Charitable giving

Does your company take a strategic approach to charitable giving?

Question collaborator: LBG

EXCELLENT Answers

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GOOD Answers

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OKAY Answers

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Some companies make impromptu, ad hoc donations to causes that are supported by a few employees, but have no relevance to the company. Others select favoured charities and regularly donate to these.

Strategic charitable giving programmes differentiate themselves as being focused on addressing specific issues, ideally which are material to the business and often combine both financial and non-financial contributions. Companies bring the large scale of their resources — cash, employee time, products and services — and focus them on those issues to maximise the difference the business can make.

Charitable giving can involve a combination of approaches. Responsible 100 uses the LBG framework for defining charitable giving as “businesses’ voluntary engagement with charitable organisations or activities that extends beyond their core businesses activities”. Giving can be provided through a monetary donation, an in-kind donation of a company’s products, providing professional services pro bono and/or at beneficial rates, and the cost of employee volunteering time during working hours. The cost of managing community programmes can also be included, such the cost of helping staff to give easily. While not a direction contribution, businesses can claim as ‘leverage’ the amount their employees give through fundraising or payroll giving. More information on the LBG framework is available at www.lbg-online.net.

Some businesses link monetary donations with employee participation. An employee volunteering scheme may include regular voluntary activity by employees that is supported by the company. This might, for example, be giving staff members paid time off to undertake voluntary work, incorporating volunteering into a personal development scheme, setting up charitable programmes that offer staff the opportunity to volunteer, or corporate matching of employee giving and volunteering. Employee volunteering has the potential to benefit all those involved, for example by providing employees the opportunity to work and learn outside their usual work environment, increasing staff morale and work performance for the employer, and increasing goodwill across the community.

In the long-term, aligning organisational values with giving will ideally lend consistency and strength to the company brand while also addressing real needs. Taking a strategic approach is also likely to lend to vibrant and sustainable partnerships between a company and the charitable organisations it works with.

Charitable giving

'Charitable giving' refers to businesses’ voluntary engagement with charitable organisations or activities that extends beyond their core businesses activities for the purpose of public benefit, whether in the form of money, products, time and/or expertise.

Strategic approach to charitable giving

A ‘strategic approach to charitable giving’ is likely to combine both financial support and non-financial giving such as sharing business assets and/or knowledge, and further, these contributions are aligned with the values, aims and or culture of the business. Research suggests that the best programmes for charitable giving combine financial support with innovative approaches for sharing business assets and knowledge because they amplify the positive impact of their contribution.

Cash contribution*

'Cash contribution' is the gross monetary amount a company pays in support of a community organisation/project.

Time contribution*

A 'time contribution' is the cost to the company of the paid working hours contributed by employees to a community organisation or activity.

In-kind contribution*

An 'in-kind contribution' is donation or use of a company’s product, services or resources. For example, this could include the donation of a product, pro-bono professional service or use of office space or equipment. In-kind contributions must be valued at what it has cost the company to make or maintain, not what the beneficiary organisation would otherwise have had to pay in the open market.

Management cost*

Companies can include 'management costs' in their charitable giving, that is the cost of managing and delivery community activities. This could include salaries, benefits, planning costs and communication costs.

LBG framework

The 'LBG framework' is a global standard on corporate community investments. LBG defines what can be considered a charitable contribution. Items denoted with an asterisk * in this glossary are terms defined by LBG. More information on the framework, the terms and how to calculate contributions is available at www.lbg-online.net.

Gift Aid

'Gift Aid' refers to the UK government scheme which allows charities to reclaim the basic rate tax already paid on any donation. Donating through Gift Aid means charities and community amateur sports clubs (CASCs) can claim an extra 25p for every £1 given. It does not cost the donor any extra.

Answering YES

All Businesses MUST

Explain how they take part in charitable giving, describing what form their giving takes using the LBG model of cash, time, in-kind, or management cost

Explain why they take part in charitable giving, describing the purpose, societal issue and/or business objective they seek to address, if any

Describe how they achieve alignment between their charitable giving and their organisation’s purpose, aims and/or values

Describe approximately how much they give to charitable causes per financial year

Describe whether they express the amount they give as a proportion of profits, or why they chose not do this

All Businesses MAY

Provide examples of their charitable giving and the policies, processes, partnerships and programmes they have in place to support it

Explain which business stakeholders are involved in giving decisions and practices and how

Explain if and how their giving is recognised and celebrated across their organisation

Explain how their employees are engaged in charitable giving

Explain if and how they measure their charitable giving contributions

Explain how they audit and report on their giving and whether this information is publicly available

Describe how their charitable giving aligns with their organisation’s capabilities and/or strategy

Provide any other relevant information

Answering NO

All Businesses MUST

Explain why they do not participate in charitable giving, listing the business reasons, any mitigating circumstances or other reasons that apply

All Businesses MAY

Describe any charitable giving they do even though this falls below the threshold for answering YES to this question

State how much they have given, preferably as a proportion of profits or sales

Mention any future intentions regarding this issue

DON'T KNOW is not a permissible answer to this question

NOT APPLICABLE is not a permissible answer to this question

Version 2

To receive a score of 'Excellent'

