What we’re talking about

Looking at it from a high level, community investment can mean everything from hiring local to buying from local suppliers and supporting local initiatives: anything that keeps (or increases) money circulating within the community. But the term is also used to describe focused giving and philanthropy – ie, supporting local causes and organizations with money, volunteer hours, or in-kind product donations. This guide focuses on how you can most effectively give back as a small business – how to define what your local communities are, which causes to support and how much to give. 

Why it’s important

Corporate philanthropy has a long history: all the biggest multinationals in the world have causes they have supported with big bucks. But, these days, the idea of a huge bank simply donating to a charity or cause, though still a meaningful cause, feels a bit outdated. Instead, businesses more often try to make an impact in areas that are more relevant to what they do and align with their values. 

Enter community investment, which is all about the idea of positively impacting the communities you’re located in and lean on – ideally in ways that make the best use of your product, people or platform. Meaningful efforts in this area resonate with both consumers and employees. Research by America’s Charities found that 71% of employees surveyed say it’s very important to work at a company where culture is supportive of giving and volunteering; PR company Cone Communications, meanwhile, found that 73% of Americans prioritize companies that give back to important causes.

Things to note

Money isn’t the only thing you can donate. When you think of corporate giving, financial donations might be the first thing that comes to mind. But consider all the resources you’ve got – your employees’ time and expertise can be used to do good, as can your product (whether it’s a physical one or a service). Think broadly about what you can offer.

Your local communities may be distributed globally. In the past, the most relevant community for your business would have been where your HQ was based. These days, there’s typically a broader view of what communities a business should focus on. Think about who is involved in your supply chain, where your employees are based, and where your customers are from or located. And communities don’t necessarily need to be defined by geography. You can commit support and investment for groups that might be located all around the country or world – formerly incarcerated people, refugees and garment workers are all examples of communities that might be relevant for certain types of businesses and could be spread over multiple geographies.

It’s essential to focus. There are many important causes and thousands of organizations doing meaningful work that are worth supporting, but you won’t be able to back them all. That’s why it’s important to choose a few key focus areas for your community investment, ideally ones that align closely with your business. Declaring a focus doesn’t mean you don’t care about issues that fall outside of your scope, it simply means you’re committing to depth rather than breadth when it comes to impact.

How to decide on your community investment strategy

1. Work out what you can give. Create a budget for your philanthropy the same way you would for any other business expense. Carve out a particular amount you can afford to donate each quarter or year, or think in terms of percentages (ie, X% of revenue or X% of profits). Whatever you choose, make sure it’s an amount you’ll be able to sustain. Don’t forget to work out what you can provide in terms of volunteer support (whether in terms of hours or value of services) and product as well.

2. Set aside some funds so you can be reactive if needed. Once you know what you’re able to contribute as a business, set aside a certain amount that you won’t allocate in advance and will instead use to contribute reactively. If an unexpected crisis crops up that’s related to your giving priorities, you’ll want to have the capacity to provide support in a timely fashion without needing to work out whether you can give beyond your allocated budget.

3. Choose a few focus areas and communities. Think about the issues, groups and regions that are most relevant to your business and matter most to your employees and customers. While some businesses do give to a wide range of efforts, developing a narrower focus for your support will make it easier to communicate your impact and rally others around your efforts.

4. Outline your criteria for support. Even with your defined focus areas, there will still be numerous organizations you could partner with, so it’s important to clearly outline how you’ll choose among initiatives and distribute funds. Will you make many smaller grants or fewer larger ones? Will you allow non-profits to apply for support, employees to suggest them or proactively select partners? Will you kick off long-standing partnerships or provide support through one-off donations? Will individuals or religious groups be eligible for your support or only registered non-profits and charities?

5. Identify a few key partners. Whether you’re going to select your partners or do an open call, it’s a good idea to do some research and identify examples of a few projects or organizations that meet all your criteria, and provide good examples of the kind of work you want to support.

6. Put a process in place. Decide how you’ll provide support and put people and systems in place to make sure your community investment happens. For example, if you let employees organize their own volunteer opportunities, how will you encourage them to do so? If you plan to have company-wide volunteer days, when will these happen and who will coordinate them? The same goes for monetary support and product donations – know when and how organizations will be given these.

7. Track your impact. Number of volunteer hours; value of product or services donated; number of organizations supported; amount of money contributed; number of people impacted – note it all down. This is all key information that you’ll want to share with your team (and maybe your customers). It’ll also help you receive any tax benefits you’re entitled to as a result of your giving.

Key takeaways

• Community investment is all about giving back to local causes and groups through monetary giving, volunteering and product donations.

• These days, the communities that are relevant to your business may be distributed across the globe – think broadly about who you should focus your support on and why.

• Rather than giving on an ad-hoc basis, it’s better to be proactive about your giving strategy and decide on a budget, key focus areas and criteria for support in advance.

Learn more

Perspective. Alan Kohll, an expert in corporate wellness, wrote about the value of employee volunteering programs for Forbes.

Example. Check out Mailchimp’s corporate citizenship efforts, which focus on small world changers in its hometown of Atlanta.

Tool. Neighbourly is a UK-based corporate social responsibility (CSR) management platform that helps businesses connect with local causes to donate volunteer time, money and surplus products.