Stakeholder Philanthropy: The Way Forward for Corporate Giving

While organizations primarily focus on making profits, they have equal responsibility for giving back to the community. As such, businesses worldwide have been involved in corporate philanthropy for a long time. But traditionally, it is the top executives who decide where they will invest their money and resources. It is also the companies that decide on choosing and inviting nonprofit organizations (NPOs) in a given area to compete for grants. 

However, the role of a stakeholder — customers, consumers, employees, partners, and community members — has been growing over the past few years. These stakeholders want companies to champion causes that are important to them. They also want to be involved in how organizations make decisions. This includes how companies donate.

A number of businesses are responding positively and actively involving their stakeholders in their decisions about the NPOs and activities they engage in. They are also working with NPOs to remove barriers to support and ensure success.

All this is giving rise to a new model of corporate philanthropy: stakeholder philanthropy. The model offers brands an opportunity to meet their consumers and employees where they are while realizing both business and social benefits.

Benevity recently conducted a study to understand what consumers and employees think and feel about how businesses approach community investment. 

People Want To Have a Say

A major finding from the study was that most people want businesses to give back to the community and want to have a say in where they donate. About 86% of employees and 84% of consumers said that stakeholders should have an opportunity to get involved in corporate philanthropy. About 80% of employees and 78% of consumers would also give input if they got an opportunity. About 73% of consumers were likely to support or shop at a company seeking input on where they would invest.

Corporate philanthropy has evolved over the years. The partnership-based approach was building up even before the COVID-19 pandemic hit. However, the events over the last two years have accelerated the shift. The world realized that people on the frontlines were not served well. We also learned that there were barriers to equity and progress. Now, people are demanding more transparency, accountability, and collaboration from businesses.

About 82% of consumers from the survey said they had no say in the causes businesses support. About 58% said their local community had no or infrequent input. Many NPOs, too, had no easy time getting grants through traditional corporate philanthropy, as they spent many hours filling out grants-related forms.

See more: Why Corporate Social Responsibility (CSR) Is the Catalyst for Stronger Enterprises and Communities

Stakeholder Philanthropy — An Equitable Way

Stakeholder philanthropy is a more inclusive and equitable approach as it includes various stakeholders in the decision-making process. It empowers diverse groups of people. A few purpose-driven organizations already include their employees in making decisions. Some have also formed employee resource groups (ERGs) to select NPO partners.

When businesses get involved in stakeholder philanthropy, they attract more loyal customers and employees. About 85% of employees and 84% of consumers said that more people trust the business when the company engages more with them. About 78% of employees would most likely work with an organization that provides transparency. 

According to Joe CassidyOpens a new window , Vice President and Grants Manager at The M&T Charitable Foundation, “The direction of these programs is going to be bubbling up instead of pushing down. Our employees’ voices are starting to be heard, and they will be considered more and more.”

Seven Elements That Make Stakeholder Philanthropy Successful

While theoretically, stakeholder philanthropy sounds great, how can companies make it successful in reality? Here are seven principles to follow to make it successful.

• Inspired

Adopting stakeholder philanthropy requires trying new ways of doing things boldly. Some companies are already taking steps, identifying ways to do things differently as new systems and theories emerge. They are willing to gain valuable knowledge, insights, and best practices regarding the subject. Whether it is through ERGs or executives involved in strategizing and decision-making, businesses can gain new learnings and insights. 

• Trust-based

Companies can leverage the expertise of NPOs and benefit from leaning into trust-based principles — building strong relationships with NPOs founded in true partnership. This involves having more conversations, reducing the work required to apply for grants, providing more unrestricted grants for operations, and using available data to create new materials. All this requires a different mindset about what success looks like.

• Equity-focused

A society and company should look at opportunities from a perspective of diversity, equity, and inclusion (DEI). Just like companies focus on DEI within the company, they should apply a DEI lens to their philanthropic endeavors as well. To do this, they can transfer decisioning to equity-deserving groups, provide advocacy along with funding, and make the application process more accessible.

• Collaborative

Companies that can collaborate and seek opportunities to partner with other companies achieve greater results when it comes to addressing social issues. Observing what others are doing can make an initiative complementary instead of duplicative. Companies can also work with other companies to identify the right NPO for grants.

• Enterprising

Besides focusing on solving social problems through philanthropy, companies can also use their business themselves as a solution. Many companies are also offering seed capital to social enterprises, creating a bigger ecosystem of impact-oriented companies. This further galvanizes the purpose-driven economy.

• Data-enabled

Companies can inspire more people to do good due to their reach and resources. But different companies taking different approaches to grant funds and the need for reporting has led to the use of complex forms and surveys that are overwhelming for program leaders to deliver. Utilizing data efficiently to make decisions and reports can reduce the onus on NPOs. It also assists them in telling their stories of the impact they create. 

• Engagement-driven

The future of corporate giving is democratized. That means corporates will have to engage stakeholders more. Participatory philanthropic programs which involve stakeholders in decision-making will become the future of corporate giving. In practice, this means giving opportunities to provide input and providing skill-based volunteering along with corporate grants.

The future of corporate philanthropy is stakeholder philanthropy. By empowering more stakeholders and involving them in decision-making, corporate leaders can create a better impact on society while also establishing more trust among employees and customers.

Do you involve your stakeholders in your corporate philanthropic activities? What benefits have you seen? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window . 

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