strategies to achieve social impact Building the Appropriate Structure

2 Structural Models Companies have several options to consider when developing their structural model: Corporate Foundation Corporate Giving Program Community Foundation Many companies use a combined approach – a corporate giving program might focus on donations that might be perceived as self-dealing under foundation rules such as event tickets, or marketing-related approaches; the foundation might focus on the primary program areas.

3 Structural Models Corporate Foundation Corporate Giving Program Community Foundation Governance Board of Directors usually made up of senior executives Decision-makers can be employees on a committee; large grants may be decided by senior management Governing committee represents broad interests of public rather than private interests of donors Expenses Staffing expenses paid by company; must file annual tax return; exempt from sales tax Cost is part of company’s annual operating expenses. Expenses are shared by multiple donors; fees charged for services may be based on percentage of the value of the fund Legal Separate legal entity; subject to self-dealing regulations; donations made by company to foundation are subject to 10% annual limit Expenses deducted as donations are subject to 10% annual limit set by IRS. Since the legal apparatus of a community foundation is in place, a company’s fund is tax-exempt Image & Positioning May project higher commitment to social issues; endowment can enable consistent support even in difficult economy Can often be influenced by multiple stakeholder needs; strong governance needed to develop strategic programs Perception could be that company does not value the function enough to support it The following provides some background information on the different models

4 Structural Models Pros and cons of a corporate foundation* ProsCons Ensures a more consistent approach and greater ability to build long-term programs No privacy and the company is subject to private foundation disclosure laws. No ability to combine marketing and philanthropy dollars providing less flexibility Provides some protection to management from criticism about funding decisions (depending on how it is set up) The self-dealing rule can be problematic for corporate foundations. Corporate giving programs are often set up to allow more flexibility in giving and to eliminate self-dealing conflicts. Some companies use the foundation as a tool to: 1) fund items they normally would not fund for political reasons; 2) to get outsiders on the Board or employees – thus helping with company loyalty; 3) to support an employee matching fund; 4) as a buffer and one stop shop to refer grant seekers to. Additional paperwork and administrative expenses, which include filing incorporation papers, keeping records, filing 990PFs, developing bylaws, giving guidelines, etc. Additional staffing may also be needed. Can pay matching gifts with no need for acknowledgements from nonprofits for IRS purposes Must follow the 5% payout rule and has the same rules as any foundation of giving only to 501c3 groups or exercising expenditure responsibility *Source - San Diego Grantmakers website: Pros and cons of corporate foundations

5 Structural Models Decentralized Model Centralized Model Hybrid Model   

6 Structural Models Benefits of the different models: CentralizedDecentralized Provides strong controls on all grantmakingEngages local managers in grantmaking Allows for more efficiency of program, staff, and processes Responds to local needs Ensures a consistent and clear focus for grantmaking Empowers employees May facilitate larger and more impactful grantsMay support local business needs Creates capacity to leverage other corporate resources Creates capacity to leverage local office resources

7 Decentralized Model In a decentralized model, each region makes grants according to needs/expectations of priority stakeholders. HQ Local Office

8 Centralized Model In a centralized model, HQ determines strategic priorities and regional offices follow guidelines provided by HQ. HQ Local Office

9 Hybrid Model In a hybrid model, HQ determines strategic priorities, but local offices have flexibility to align with corporate priorities and to address regional stakeholder needs. HQ Local Office

10 Governance A critical issue for any model relates to governance: how can the internal governance structure be designed to ensure the development of strategic programs, the leveraging of internal resources, and the ability to move quickly and nimbly. Specifically, a governing body should have: Decision-making body Advisory/Steering Committee Corporate Giving Staff A structure that enables the corporation to take advantage of opportunities quickly Responsibility for approving corporate giving policies, procedures and budgets – including those of the foundation (if one exists) Members who can manage sensitive issues, anticipate crises, and develop response strategies Members who understand the demographics and dynamics of the community Access to the CEO, senior management and community resources

