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by D. Michael Wilson
Never in my lifetime has the need for corporations to lead the way in philanthropic work been more dire. This spring, as Covid-19 sunk its claws into the heart of our nation, nearly 40 million people lost their jobs, leading to record highs of unemployment claims with no indication of when or if a significant number of these jobs will return. Over 55 million school children had their education upturned as the United States underwent a near-total shutdown of schools. Most alarming, the death toll from COVID-19 in the United States alone has surpassed 100,000 individuals and will likely exceed 150,000 by mid-August. Meanwhile, our nation’s rate of infection continues to climb as we break daily records of new infections. Add to all this the backdrop of a profoundly divided nation and ensuing partisan gridlock. At a moment when so many Americans are reeling from COVID related trauma, many cultural organizations that have traditionally offered solace have been forced to close, and many cherished institutions have been suspended. The respite from the virus we had all hoped the summer would bring is clearly not coming, while the threat of a second wave of illness looms on the horizon.
Philanthropy is Needed Now
When the virus took hold in the US this spring, there was a great awareness of the increased need that was placed on non-profits, and there was a commensurate outpouring of charitable giving. After the initial surge of those first two months, philanthropic organizations reported a plateauing in the demand for services as people began to receive unemployment funds. However, as many COVID related relief programs draw to a close, they’ve begun to see another increase in demand. With federal unemployment payments set to end in July, many anticipate significant increases in August. If children do not return to classrooms in September the demand will remain elevated as meals served at school represent a significant source of nutrition for our children who are most at risk.
One of the organizations I regularly donate to, the Lowcountry Food Bank (LCFB), serving the greater Charleston, SC region, reported a 484% average increase in the number of people who pass through their doors seeking emergency assistance since March 16. While they’ve thankfully gained a number of “recurring” gift donors who give monthly, the overall frequency of gifts from individuals and corporations is dropping. Like many nonprofits, their greater concern is what “end of year” giving will look like, as most non-profits tend to receive roughly 40% of their annual income during the last quarter of the year. The LCFB provides a critical service for immediate human needs. They’re hoping that by redoubling their outreach efforts to individuals who have routinely given during the fourth quarter in the past, they’ll continue to be able to meet demand. As Jill Hirsekorn, LCFB Director of Communications puts it, “We have a compelling story to tell and are filling a critical need in the community. Therefore, we are competing for contributions, but we are able to make the case for support. It has become much more challenging for ‘non-essential service’ nonprofits.”
Corporations Should Commit to Philanthropy
Philanthropy is an investment in the community that pays dividends on many levels: employee engagement, community goodwill, talent acquisition, community leadership, and governmental support. If an organization invests wisely and consistently, appropriating its limited dollars in a way that maximizes impact, these dividends are collected over both the short- and long-term.
What’s more, as they are free from the inherent bureaucracy of most government agencies, corporate organizations are well-positioned to respond to the changing needs of the communities in which they operate, and in which their employees live and work. These factors allow companies to be more attuned to local needs and, therefore, bring greater impact with fewer dollars.
Of course, while the current need for philanthropy is painfully clear, what might not be is the case for why corporations should continue and even grow their philanthropic work in the COVID-economy.
The Obstacles
Consider how corporations approach philanthropic work in “normal” times. In these periods, companies will look to industry philanthropy indices, often expressed as a percentage of revenues or profitability, to understand peer company giving levels. While the emphasis on philanthropy varies naturally by both industry and individual companies, companies typically do not want to be outliers.
Now, consider how that approach has altered during challenging economic periods of what would still, in contrast with today’s world, be considered “normal” times. During challenging economic periods when leadership sees a need to cut headcount, reduce discretionary spending, and perhaps take other restructuring initiatives, charitable giving becomes even more highly scrutinized. It is understandably difficult for businesses to eliminate jobs and benefits and not consider cuts to philanthropic giving at the same time in order to maintain a balance of stakeholder equity.
The pressure for public companies is even greater as they not only have to consider the reactions of employees and community stakeholders but shareholders as well. Despite the trend toward Environmental, Social, and Corporate Governance (ESG) investing and the growing view that companies must serve all stakeholders, not just shareholders, the reality is that most shareholders, especially institutional shareholders, believe their interest is both first and foremost. And as the “owners” of the company, they have a valid point.
How Corporations and Individuals can Succeed with Philanthropic Work
Make It an Investment, Not an Expenditure
In our COVID-economy, it is crucial that company leadership cast philanthropic giving in the light of investment, not expense. The difference is more than semantics.
At Ingevity, where I most recently served as CEO, we were thoughtful about the types of causes we would support, and would not support. Ultimately, as a chemicals and materials, science-based company, we decided our philanthropy should serve one of three areas: health and human services; science, technology, engineering and mathematics (STEM) education; or the environment — all of which were important to the organization and the nature of its work.
