Companies have long played an important role in their communities, sponsoring everything from the local little league team to soup kitchens and cultural institutions. Increasingly, however, companies are discovering that philanthropy isn’t just good corporate citizenship; it’s also good business, supporting a vast array of objectives: raising brand awareness, enhancing employee engagement and retention, and cultivating goodwill. Because so much financial and reputational capital is riding on their philanthropic initiatives, corporations are increasingly interested in strategies that set their giving programs apart.
For these companies that seek to differentiate their giving programs, a corporate foundation may confer distinct advantages. The IRS allows corporate foundations wide latitude to undertake creative, inventive, effective philanthropy that can’t be accomplished by other means. In practice, this means that corporate foundations aren’t limited to making grants to 501(c)(3) organizations. Whether making a tax-efficient donation to an orphanage in India that has never heard of an IRS 501(c)(3) designation or a hardware store in Newark running a safe trick-or- treating program for kids in tough neighborhoods, the IRS allows corporate foundations to fund most any charitable cause. And because a corporate foundation allows for consistent giving, even in lean years, the parent company can fund signature charitable programs that, over time, become closely associated with its brand.
In this article, we outline ten capabilities of this powerful charitable vehicle.
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