What's the Best Way for Your Business to Give Back?

By Andy Cummings

Your company is about to move into uncharted territory: It’s time to formalize a philanthropic program. You realize the importance of giving programs and the value they offer for your brand reputation. The question isn’t whether to invest in social change, but rather: Which route will have the most impact?

There’s a choice. You can set up a program focused on donations or make grants the focus. Both contribute to social change though each has its own unique benefits. Which path should you take, or should you have both grants and donations programs?

Quick rundown

Donations are forms of gifts. They have no requirements. Your company can specify how your donation is to be used, but the organization is not obliged to comply. Nonprofit organizations request donations to underwrite activities. For example, a nonprofit might ask a company for funds to attend a conference on how to promote its charitable mission. It’s a reciprocal agreement. The company receives public recognition for their donation. There are also product donations, for example, Kohler donates plumbing fixtures and SAP donates software to schools.

Grants are funds awarded to a nonprofit organization through an application process. In exchange for the grant, the nonprofit organization agrees to provide reports of progress toward the social goal. Your company is able to see and share the impact of your philanthropic contributions. There is also the opportunity for capacity building grants, designed to help nonprofit organizations carry out their missions more effectively. Many companies see grants programs as a way to demonstrate they are not just focused on making a profit.

Return on investment

After you look at these two basic definitions, it might seem obvious. One option may seem far more beneficial for your business. But this isn’t all about your business.

The optimal approach is to decide which path aligns your goals with the social change you want to support, ideally working with a partner to help determine and implement your plan. At Versaic, a partnership approach is integral to our beliefs and system, sticking with you on your continuous journey to impact. Upfront we ask questions such as: How can we better understand and help meet your goals? What is the impact you’re looking to cause? What outcomes tell you you’re achieving that impact?

It is only by putting effort into this type of planning upfront that you can make an informed choice to do grants or donations.

Why grants?

Grants are the tools that nonprofits use to grow and make innovation possible. It is an investment that will fund the purchase of quantifiable things to create programs that make social change. You can chart progress and impact with the reporting the nonprofit organization provides. You'll receive proof they’re managing your grant and achieving the impact you set out to make. Many of our grant making clients have found this reporting can foster a collaborative relationship with the non-profit. If needed, the grantmaker can help get the grantee back on track earlier in the grant cycle. Likewise, the grantee can showcase their past results to secure funding from other sources.

Another important benefit of a grant to a nonprofit organization is validation. You’re lending the credibility of your company. It can be said that the support of a recognizable company has just as much value as the grant itself. Sequoia’s Caring Community Grants Program provides grants to non-profits that offer critical health services to District residents. This giving program aligns with their mission to improve the health of residents by providing access to care and promoting wellness.

Why donate?

Donations are the unrestricted funds nonprofits use to pay for essential items such as rent, salaries, and other operational expenses. These needs are critical, but they’re seldom covered by grants.

Donations are also the tool many nonprofits use to ensure the future of programs launched by grants. Few grant-makers provide ongoing funds on an annual basis. Those funds come from donations.

The unrestricted nature of donations makes it possible for a nonprofit to use the funding wherever it’s necessary. Successful organizations can forecast a donation budget. They aren’t hampered by a lengthy application process, and there are no reporting or progress requirements.

The benefits of donating goods and services are plenty. Wyndham Hotels, for instance, donates hotel rewards points. This allows them to not only do good in the community but get the word out about their hotels. They are able to tie their donation program to their product and build their overall brand reputation.

Why both?

If you consider how key causes map to the interests of employees and business goals you can achieve the best of both worlds with both grants and donations programs. There are many reasons why companies implement both donations and grants programs. By incorporating both you have the opportunity to build a solid brand reputation, establish a relationship with consumers by supporting local communities where you work and show a strong commitment to philanthropy.

People notice how much effort you are putting into your philanthropy programs. According to a study by Deloitte, 70 percent of millennials strongly favor companies committed to the community. Wegman’s has been finding ways to give back to the neighborhoods in which it operates for over 90 years, and its commitment to philanthropy makes it one of the most loved grocery chains in the country.

Business decisions

Good philanthropic programs mirror good business practices. They start with defining your objective. In this case, the overall objective is that your company wants to contribute to social change. Your strategy then dictates an approach. The approach determines your level of involvement.

If you choose to make grants, you’re laying the foundation for an ongoing relationship. While the grant may be a one-time award, both you and the grantees must invest a significant amount of time in the process. Your reward is the ability to share the impact of your philanthropic efforts.

If you choose to make donations, your benefit can be much more dramatic. The funding has less stipulations. Nonprofits can use it where it will make the most sense. There’s far less interaction and involvement on your part.

Grantmaking provides you with more to leverage to promote your philanthropic efforts. Donations allow you to do less work. Both paths benefit nonprofit organizations equally. Both also contribute equally to social change.

Image credit: Flickr/Asenat29

Andy Cummings has been with Versaic since 2003 and has been instrumental in building Versaic’s leadership position in the sponsorship and philanthropy markets. Over the years, through his extensive knowledge of Versaic’s product architecture and thousands of conversations with clients, Andy has built a solid understanding of how the Versaic platform can be adapted to create the most relevant applications and client solutions.You can reach out to Versaic via Twitter (@Versaic) and Instagram.

Interested in learning more about Versaic and our solutions for grants or donations? Call 877-712-9495 or visit Versaic.com.