Firms Seek Strategies for Charitable Giving
Last year, U.S. corporations donated $20.77 billion to nonprofits, while an estimated 63 million Americans volunteered their time and effort in some capacity, according to the National Philanthropic Trust.
The construction industry is well represented in those figures. Contractor websites typically include sections touting contributions of money, materials, services and time to an array of national and community causes.
“Every firm has a culture of philanthropy,” says Brian Turmail, Associated General Contractors of America spokesman. “Some activities may be strategically aligned with the company’s overall goals or C-suite preferences, or have an emotional tie-in, such as assisting a family member with a challenging disease or a returning service member. Either path is great.”
Whether it’s an expression of a company’s core values or a desire to burnish the image of “doing the right thing,” philanthropy is also an increasingly important component of doing business.
“Evidence shows that investing in the community enhances profitability,” says Denver-based philanthropy consultant Bruce DeBoskey. As such, he says, philanthropy should be strategic and coherent—logical, well organized and sensible, as well as easy to understand and articulate. “It’s like any other investment, regardless of a company’s size,” DeBoskey says.
However, he adds, many companies often take a random, uncoordinated approach to philanthropy, which limits its effectiveness, particularly as it relates to the bottom line. It’s not simply a matter of designating dollar amounts. “The key question to ask is why you’re giving money away,” DeBoskey says.
He admits that influences on a philanthropy program often are highly company-specific. For example, a firm’s philanthropy choices may be driven by both internal and external factors, from ownership structure and long-standing giving habits to supporting clients and markets where it does business.
“There’s no automatic right or wrong answer,” he says.
But he also stresses the importance of engaging internal stakeholders, giving employees a voice in shaping both priorities and practices for giving.
Gordon Lansford, president and CEO of Kansas City, Mo.-based JE Dunn Construction, agrees, adding that top-down philanthropy is destined to fail for lack of employee buy-in. “That’s when you fall into a trap of ‘just writing the check,’ especially if charities are selected simply to win clients or projects,” Lansford says.
Denver-based GH Phipps Construction Cos. is another example of a contractor that has adapted its long-standing corporate philanthropy strategy over the years. The company regularly makes cash contributions to legacy recipients such as Children’s Hospital Colorado, as well as to causes sponsored by clients and industry partners. GH Phipps hosts an annual golf tournament, alternating its charity recipients every three years.
“Most of our clients are not-for-profit orgs, and we’ll contribute in whatever way they want us to,” explains GH Phipps President Kurt Klanderud, adding that the firm has a policy to vary its support as projects begin and end.
“You can’t support everything in perpetuity,” he says.
The approach also gives the firm significant flexibility in its philanthropy program, including the option to donate a portion of its project fee. What’s essential, Klanderud says, is that there are no misunderstandings between donors and recipients. “We’re always transparent about what we plan to do,” he says.
Internal engagement has taken on greater importance as workplaces become increasingly dominated by millennials. The vast majority of them express greater loyalty to companies with a strong social-responsibility culture.
“If you’re doing a philanthropy plan without looking through the lens of millennials, you’re missing a huge potential for engagement,” says DeBoskey. He cites research that says when presented with otherwise equal jobs, 80% of them will work where they can better their community.
“They want more than just a paycheck,” he says.
Devin Connell says that nonprofits also recognize recruiting as a benefit of corporate giving. “Younger employees are asking, ‘What makes a company interesting to work for?’ They want more just than a desk job,” he adds. Connell, industry program director for Bridges to Prosperity, a nonprofit that builds pedestrian bridges for people in developing countries, sees both the value of volunteering as a recruiting tool and as a team-building opportunity. “Working on these projects allows young professionals to be in leadership roles,” he says. “It allows them to branch out and see new things, and it can be a big selling point for a company.”
Lansford says JE Dunn looks for philanthropies that have already attracted the interest of employees. Nationally, the company commits more than 10% of its annual pre-tax earnings to charities, supporting more than 400 nonprofits a year. Along with advocating employee support for national charity campaigns, JE Dunn also encourages each of its 20 offices to identify smaller, local charities for company support, particularly opportunities to mobilize participation and volunteer efforts.
“You’d be hard pressed to find a week when our employees are not participating in some event or volunteering at a charity, whether it’s sponsored by us, or a team effort with a client or partner,” Lansford says.
Over the past six years, GH Phipps’ employee-focused philanthropy has devoted nearly 2,000 volunteer hours annually for events selected by management and employees. Among them: participation in charity races, coaching youth sports, and time for religious groups and nonprofits.
“Our employees are already involved with making decisions and fostering engagement,” Klanderud says, adding that the firm may establish a foundation to manage its altruistic giving. “This would get employees more involved in deciding where the funding goes,” he says.
Sundt Construction, Tempe, Ariz., took that approach in 1999, when it formed the nonprofit Sundt Foundation to build on its own tradition of community service. Funded through company-matched employee contributions, the foundation gives grants to community organizations that benefit disadvantaged children and adults. Employees submit proposals for recipients and decide how the funding is distributed. Grants are often delivered personally by employees as well, providing a deeper emotional connection between the company and community.
“Because the giving is directed by employees, it matches up with what they see as being needs in the community,” explains Sundt Vice President Stefanie Teller.
And because the foundation is separate from Sundt’s business development, “the money goes to organizations that need it, not those we want to do business with,” Teller adds. “The program also resonates with our younger employees because anyone can come up with an idea.”
To date, Sundt Foundation has provided more than $8.6 million in cumulative aid to community organizations in Arizona, California and Texas. The foundation hopes to top $10 million next year in its 20th anniversary.
While these examples of philanthropy have evolved from long-standing traditions of community service, other firms can benefit from working with an experienced consultant who can help align resources with opportunities and expectations. Simply mimicking another company’s model may duplicate its flaws as well.
“The biggest, most well-known companies may be getting headlines for their work,” DeBoskey says. “But those efforts may be less effective than they think. Every company needs to find that answer in its own way.”
Some of the best ways contractors can contribute to their communities may be right in front of them.
“What other industry,” Turmail asks, “has people who can show up with a backhoe and repave a parking lot or repair a roof?”