Why Ramping Up Your Corporate Social Responsibility Strategy May Be Right for Your Business

Giving back can create employee engagement and help your bottom line.

two gift boxes wrapped in ribbon

Few business buzz phrases are as prominent at the moment as corporate social responsibility (CSR), and for good reason. Companies that thoughtfully and strategically leverage this approach to doing business can become employers of choice while potentially lowering tax liability and substantially bolstering their reputations in the community to potential clients.  

Current IRS tax code advances CSR programs through the way it addresses corporate foundations and employee matching gifts. Matched employee donations are often deductible for up to 10 percent of a company's annual taxable income. But that's hardly the only reason to embark on this path. Among the most important of the additional potential benefits is enhanced employee engagement. A study by the Temkin Group, for instance, found that more than 90 percent of engaged employees almost always try their hardest at work. And in another study, Modern Survey found that employees who understood their employers' values were 51 times as likely to be fully engaged in their work, which can result in higher profits.

A recent report by the Council of Foundations looked at some of the relevant issues around CSR programs, including the modest out-of-pocket costs. Among its findings:

  • Nearly 2/3 of respondents to a survey said they would prefer to work for a company that gave them opportunities to volunteer in the community.
  • The average cost of a quality employee volunteerism program for large companies is about $30 per employee.

Creating alignment and buy-in

These strategies, however, generally are successful only where two things happen: Efforts are aligned with corporate strategy and senior leadership plays an active role in supporting the programs.

In privately held organizations, notes Phyllis Silverstein, Senior Regional Fiduciary Manager, Philanthropic Services for the Southeast region of Wells Fargo Private Bank, alignment often comes from having programs that mesh with owners' personal values, not just their corporate strategy.

"A company we've been working with is family-owned. The family wanted to start a foundation so they could give money in communities across the country where they do business, but specifically in areas where their priorities match the value priorities of the family," says Silverstein.

An outside board of advisors was initially hesitant about the idea, but the multigenerational family pushed through anyway, embarking on such programs as funding employee volunteering at animal shelters and for clothing drives. "These are things that everyone in the company could do. Everyone could participate in giving back to the community," Silverstein says. "These were all about the values the company stood for. It wasn't about profits at all." 

"In charity work, there's a feel-good component, but there are also people's lives at the other end of that check." —  Phyllis Silverstein, Senior Regional Fiduciary Manager, Philanthropic Services for the Southeast region, Wells Fargo Private Bank

Practicing sustainability and patience

Silverstein, who spent 28 years in the nonprofit sector, cautions that many successful programs are designed from the beginning with sustainability in mind, understanding that real change takes time to achieve. "After a five-year commitment, what happens then? You need to think of that on the front end. I talk about raising endowments all the time with charities," likening building endowments to creating emergency savings for a rainy day.

Perhaps most important of all, Silverstein recommends that corporate volunteer programs assess their success by broadly measuring impact, not just tracking statistics. That means looking at real program outcomes, not merely the inputs.

"That's a real sea change for foundations, which are used to demanding statistical benchmarks," she says. "They're used to asking such questions as 'How many people are being fed?' or 'How many man-hours were donated?' as opposed to 'What's the real impact?'" In the social services arena, however, "There are all these overlaying issues at play that don't come into the picture if you're looking just at numbers. This is all about looking at outcomes, not just putting a bandage on the problem by saying 'We're going to give you $100,000,'" she says.

"In charity work, there's a feel-good component, but there are also people's lives at the other end of that check."

Writer John Ettorre's work has appeared in The New York Times and the Christian Science Monitor. He lives in Cleveland.

Image by iStock

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Wells Fargo Philanthropic Services is part of Wells Fargo Wealth Management providing products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries.

Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors does not provide tax or legal advice. Please consult your tax or legal advisors to determine how this information may apply to your own situation.

This information is provided for educational and illustrative purposes only.

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