11 Staff Skill Requirements Corporate giving staff need a range of skills to effectively develop and manage corporate giving programs. Specifically, corporate giving staff must be able to: Understand the business and develop a strategic vision that meets the rising expectations of stakeholders Engage and build relationships with a wide range of stakeholders – from senior leaders to managers to priority external stakeholders Build systems and develop a framework for capturing results for a variety of programs and at varying levels for stakeholders Develop communication systems that educate and update all stakeholders

12 Corporate Giving Competencies & Skills FocusCompetency/Skill Integrated Philanthropy Knowledgeable of all CSR and community-related activities; lead strategic development of philanthropic programs, approach Participate in cross-departmental teams for stronger coordination and information sharing Structurally able to report to and receive feedback from Leadership/Executive Team Stakeholder Engagement Coordinate opportunities to inform and involve internal stakeholders in philanthropy and with nonprofit partners Present philanthropy updates to external stakeholders Engage internal and external stakeholders in development of new philanthropy programs Measuring Outcomes Understand what’s measureable and implement mechanisms to capture outcome-related data Reporting Comprehensively Understand company’s CSR reporting standards/codes and what philanthropy can contribute Report regularly to stakeholders and to the public in a variety of formats (on-line, fact sheets, etc.)

13 Management Capacity : The ability to develop and run successful programs Adaptive Capacity: The ability to monitor, assess, and respond to internal forces within the company and external changes in the operating environment Leadership Capacity : The ability of department leader(s) to create and sustain strong relationships with key stakeholders, educate and inspire others, prioritize goals, garner resources for the department, and provide direction on programs Operational Capacity: The ability to carry out key departmental and programmatic functions Corporate Giving Competencies & Skills

14 Adaptive Capacity Alignment and integration with business Connections to other key departments (marketing, government relations, CSR, HR, etc.) Alignment with related firm efforts (i.e. CSR goals) Continuous monitoring of internal forces and external trends Awareness of major company goals and plans Understanding of external operating environment (i.e. economy) Monitoring of trends and best practices in the field of corporate community involvement Ongoing evaluation of programs Knowledge of key players Strategic alliances formed with community groups and key opinion leaders Strategic alliances within the company

15 Assessing Adaptive Capacity Alignment and integration with business Is there a system in place for the CCI department to interface and work with related departments (HR, CSR, Public Affairs, Gov’t Relations) Does the CCI department have a clear understanding of the goals and major programs of these departments and other key business units? Continuous monitoring of internal forces and external trends Does the CCI department stay up to date on major company goals and plans (i.e. expansion, new products, etc.)? To what extent are department leaders aware of major trends in the economy or market that will affect the company in the near and long term? How often does the department evaluate programs and does it use that information for planning and continuous improvement? Knowledge of key players Does the department know who they should be getting input from within the company? Outside the company?

16 Leadership Capacity Internal leadership Strong relationships with internal stakeholders Direct communication lines with senior leadership of company Ability to bring resources and attention to departmental goals and efforts Ability to set and carry out a strategic vision for the department and inspire staff External leadership Strong relationships with external stakeholders Ability to prioritize key stakeholders for different initiatives A network of other CCI l eaders to learn from and benchmark against

17 Assessing Leadership Capacity Internal leadership What percentage of his/her time does the department leader or leaders spend on creating and maintaining relationships with key internal stakeholders? How often does the department leader talk directly with the CEO or top senior management of the company? Under what circumstances? Can all members of the department articulate the vision for CCI for the next 1 to 3 three years? External leadership How much of his/her time does the department leader spend on developing relationships with key external stakeholders? To what extent does the department leader(s) have a network of CCI professionals with which to share and learn best practices?

strategies to achieve social impact Tools and Resources

19 Resources Corporate Giving, Options and Strategies, by Sylvia Clark and Kate Dewey, Council on Foundations, 2008 TCC Website - – briefing papers and presentationswww.tccgrp.com Weathering the Storm, The State of Corporate Citizenship in the United States 2009, Boston College Center for Corporate Citizenship,