Middle Market Philanthropy Supports Engagement

Sarah Steimer
Marketing News, Nonprofit
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Key Takeaways

What? Middle market companies’ philanthropic efforts can benefit not only the recipient, but employees, community relations and the business.

So what? When companies get involved in charitable giving, it has the potential to keep current employees engaged, attract potential employees and make connections between businesses and the community.

Now what? Companies should involve employees or clients in choosing a charitable effort and focus on something that promotes engagement and personal connection.

​July 1, 2017

Surveys show corporate charity yields returns in partnerships and human relations for middle market businesses

The corporate philanthropy of yesteryear—images of CEOs handing over giant checks—has been made over. Middle market firms now have an opportunity to step up and get involved in philanthropic initiatives on a level deeper than monetary contributions. Many are choosing personal causes, and they aim to connect with their internal and external communities, steps that benefit both giver and recipient.

The “Giving USA 2016” report by Charity Navigator showed that corporations donated $18.45 billion in 2015, a 3.9% increase from the previous year, and corporate giving made up 5% of all U.S. charitable contributions. A 2015 report on corporate philanthropy from America’s Charities found 60% of companies offer year-round giving. The report also found 60% of small to midsize companies offer volunteer opportunities, 37% have payroll contributions and 28% engage in matching gift options.

The opportunities are nearly endless for corporate philanthropy. According to Sandra Miniutti, vice president of marketing at Charity Navigator, options include direct contributions, participating in nonprofit special events, attending galas and buying tables or participating in activities. Some companies also allow their employees to take time off to volunteer or to use part of their work hours to donate their skills and expertise directly to a charity.

Choosing a Cause

There are plenty of causes to choose from: The top recipients of monetary charitable contributions in the U.S. include religious groups (33%), education (16%), human services (12%), foundations (11%) and health-related groups (8%). Miniutti says companies should find a cause they have a meaningful connection with.

“If the company is looking to build goodwill among shareholders, consumers and regulators, then it’s important to see that there is an authentic relationship between the company and the charity’s mission,” she says.

Choosing the right organization can matter quite a bit for a company, as the America’s Charities report found 90% of survey respondents said partnering with a reputable nonprofit enhances their brand.

“Look for a strong alignment,” Miniutti says. “Once the company has identified some charities that are good candidates, we recommend that the company vet them to make sure that they’re financially strong, accountable, transparent and that they can speak to the impact of their work.”

Many individuals and companies choose a cause that’s very personal to their lives or the company’s mission. Bradley Schmarak, senior partner at Reed Smith and global co-chair of its private equity practice, is board chairman for the Middle Market Open, an annual golf tournament that benefits the National Kidney Foundation of Illinois. Schmarak says the event began from a very personal place for tournament creator Scott Lang. His then-wife worked for NKF of Illinois. Lang reached out for participants from the companies he worked with the most, pulling largely from the middle market business community in Chicago.

Schmarak says middle market companies and the firms that support them can have philanthropy built into their core. For example, 71% of lawyers at Schmarak’s firm did pro bono work in 2016, coming out to 76,000 hours, or $40 million in billable time.

From America's Charities' 2015 report, "The New Corporate DNA: Where Employee Engagement and Social Impact Converge"

“Oftentimes, the organizations that the middle market companies choose to embrace happen to have ties to the leadership of those organizations,” Schmarak says. “If you’ve got a CEO who is battling lung cancer, that company might choose to work with the related charity that’s important to him or her. That’s often what we see in pro bono: You have leadership where something is sparked in them and they want to get involved. As they get more fulfillment from the work they’ve done, they make those opportunities available to their employees and other people in the company.”

Another option for companies that may not have a personal cause to pursue is to consider charities that clients or customers are already involved with. The National Center for the Middle Market explains close relationships with customers are key in this market, and demonstrating a tangible interest in the same causes as your clients is an opportunity to strengthen these relationships.

Companies must involve employees in these decisions. The America’s Charities survey found employee engagement receives a boost when supported causes are those that employees are passionate about, not just those the leadership team chooses.

