Family philanthropy

“A business that makes nothing but money is a poor business”
- Henry Ford

As more companies consider what corporate responsibility means to them, so questions are being asked about what is meant by corporate philanthropy.

Corporate philanthropy can be defined as the giving of money, assets, time, encouragement and expertise by companies to create positive social and environmental impact. In other words, it’s one of the things to think about when it comes to corporate responsibility.

Although you might think that companies give much more than individuals, the reality is that corporate giving for 2005/6 in the UK was around £1.1 billion compared to the £8.9 billion of individual donations for the same year, according to Charities Aid Foundation.

Why?

Well, when it comes to altruism, some argue that it is not up to companies to give shareholders’ money away; that it’s up to employees to seek the company’s support for charities or projects; and that companies are already supporting communities through their core products and services or by providing employment.

As far as being a force for marketing, others remain unconvinced that corporate philanthropy does much to create competitive advantage, improve a company’s reputation; attract the best employees; make it a better neighbour; help it win customers or strike better terms with suppliers.  In other words, the game may not be worth the candle.

That said, some companies are just getting on with it. For example, in 2006 The Royal Bank of Scotland invested nearly £60m in the communities in which it operates.  In the same year, over 25,000 staff took advantage of The Royal Bank of Scotland’s employee giving programmes generating £12.7m for over 8,500 good causes across the UK. 

A number of family businesses are also leading the way. Not only do they not see anything wrong with the company benefiting, they can see how the family benefit too.

• Kent-based healthcare provider Active Assistance makes significant donations to two charities, one that is involved in lobbying and another that is involved in rehabilitation for people with spinal injuries;
• Newbury-based merger and acquisition company, BCMS Corporate has set up a family charitable trust and built a school and orphanage in India as well as supporting local charities;
• Top hotelier English Lakes Hotels is passionate about the environment, involving employees as well as family members in reinvesting in the Lake District to repair footpaths, walls, riverbanks and lake shores;
• For Thame-based butchers, M Newitt and Sons Ltd, it's about advancing food education among children, with practical onsite demonstrations and teaching for schools;
• Pertemps Ltd, the recruitment agency, focuses on bringing investment to deprived areas of inner-city Birmingham, having given away more than £11m in the last five years, matching money raised by employees to a maximum of £500 each;
• Sheffield-based coffee roasters Pollards Tea and Coffee Ltd is committed to supporting Fairtrade and help business coffee growers in India make every effort to support both the pickers and the planters whilst they are working and when they retire;
• Surrey-based construction and property development company, Wates Group, makes a substantial contribution to the community as one of the top 100 companies included in the Business in the Community’s Corporate Responsibility Index, in addition to the many causes supported by the families charitable foundation and the wide involvement of family members in the Wates Foundation, making grants of over £3m per annum; 
• Basildon-based pharmaceutical company Waymade Healthcare has established fresh water and eye hospital initiatives and a university for the teaching of English in India and has also set up a family foundation – the Shanta Foundation – to channel their giving and raise additional funds.

What these companies have in common is that they are all winners of the 2006 Coutts Prize for Family Business, designed to recognise and celebrate the best run small, medium-sized and large family businesses in England and Wales, regionally and nationally. For them corporate philanthropy is an expression of the ethos of the company, what the company is, what it does and how it does it. For these family businesses it’s right to be seen to be doing well by doing good and encouraging others to do the same.

And in addition to making good business sense, and responding to social needs in innovative ways, corporate philanthropy can help keep the family together especially when not all the family are involved in the business. One way family businesses do this is to set up a family trust and donate a percentage of pre-tax profits to the trust. It can also be used to teach the next generation the value of money and can provide a new sense of purpose to family members leaving the business.

Not to mention that it can be amongst the most enjoyable and rewarding things a company can do.

So where should you start…

• Look at what the company is already doing.
• Agree who is or should be involved – the family may want to do something as a family as well as engaging employees.
• Discuss the criteria you are going to use to select the causes and the charities you are going to support. Refer to this Guide to Giving and other resources by Philanthropy UK.
• Find out about effective charities to support.  Look at online charity directories like Guidestar UK, New Philanthropy Capital’s Charity Selector and Intelligent Giving.
• Agree how much you are going to give. Consider a percentage of pre-tax profits.
• Take advice on how your giving can be made tax effective under the Gift Aid Scheme. Consider setting up a charity bank account or charitable trust for individual giving.
• Approach organisations like Coutts & Co, Charities Aid Foundation, the Community Foundation Network, the Institute for Philanthropy and New Philanthropy Capital for ideas, research and advice on creating a giving strategy.

Recommended resources

• Philanthropy UK
• Coutts & Co
• Guidestar UK
• New Philanthropy Capital
• Giving">Intelligent Giving
• Charities Aid Foundation (CAF)
• Community Foundation Network (CFN)

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This article first appeared in Generation magazine, issue four, Summer 2007.