A few days ago I was in a meeting setting up a new corporate foundation for a small business. When I asked whether or not the firm wanted a way to take online requests, one of the partners said, “Absolutely not. We’ll get bombarded! As it is, I get people calling saying, ‘Hi, I’m [big client]’s cousin, would you sponsor my charity event?’”

In other words, he was saying that if we publicize the foundation, then:

we’ll get too many funding requests, and
we’ll get requests from people that we can’t turn down.

Is that true? Is he right to be concerned?

The first rule of Fight Club…

The first effect I like to call The Secret Foundation. Getting overwhelmed with charity requests is a real, valid concern for most firms, especially ones that don’t have the resources available to manage several requests per day. One of the reasons for establishing a corporate foundation, however, is to be able to collect and process requests on a manageable schedule. Any random requests can easily be deflected with “Our foundation handles that — here’s the website (or phone number.)”

Keeping the foundation a secret will probably reduce the number of requests, but it completely misses the point. Customers report that they have a more positive image (91%), more trust (87%), and more loyalty (87%) towards businesses that support social and environmental programs. By not advertising the good you’re doing in the community, you’re forgoing this very tangible benefit.

A better way to look at lots and lots of funding requests is that your foundation (and presumably your company brand) are getting lots and lots of name recognition. The more requests you get, the more people are visiting your website and reading about your company, its employees, and the good things you’re doing in the community. These are all really good things!

An offer you can’t refuse

The second effect almost sounds like a veiled threat. By publicizing your foundation, you’re presumably opening the door to unscrupulous charities who want to extort you. “If you don’t donate to my charity, I’ll have my cousin cancel his lucrative contract with you.” But this is actually not as bad as it sounds. If anybody ever did say something like that, you have an easy funding decision to make! No legitimate charity would ever use this tactic, and a quick phone call to a board member would make sure it never happens again.

While reputable charities would never resort to extortion, nearly all of them use some form of “relationship fundraising.” This is where board members are encouraged to go through their contact lists to look for potential donors. Inevitably, you’ll get a call from a client who is fundraising for an organization for which they serve on the board. These requests are usually exploratory, and only rarely result in a lost client. In fact, the only time you might lose a client because you didn’t donate to their pet cause is because one of your competitors did instead!

The best defense

Rather than hiding under a rock, the best way to take control of corporate philanthropy is to formalize it. By setting up a corporate foundation and making some basic policies, you can easily filter out the kinds of requests you’re not interested in. You can review proposals annually if you wish, or hire someone like Valor CSR to manage the entire process for you. The worst mistake you can make is not talking about the good things you’re doing for the community, because it means you’re potentially throwing away brand recognition, positive image, trust, and loyalty.

P.S. Explore this topic in more detail in our whitepaper: CSR best practices for small business.