New Venture Lab: Equipping Christian Entrepreneurs

Question

We are needing to develop a “corporate charitable giving policy” for our company that reflects our Christian values.  We’re already getting hit by requests (like United Way).  Do you have something in writing that you can share with us, or at least some guidance?

Answer

There are three different ways to handle company charitable giving policies:

1. Do not give at all through the company and only give individually.  This approach works best for organizations with multiple owners with different giving strategies and for non-pass through entities to avoid the "double tax" of giving at both the company level and the personal level.  For pass-through entities such as S Corps, LLCs and Sole Proprietorships with one owner, it doesn't matter if the giving is done at the company or at the personal level.
2. Give only to specific organizations and not to any others.  This greatly simplifies the giving dilemma.  Your company is still giving, but it's directed and targeted giving that means your gifts are larger and have more impact.  It also makes it easier to turn down giving requests that are not target causes.
3. Give to any and all causes that fit a specific set of guidelines until you've hit your giving limit or threshold.  This gives you the freedom to give as you see fit, but also lays out a set of guidelines that helps guide your giving.

Example policy text for all three types of policies are laid out below:

1. Example where the company has made it clear that it does not give: 

While we recognize the need for and the value of charity, and while we encourage employees to get involved in volunteering their own time and resources for charitable causes, the company policy is that _[company name]_ (and all its subsidiaries) do not give to any charitable causes. 

The company is owned by investors that have made a financial investment for the purposes of growing the company and making a return on that investment.  If our investors desire to give additional funds to charitable causes, they will do so through their own decision-making channels rather than through the company’s employees and officers.

2. Example where a company has limited its support to only specific charities and no others:

Each year we receive hundreds of requests from very worthwhile organizations throughout the United States. While we would like to be able to grant each request, it is not financially feasible to do so.

As a result, a policy has been established. We provide financial and in kind support as well as many hours of volunteer leadership to numerous industry associations, university groups and various non-profit organizations across United States.

Building on this commitment, we have selected the ______, ______ and ______ as our target organizations for charitable giving.   It is our intent to provide meaningful support to these partner organizations and therefore we are limiting our charitable contributions to only these organizations we currently support.

3. Example where a company makes it up as they go along, but has clear guidelines to direct their giving:

We support many charitable and civic organizations, both with cash and in-kind contributions.  We frequently receive requests for gift certificates, which not-for-profit organizations then sell or auction to raise cash.  We have also conducted concerts or other fundraisers at our facilities for such organizations as the ______, ______, ______ and ______. 

We remain committed to building ties with the community and expect to increase our charitable giving.  However, we cannot honor every request for assistance which comes in the door.  If you are a philanthropic organization and desire a contribution from us, we ask that you first review the guidelines below. 

Our charitable giving guidelines: 

Tax Exempt Status.  Our policy is to limit our support to organizations which have been recognized as tax exempt under Section 501(c)(3) of the Internal Revenue Code.  

Geographic Limitations.  Although we do not limit our giving to local organizations, we do give preference to organizations which support the local community in some fashion. 

Exempt Purpose.  We give preference to organizations which are dedicated to the following activities (in no particular order below):   

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Requests for contributions.  All requests for contributions must be in writing and mailed to the following address:

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