EXCELLENT statement:

Operates a strategic approach to charitable giving with demonstrable results of achieving positive societal impacts

Examples of policies and practices which may support the statement:

  1. e.g. Has clear long-term strategy for community investment that describes the issue and outcomes they seek to achieve
  2. e.g. Measures and reports the impact of the charitable giving activities and whether the programmes are achieving the strategic goals.
  3. e.g. The charitable programme is aligned with the aims and culture of the organisation
  4. e.g. Charitable giving leverages the skills and capabilities of the company to deliver against the charitable giving strategy
  5. e.g. Charitable programme is able to demonstrate positive business benefits
  6. e.g. Has their charitable giving contributions assured or audited by a third party and publishes the assurance statement on their website
  7. e.g. Has a demonstrable track record of engaging customers, suppliers and employees in donating money/time to the charities it supports
  8. e.g. Commits substantial business resources to pro bono and charitable work and treats pro bono work clients as if they were a paying client
  9. e.g. Promotes and matches all employee giving, promotes and enables payroll giving
  10. e.g. Has named individual and/or team responsible for directing the charitable giving strategy although their partner organisations are connected to all parts of the business rather than within just one department or function
  11. e.g. Has clear measures in place for assessing levels of charitable giving
  12. e.g. Aligns its giving strategies with the Sustainable Development Goals
  13. e.g. Measures charitable giving against leading community investment standards, such as LBG
  14. e.g. Volunteering programme prioritises matching the needs of the organisations it works with, with the competences of its employees, focusing on the quality of the people and service they provided rather than the quantity of the people who volunteer
  15. e.g. Pays the full cost of the programmes they support, and invests in building the capacity of their charity partners
  16. e.g. Selects charity partners based on strategic assessments of their ability to achieve their CSR aims employing a selection process which is transparent, fair, and respectful of Civil Society Organisations’ time
  17. e.g. Supports a small number of organisations through large, strategic relationships (rather than a large number of low-level relationships)
To receive a score of 'Good'

GOOD statement:

Adopts a range of recognised charitable giving practices

Examples of policies and practices which may support the statement:

  1. e.g. Has a charitable giving strategy albeit not one which is aligned to the business’ capabilities, business strategy or material issues
  2. e.g. Publishes data on charitable contributions on their website but does not report on the outcomes its contributions has had of its activities
  3. e.g. Encourages stakeholders to donate money and/or time to worthy causes
  4. e.g. Has a policy that commits to matched funding for employee fundraising
  5. e.g. Has a Volunteering Policy that provides employees time off for volunteering.
  6. e.g. States charitable giving as part of company values and/or acknowledges business responsibility for charitable giving/community support
  7. e.g. Measures and reports the ‘outputs’ of the charitable giving activities, for example the number of beneficiaries reached, number of organisations supported, etc. (See LBG for more information on definition and examples of output).
  8. e.g. Has an individual or team responsible for the charitable programme
  9. e.g. enables payroll giving, matches employee giving from time to time and/or on an ad hoc basis
  10. e.g. Has named individual and/or team responsible for directing the charitable giving strategy
  11. e.g. Pays the full cost of the programmes they support
  12. e.g. Process for selection of charity partners is transparent, fair, and respectful of Civil Society Organisations’ time
To receive a score of 'Okay'

OKAY statement:

Engages in charitable activity on an ad hoc basis, OR charitable giving is not relevant to the business

Examples of policies and practices which may support the statement:

  1. e.g. Organisation has identified a number of broad focus areas but does not have a clear, targeted strategy for charitable giving, i.e. giving is not directed towards specific causes or organisations
  2. e.g. Volunteering and/or fundraising takes place from time to time but is ad hoc and not co-ordinated
  3. e.g. Organisation donates money but doesn’t measure the impact of its giving
  4. e.g. Allows employees to partake in pro bono or other charitable work, but does not have a policy encouraging them to do so.
  5. e.g. Measures and reports the ‘inputs’ of the charitable giving activities, for example, how much money was donated, how many hours were volunteered. (See LBG for more information on definition and examples of input).
  6. e.g. Enables payroll giving on an ad hoc basis
  7. e.g. Does not pay the full costs of the programmes they support as individual partners / Does not ensure the full costs of the programmes they support are met when working as part of a multi-funded collaboration
  8. e.g. Holds a staff vote to decide charity partners
To receive a score of 'Poor'

POOR statement:

Does not engage in any charitable giving although it has the means and opportunity to do so, OR charitable giving activity is so poorly directed and co-ordinated as to burden partners rather than support them

Examples of policies and practices which may support the statement:

  1. e.g. Makes ad hoc cash donations with no clear trends or purpose
  2. e.g. Takes no part in any charitable giving
  3. e.g. Makes no public statements in support of charitable activities or giving
  4. e.g. The charitable giving programme relies on employee fundraising as the main vehicle for investment, or where employee fundraising amounts are greater than donations by the business
  5. e.g. Refuses to pay cost recovery for rejected proposals requested by the company
  6. e.g. Wastes charities’ time through a lengthy and resource-heavy selection process