Many business owners and leaders have embraced the concept of individual donor-advised funds (DAFs) for philanthropy. They may not realize that the same advantages apply to corporate DAFs as well, aiding in financial and charitable planning while also:

  • Providing a framework for company giving.
  • Enabling companies to support specific causes aligned with their missions.
  • Streamlining grant decisions and budgeting for the company and its offices.
  • Facilitating employee engagement through philanthropy committees and volunteerism.
  • Allowing substantial contributions during profitable years to sustain consistent levels of giving during less profitable years.
  • Giving public voice to an organization’s philanthropy, which supports publicity, retention, and recruiting.

Below are 10 tips financial advisors can use to help their clients expand corporate philanthropy with DAFs.

1. Establish a Philanthropic Mission

To get everyone on the same page, develop a philanthropic mission for all offices across the organization. Aligning the mission with company values helps ensure buy-in at all levels, from the workers to the directors.

2. Create a Philanthropy Committee

A philanthropy committee can map out the company’s philanthropic direction and ensure it reaches its goals. Establishing a committee with term limits will promote broad employee participation, empowering a variety of voices.

3. Allocate Dollars for Charitable Giving

Budgeting is crucial for all organizations. Allocating a specific amount of money for charitable giving eliminates accounting surprises and guarantees money can be granted to worthy causes. Provide these annual giving budgets to the appropriate committees or offices.

4. Engage Employees in Philanthropy Discussions

Allow employees to engage in grant recommendations to build connections to the organization and its values. Employees will appreciate the sense of inclusion and the ability to advocate for causes that are important to them.

5. Develop a Granting Process

While it’s great to include everyone in discussions, the actual granting process should be streamlined. Limit the number of employees administering grant recommendations to one or two executives and be sure to appoint successor advisors.

6. Set Grant Thresholds

Once the overall corporate budget is allocated, the company should establish thresholds for each grant that goes out from the DAF. Setting larger minimum grant sizes sends a clear message of support to charities.

7. Strategize Funding Sources

In discussions with the philanthropy committee, determine funding sources for the DAF, whether from the company or a select group of executives. While some organizations have funding already set aside, others need more guidance on acquiring it.

8. Determine Timing for Grants

Grant recommendations should happen several times per year. Determine a schedule that makes sense for the organization’s funding goals and try to avoid peak giving periods for charities.

9. Prepare to Make a Lasting Impact

Grants from DAFs can serve both short- and long-term purposes. Work with the company’s philanthropy committee to determine how they can make the biggest impact and establish a charitable legacy for the organization.

10. Set Expectations for Charitable Giving

Make sure that everyone knows corporate DAFs are meant for significant corporate philanthropy with large contributions. They are not designed for immediate re-granting or matching employee contributions.

 

Assisting clients in creating corporate DAFs can help financial advisors forge connections with C-Suite executives and strengthen relationships with privately held business owners to improve their corporate image. More importantly, advisors can help these companies and employees make a meaningful charitable impact that secures their philanthropic legacy.

For more information empowering corporate philanthropy through DAFs, contact American Endowment Foundation today.