Strategic Giving for Entrepreneurs

In the go-go 1990s, when I was running an information technology consulting and professional-services firm that I founded in 1989 with my husband, we were having difficulty recruiting and retaining people.

Times were heady. Labor was in demand. With our limited resources and modest benefits, it was all we could do to compete. So we partnered with two nonprofit agencies and developed an employee volunteer program. The agencies were Habitat for Humanity, whose volunteers actually build houses for low-income people, and the North Fulton Community Charities in Atlanta, which supports families below the poverty level.

The tactic worked. Our turnover improved to about a year, from the six months then typical in the industry. In providing this perk, we ourselves subsequently refocused, in 2001, as a consultancy that helps other companies form partnerships with nonprofit groups.

Giving Strategically

Entrepreneurial companies know that giving back is the right thing to do. When charities call, they write a check. However, our experience has taught us that companies should instead “give strategically” in order to have a bigger impact and get something in return.

In short, charitable giving can benefit your company as much as the charity. You can, as we did, use it as a tool to attract and retain people. Even though labor isn’t as tight as in the 1990s, entrepreneurial companies always find recruiting harder than established companies that offer generous benefits packages. In addition, you can use your partnerships with charitable organizations to leverage your company’s marketing efforts.

Indeed, you should make no apologies for maximizing your ability to give strategically. What follows is a look at how to do that.

Creating a Plan

In the 1990s, when MA&A Group was competing for talent in the computer consulting and temporary personnel business, we didn’t actually plan for our employee volunteer program. We just did it. However, I would suggest that entrepreneurs, as a first step, develop what I call a “Social Responsibility Statement.” In that planning document, include what you, as the founder, want to focus on within your community-relations program.

Next, appoint a committee, consisting of employee volunteers. Let them work from the statement to determine specific agencies they want to support. Give them a budget, including cash and in-kind items, and let them determine the allocation.

For example, you might in the “Social Responsibility Statement” say that your company values the community’s health. Your employees would then target perhaps an environmental organization or a children’s health advocacy group. They would advise that the company allow employees time off to set up a Web site for the charity or provide underutilized space for an office or storage space for the group.

If you, the entrepreneur, want to support a specific charity, you should put that in the statement. The rule of thumb is that what you want goes in the statement; what you don’t specify in the document is for the employees to work out.

The Rules of Engagement

Involving employees, of course, enables them to be engaged. Engagement produces the benefits you are seeking, such as a better retention rate. In our case, we had targeted a participation rate of 10 percent to 15 percent of our staff, and we were thrilled to get 30 percent.

Satisfied employees are worth their weight in gold. An opportunity for charitable engagement will prompt your employees to speak highly of you, and to be less likely to speak poorly of you. (You know the old adage: employees share good experiences four times, and bad ones eight times.) Such a program would be especially appealing to Gen Y—those socially conscious workers now in their 20s who grew up doing community service.

In addition, you might discover that your employees have talents that you haven’t spotted. In our case, we learned that two employees working for Habitat for Humanity exhibited leadership skills that they weren’t able to exercise on the job.

A plus is that these benefits come at very little cost. We allowed our employees eight hours a quarter, hardly a huge outlay of resources. In return, we got higher morale, improved retention, and a window into potential that we hadn’t observed on the job.

Partnering for Profit

The other area in which strategic giving pays off for companies is in partnering with charities to build visibility – and marketing momentum. In 1983, American Express set the standard when it sponsored the restoration of the Statue of Liberty. In a three-year campaign, the company raised $1.7 million for the endeavor – and its own profile among credit-card users.

Partnering for profit, however, is an art, especially for entrepreneurial companies whose profiles aren’t as high and whose pockets aren’t as deep as that of American Express. Indeed, charities that are themselves an elite might not even want your company involved.

In fact, partnering works best for entrepreneurial companies in smaller communities. In addition, it helps to keep your involvement local, because it is better to have a greater impact in a single community than to spread your resources too thinly.

In selecting a charity, consider an organization that is approximately the same level as your company in terms of size and prestige, and that appeals to the same set of demographics. A high-end restaurant chain, for example, might pair with a local opera, because both reach affluent adults in a specific geographic area.

The Power of Passion

Finally, choose a charity that advocates for a cause that engages you on a personal level. In other words, let your passion be the driver. If you are passionate, you will inspire your employees to engage. And that, in turn, will lead to the positive results that you are seeking.

Your charity will benefit from your commitment and contribution. Your company will benefit from your staff’s greater morale and involvement, and, if you partner for profit, from the increased visibility that produces sales momentum. In sum, strategic giving empowers! Embrace it as a powerful company-building tool!

More like this: Talent and HR

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