What Is Strategic Philanthropy?

The business world has a long tradition of philanthropic giving, especially over the past century. But over time, the concept of strategic philanthropy has developed as a way to challenge how traditional corporate giving has been conducted.

More recently, the wider philanthropic and nonprofit sectors have shifted toward a more business-like approach. This is a focused and data-driven process and is what has come to be called strategic philanthropy.

But how is it distinct from traditional forms of corporate giving?

Defining the Term

Strategic philanthropy is an approach to philanthropy that is designed to fit with the giver’s overall mission, goals, and values. Strategic philanthropy rationalizes that the best way to create social impact is to start with a carefully articulated strategy: to decide on a goal that matters and figure out what it will take to get there.

Effective philanthropic organizations understand how to integrate these carefully articulated strategies with their actual practices. By developing a strategy in collaboration with key partners and seeking to gather measurable data, strategic philanthropists can create positive short-term and long-term impacts upon their communities and the world.

Moreover, strategic philanthropy as conducted by businesses and corporations is often not solely altruistic. Well-considered and implemented giving can have a positive impact on both the recipients of the philanthropy as well as the giving business’s bottom line. This approach to philanthropy is intended to help both the company and the society of which it is a part, making it a vital component of the relationship between any business and society at large.

Because strategic philanthropy seeks to achieve goals for both the recipient and for the organization doing the giving, it is narrowly focused. Philanthropy generally may choose to address any legitimate need in a community and there are more than enough issues that need to be addressed. However, strategic philanthropy’s approach is specific: it concentrates on needs or issues that are aligned with the giving organization’s stated mission and core objectives.

Strategic corporate philanthropy is considered to be one of the most important ways in which a business can fulfill its social responsibilities and ensure that it is doing its part to be a good corporate citizen.

The Case For Strategic Philanthropy

At the core of any philanthropic cause is the belief in the positive social impact that may result. Visionary and innovative strategic philanthropists seek to leave an enduring positive legacy. But as research has shown, the benefits of strategic philanthropy may come full circle back to the philanthropists themselves.

Business for Social Responsibility has gathered research that indicates that philanthropic giving may

Increase business exposure, secure customer loyalty, and improve brand image
Strengthen employee loyalty and retention as well as enhancing employee productivity
Enhance corporate reputation
Provide market differentiation

Brand Image

The more good a business can do, the better its brand perception will be. Strategic philanthropy creates opportunities for corporations to connect with consumer audiences through positive social initiatives. This increase in exposure combined with charitable community engagement is key to building a loyal customer base that thinks highly of your brand.

Employee Loyalty

Organizations that involve their employees with their philanthropic programs help to increase employee engagement, which in turn improves productivity. Increasingly, corporate employees run the risk of feeling disconnected from their workplace; they may consider their careers to be far removed from their life values. Employer philanthropic efforts can change that.

Thoughtful philanthropic efforts can also attract valuable new employees who may consider it to be a priority in choosing their future workplace, as workers are increasingly measuring their own career successes by the positive impact they feel they can have on the world around them. Studies have even shown that over half of employees say they would not consider working for a company that does not have a strong philanthropic commitment.

Market Differentiation

Strategic philanthropy is an effective way of helping to distinguish your company from competitors in the same market. Research shows that people spend more with brands that vocally support causes: when choosing between two brands of equal value, 90 percent of consumers are likely to select a cause-branded product. Additionally, 87 percent of consumers said they would buy a product simply because a company advocated for an issue that they care about. This research reveals just how valuable strategic philanthropy can be.

The Key Elements of Strategic Philanthropy

What are the key elements that any philanthropic organization must embrace to ensure that their philanthropic giving is truly strategic? There are three:

goal setting
data-driven strategic development
measurement of progress and outcomes.

Strategic givers first articulate a set of clearly defined objectives. It’s helpful to think of this approach as the difference between precision aim and scatter-shot. Of course, giving to any cause is a worthwhile activity. However, to achieve larger goals and to address complex problems, it is important to narrow the focus onto specific causes and create well-articulated action plans. These causes should align with the stated mission and values of the giving organization.

The next key element is data. Data is the most important tool by which strategic philanthropists formulate their evidence-based strategies. And gathering this data is not a solo task. In order to be most effective, giving organizations must meaningfully engage with their shareholders, with the communities in which they function, with their employees, and with the intended targets of their giving. By working in partnership with other key groups, strategic philanthropists can ensure that they will get the most “bang for their buck.”

The final element is an ongoing process. Both givers and recipients should regularly monitor progress towards stated outcomes. Outcomes are crucial. It is important to assess and reassess success so that appropriate course corrections can be made whenever deemed necessary. This is a heightened form of accountability. Traditional giving has not required this level of back-and-forth between giver and recipient, but without this process, strategic philanthropy cannot be nearly as effective.

How to Proceed

Businesses can be incredible models for the communities in which they operate. For example, business organizations can demonstrate the value of risk-taking, innovative out-of-the-box thinking, teamwork and partnership engagement, and financial responsibility. The wider philanthropic sector has a lot to learn from the specific expertise that the business world can offer. But to those who are unfamiliar with the process, strategic philanthropy can seem daunting and confusing. After all, businesses may struggle to see how their own forms of expertise translate into creating an effective philanthropic strategy.

It’s important that organizations commit to doing strategic philanthropy right, and know that they aren’t alone. Strategic philanthropic consulting is an incredible resource for those who want to move forward but aren’t sure how or where to take the first step.

Saddock Is Here To Help

Ensure that your funds are well-spent and that you are doing the most good with what you give. Make effective, measurable change with strategic philanthropic practice.

Sources:

^{https://ssir.org/up_for_debate/article/}

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^{https://nonprofitquarterly.org/}