Corporate & Community Impact Resources for Business Owners Rob MacPherson, CAP, VP of Development & Strategy Sarah Weaver, JD, Senior Gift Planning Advisor March 1, 2019

Overview Trends and Benefits CSR Strategies Charitable Tools Succession Planning WHY Is This Topic Important? Trends and Business Benefits of Community Engagement & Corporate Social Responsibility WHAT Is My CSR Platform? CSR Strategies, Including Brand, Image & Values HOW Do I Utilize CSR? Charitable Tools for the Business Owner What Happens WHEN I Am Ready to Exit My Business? Succession Planning for Business, Family & Community

Corporate Social Responsibility (CSR) “Movement aimed at encouraging companies to be aware of the impact of their business on the rest of society – including their own stakeholders and the environment.” “A business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.”

CSR Approaches Differ Widely by Company Human rights Corporate governance Environmental impact Employee culture & working conditions Health & safety Charitable engagement Community outreach Economic return & profit sharing Others

Extremes & Everything In Between – It’s All Good!

TRENDS & BENEFITS OF CSR

Great Expectations A 2017 Cone Communications Study on CSR found: 70% of Americans believe companies have an obligation to take actions to improve issues that may not be relevant to their everyday business 87% of Americans would purchase a product because that company stood up for or advocated for an issue that they care about 76% of Americans would refuse to purchase a company’s product or services upon learning that it supported an issue contrary to their beliefs

Great Expectations

Talent Attraction & Retention Millennials now make up the largest segment of the workforce Predicted to be 50% within the next 2 years and 75% by 2030 – US Bureau of Labor Statistics The “Purpose Over Paycheck” Generation According to PwC’s recent Workforce of the Future survey, 88% of Millennials want to work for a company whose values reflect their own Research from Deloitte indicates that 73% of Millennials who work at a “purpose-driven” company are engaged, compared with just 23% who don’t

Business Benefits Improved Public Image Increased Media Coverage Boosted Employee Engagement Satisfied & Engaged Customers Increased Innovation & Creativity Cost Savings Brand Differentiation & Competitive Advantage Long-Term Thinking Attraction & Retention of Investors

Impact Investing Impact investing combines financial returns with social returns According to a recent survey from the Global Impact Investing Network, the estimated value of the impact investing sector doubled from $114 billion in assets under management in 2017 to $228 billion in 2018

CSR STRATEGIES

CSR Strategies Values, Interests, Purpose, Mission, Promise Stakeholders Employee Engagement Customer & Client Engagement and Awareness Industry & Competitor Awareness Pledge 1%

CHARITABLE TOOLS FOR BUSINESS OWNERS

Corporate Foundations These are a few of the country’s largest corporate foundations

Donor-Advised Funds for Business Entities Corporate Advised Funds Donor-Advised Funds for Business Entities Company as Donor (but anyone can contribute – and get a tax deduction!) Advisory Committee makes grant recommendations Same customized philanthropic services as individual and family donor-advised funds CICF can assist in engaging employees, promoting the fund internally and externally, identifying charitable purpose or themes, and much more Some regulations around fundraising for donor-advised funds, but we can help navigate CICF Employee Fund Helmer Scientific – Chili Cookoff

Employee Matching Funds Doubles the incentive for employees to give! CICF can administer matching funds Examples

Must Not Look Like an Employee Benefit! Employee Scholarship Funds Must Not Look Like an Employee Benefit! Can be tricky, but if done correctly, can be an excellent CSR tool. Conditions that must be met: Inducement Selection Committee Eligibility Requirements Objective Basis of Selection Employment Course of Study Other Objectives Percentage test: No more than 25% of eligible applicants considered are chosen, or No more than 10% of all eligible individuals (regardless of whether they apply) are awarded scholarships

Social Impact Investment Opportunities

BUSINESS SUCCESSION PLANNING

Gifts of Closely-Held Business Interests JP Morgan Chase surveyed 817 small- and middle-market businesses: One quarter said they are either planning or considering a full or partial ownership transfer within two years Your clients want you to ask! This is a huge value-add opportunity! At CICF, we can help your philanthropically-inclined business owner clients. Donating closely-held business interests is a tax-smart charitable giving strategy, and with some basic due diligence, we can accept closely-held business assets into a personal or corporate donor-advised fund.

Timing & Process PRE-AGREEMENT & PRE-SALE The process: Donate Liquidate Grant Timing & Structure MUST BE PRE-AGREEMENT & PRE-SALE to maximize tax benefits, i.e., must not be bound to particular seller in writing The process: Shares of closely-held business interests are donated to donor-advised fund Donor-advised fund entity liquidates those shares Proceeds are available for the donor to make charitable grants

Tax Savings & Avoidance Charitable Income Tax Deduction AND Capital Gains Avoidance Tax Savings & Avoidance Receive tax deduction for the full fair market value of the donated shares – requires a qualified appraisal Avoid capital gains tax on appreciation of the donated shares – crucial for many business owners in which their basis is zero Compare with selling first and donating proceeds: income tax deduction but still subject to capital gains tax

QUESTIONS?

Thank You! Rob MacPherson, CAP Vice President of Development & Strategy RobM@CICF.org Sarah Weaver, JD Senior Gift Planning Advisor SarahW@CICF.org