Still, I vividly remember an instance where I received strong push back from a shareholder over a gift. We made a significant grant to a community organization, Metanoia, in support of an early childhood education center in a community adjacent to our headquarters which was also one of our largest production facilities, a neighborhood that is one of the poorest in the region. It was an organization we had supported for two decades and we were honored to be able to support the project. At the same time, we wanted to induce others to give as well so we publicized the gift and received our desired press coverage. The very next day I attended an investment conference in New York and in my first meeting at 8 am was confronted by a livid shareholder who said, “You have no right to give away those funds. That money is not yours, it belongs to us.” This is a viewpoint that is hard to argue with. And, in fact, I agreed with her that it was her money. But, as I explained, as a CEO, I am charged every day to make decisions to spend and invest shareholder money in order to maximize returns on their investment. I then went on to explain how our gift was not an expense, but rather an investment, an investment that favorably raised our profile as an attractive place to work, giving us an edge on talent. An investment that helped shape a positive profile of the company with community leaders and government officials from whom we may one day need support to expand or extend operating permits or tax relief. And, an investment that aligned with our values and purpose and therefore helped build greater engagement among our employees. While not all investments can be quantified, I was highly confident ours was a great one.
Give it the Same Level of Consideration You Give Your Other Investments
Though the need for giving has never been higher, as the pandemic wears on, many charities and community organizations fear steep reductions in their donations. This situation makes it all the more tempting to say yes to everyone — because there are now so many worthy causes! However, to be impactful, you must be focused and strategic, as you would with any investment. Your philanthropic work must clearly align with your company’s vision. Integrating philanthropic work into your organizational structure will support you in accomplishing this.
At Ingevity, we created a philanthropy committee made up of a cross-section of employees and tasked with the development of our philanthropic charter. This committee created the guidelines for our philanthropic focus and governance, with all new giving opportunities being decided upon by the committee. From a budgetary standpoint, we always factored our philanthropic pursuits into our financial plan, typically taking into account what we had done in prior years along with available industry/peer averages.
Connect Employees with Community
My recommendation for any company committed to philanthropic work is to look for opportunities to not just give financially, but to also engage employees in the community, that is, to give time and talent in addition to treasure. Some of the experiences are eye-opening and significantly impact the individuals’ empathy for parts of the community they may not see every day. Everyone benefits from this.
While we had some employees at Ingevity who would engage by serving on a non-profit board or committee, we typically sought the broader involvement that comes from event-driven opportunities. For example, we ran, as a relatively small company, one of the largest corporate campaigns for Trident United Way in South Carolina. For five consecutive years, the total of our employee contributions plus the dollar for dollar company match was greater than one million. In addition to the financial gift, the last two years we were the sponsor for the local United Way’s Day of Caring and had almost 100 employees give a day of service helping on various community projects. In another example, we funded an exhibit on the impacts of plastics pollution at the South Carolina Aquarium. To follow that up, we then organized groups of employees to participate periodically in litter beach sweeps under the guidance of the Aquarium staff. And with the Lowcountry Food Bank, we financially sponsored Fresh For All food distributions and arranged for employee groups to visit the distribution sites to help hand out the fresh vegetables. These engagements strengthened the bonds between employees, between employees and the community, and between employees and the company.
Leadership Needs to Roll Up Their Sleeves
As John F. Kennedy famously said, “For of those to whom much is given much is required.” It is the same for philanthropy as it is for all aspects of leadership, you lead by your example. In this case, the ways in which you give your time will be far more visible than your gifts of money. Are you participating in the beach sweeps, the food distributions, the community projects during Day of Caring? Are you actively promoting participation among the rest of the leadership team? Do you thank your employees for giving back? Do you tell them how both humbled and proud you are of their actions? These are the actions effective leadership requires.
Conclusion
Simply put, philanthropy is now more important than ever because needs have never been greater. But, there is also a great opportunity here for corporations. It’s easy to give when times are good, in fact to some degree it’s expected. But if you continue to give when times are tough, not only will your dollars and your time have an outsized impact, they will make an outsized impression, a favorable one that will remain long after this crisis has passed — and that will continue to pay dividends for years to come.
About the Author
D. Michael Wilson is a philanthropist and former CEO of Ingevity, a global specialty chemical, and materials company. He has deep specialty chemical experience having served in executive roles at Albemarle Corporation and FMC prior to Ingevity. He has been a board member of both Ingevity and Vulcan Materials. He has also served on the boards of the American Chemistry Council, the National Association of Manufacturers, and the Philadelphia and Greater Charleston Metro Chambers of Commerce. He established the Michael and Pam Wilson Family Fund to benefit the Lowcountry Food Bank, the South Carolina Aquarium, and Reading Partners South Carolina, among other causes. The fund also provides support to the Plastic Free Waters initiative at the SC Aquarium. He has a BS in Chemistry and an MBA from UNC Chapel Hill. Wilson has been recognized for corporate leadership in the Charleston Business Magazine.
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