The Nonprofit FAQ

What about corporate philanthropy?

Corporations can make charitable contributions (which may reduce the corporate income tax due on their profits). They can support nonprofits and other community activities as an "ordinary business expense" if the support is a reasonable match with their business objectives, in which case the expense will reduce any profit earned. Often corporate support will take the form of sponsoring a specific event or activity. They can also encourage employees to volunteer and support them while doing so in a variety of ways -- giving them regular pay, allowing the use of corporate supplies and equipment, etc. (The accounting and tax rules are different when a business is not a corporation, but support for community activities is still possible, and of course lots of businesses with other legal forms make gifts and encourage employee volunteering.) Some corporations have a Community Involvement department; some locate these activities in the Public Affairs department. Some set up employee committees to set priorities and manage the community activities; others have separately incorporated corporate foundations that receive a gift each year from the parent corporation and then act much like a private foundation in distributing the funds, often through grants. A very important form of business giving is in the form of employee matching programs. When such a program exists, the business makes gifts to the same organizations equal to (or sometimes a multiple of) each employee's personal charitable contributions. There may of course be rules that limit to total amount to be given away or the range of organizations that can be supported. In addition, some corporations participate in workplace giving (payroll deduction) programs that allow employees to make charitable contributions (sometimes matched by the employer, sometimes not) from each paycheck. These campaigns are usually operated by "combined fund-drive" organizations that may do a good deal of the processing administration and distribute the money to the designated organizations. Corporate (and all business) giving provides a significant part of the total charitable and other support nonprofits receive each year. It is hard to get any reliable figures for the amount of charitable giving and sponsorship support given by businesses because it comes in so many forms -- some of them not measured in dollars at all. The total is probably something like 5% of all the gifts nonprofits received each year (individuals give by far the largest part of the total). Finding business support for a nonprofit's activities can be difficult. Often support follows personal engagement of employees or business owners in the work of the nonprofits. More formal sponsorship agreements may require professional assistance to negotiate. There are specific forms and schedules for registering for each workplace giving campaign. Matching gift programs require documentation and follow-up. For direct gifts from business in support of community activities, expert fundraisers say the most important factor is a close alignment between the nonprofit's work and the business's goals for its community involvement. (For more on this subject, see the Nonprofit FAQ item at http://www.idealist.org/if/i/en/faq/475-265/327-275.) The following two articles provide more background on this topic. At the 2009 Corporate Philanthropy Summit there was lots of discussion of the impact of the economic downturn on corporate giving programs. See http://www.onphilanthropy.com/site/News2?page=NewsArticle&id=7843 Corporations donated about $12 billion in 2002 according to 'Inside Corporate Philanthropy.' —Inside Corporate Philanthropy (Vol. 3, No. 10, October 10, 2003 -- see http://www.onPhilanthropy.com) Revised 1/16/10 -- PB