wasn’t initially prepared for the challenge. Building out Web-based tools such as intranet sites, external Web sites and e-mail newsletters helped spread the program’s impact.