“It’s helpful to give employees an opportunity to help select the causes that the company participates in,” Miniutti says. “There’s been lots of research showing that that’s much more powerful than having it be a top-down decision.”

Community-building Opportunities

One of the lesser-discussed benefits of philanthropic involvement is the opportunity to work with others—both inside and outside of the company. Local volunteer work brings employees together and is a chance to showcase the company’s nonprofit work to the surrounding community. According to the America’s Charities survey, 86% of employers say employees expect them to provide opportunities to engage in the community.

When working with other middle market companies, philanthropy can often lead to highly beneficial networking. Schmarak says the Middle Market Open is one of the few times the leadership of the Chicago business community comes together for a day of charity.

“We’re used to working together, and now we’re coming together for competition, for fun and philanthropy,” Schmarak says. “There may be a dozen law firms [at the event], and we all compete for work every single day. But at the same time, we know each other, we respect each other, we refer deals to each other when we have conflicts. We know at the end of the day, there’s a likelihood these people are going to be on the other side of a deal with us, so it’s nice to have that personal relationship as well.”

The board for the Middle Market Open includes about 35 people who meet once per month. Schmarak says the board members witness one another working on the strategy, planning and execution of the event.

“Any number of people there have gotten work from other board members who have been impressed with the way they conduct themselves at the board meeting,” he says. “We’re doing this altruistically, but at the same time, if a board member who’s with a private equity fund thinks that one of the board members who’s an investment banker is doing a phenomenal job with strategy, vision and execution for the event, that person may likely say, ‘I like working with you in a pro bono context, I’d like to hire you for a deal.’”

PR and HR Benefits

The main purpose of engaging in corporate philanthropy is to help others, but many middle market companies see public and human relations benefits as well. Millennials, in particular, are drawn to companies that give back.

“Increasingly, there are studies coming out showing that millennials really care about the corporations that they work for and their social responsibility,” Miniutti says. “They look for companies where they have opportunities to give back, where it’s baked into the DNA of that organization. [Marketing and PR] have historically been where the focus is for companies getting involved in philanthropic activities, but we’re seeing increased data showing that it’s important for HR efforts as well.”

The America’s Charities report says millennials expect their employers to support their involvement with causes. They consider a company’s social responsibility and support for philanthropic activities when deciding whom to work for. Seventy-seven percent of respondents to the survey believe offering employee engagement opportunities is key to attracting millennial employees.

One of the benefits of hiring millennial employees may also be that they’re tech-savvy, and technology has begun to play a major role in corporate philanthropy: The America’s Charities report found 80% of respondents use technology to allow employees to give money, 65% use it to record volunteer hours and 69% use technology to sign up for volunteer events. Technology has also broken down barriers to entry for small and midsize businesses getting involved in charity.

A company’s social media presence plays a powerful role in getting the word out about charitable giving. Compared with large companies that often have greater restrictions on employee social media use, the report found small and midsize companies believe their employees have higher expectations around social media tools that allow them to post content and promote causes to their peers. Fifty-six percent of employers incorporated social media tools into their giving program in 2015, the report found.

Another promotional avenue is for the company to help disseminate a press release on behalf of a charity, as a for-profit company likely has more PR tools at its disposal, Miniutti says. This sort of give-and-take on the marketing side strengthens the partnership between the two, something the report found is important for companies of all sizes. Strong partnerships between reputable nonprofits and companies are a supreme benefit to all involved, as 90% of survey respondents say they enhance the brand.

Partnerships, whether between colleagues, companies or nonprofits, may be the most important piece of middle market charity. They can help draw employees to a company and a cause.

“I think the charity component plays a significant role,” Schmarak says of the Middle Market Open. “All of these participants can play golf at any course they want, anytime they want, but coming together and doing it for an organization like the NKF of Illinois makes the day a little bit different.”

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Author Bio:

Sarah Steimer
Sarah Steimer is a staff writer for the AMA's magazines and e-newsletters. She may be reached at ssteimer@ama.org or on Twitter at @sarah_steimer.
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