Small and mid-sized companies usually focus their giving programs on a particular segment of a community or specific needs that cut across the entire community. These needs generally fall into certain broad categories, including education, health and human services, economic development, and the arts. Focusing its giving enables a company to make a greater impact with its dollars.

Here are some questions to consider in determining your program's focus:

• What are your current business interests?
• What are your future business needs?
• What role does your company want to play in the community?
• What are your employees' interests and what causes are they committed to?
• What area of your community or who in the community is most affected by your business?
• What community issues are likely to affect your business and/or employees?
• Where do your employees live? Where do your customers/clients live?
• What do you want your company to be known for? Whom are you trying to reach?

Here are a few examples of how companies have matched their business activities and needs with their corporate giving programs:

• A furniture manufacturer with a strong interest in conserving timber resources funds community projects dedicated to protecting the environment and environmental education.
• A grocery store provides funding to day care centers in the area after a brief survey of customers finds day care to be one of their key community concerns.
• A children's footwear company supports-through its corporate foundation-local programs involving children.
• A beer manufacturer forms an alliance with the local chapter of an anti-drunk-driving organization, helping it conduct a poster contest in high schools to publicize the organization's message.
• A travel agency offers free emergency transportation assistance, helping stranded tourists and needy families with sick relatives who live elsewhere, and also pays temporary lodging expenses for people in need.
• A small Internet start-up company creates a Web page to post volunteer opportunities in its local community.

Review examples of corporate giving mission/policy statements.

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1. Percentage of pre-tax net income. Base your giving budget on a pre-established formula calculated as a percentage of pre-tax net profits. In small companies the average is around 1 percent; however, this sometimes ranges as high as 10 percent or more.

2. Past experience adjusted for profitability. Develop an annual giving budget that becomes part of the corporate financial plan. In formulating the budget each year, companies take into account issues such as:

• Requirements of program strategy and plans;
• Current revenue and profit projections;
• Availability of other resources;
• Internal competition for resources; and
• Spending patterns of other companies in the area.

Direct giving program. This is a program operated and controlled by the company. It is funded directly by the company and is reported to the IRS as a tax-deductible charitable expense.

Company-sponsored foundation. This is a legal entity separate from the company. It is funded primarily by the company, in keeping with IRS regulations, but has its own bylaws and governance structure. For more information about starting a corporate foundation, click here.

Donor-advised fund. Under this option, the company sets up a "donor-advised fund" within a community foundation or other public charity. The company may recommend eligible charitable recipients for grants from the fund, although by law, the community foundation or other public charity must be free to accept or reject these recommendations. For more information about donor-advised funds, click here.

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There are three basic types of cash awards you can make to philanthropic or charitable organizations:

Unrestricted awards. Your company's grant goes into a recipient's general fund and can be used for any purpose by the recipient organization-program operations, administration, or other activities.

Restricted awards. Your company earmarks the money for a specific purpose or program.

Capital grants. Your company makes a donation for construction, renovation, purchase of property, or the building of an endowment.

In addition to these options, there are several techniques you can use to increase the impact of a small giving budget while encouraging giving from other sources, including employees:

Employee matching gifts. Your company's giving program offers cash matches for employee gifts to charitable organizations. There usually are set limits on the level of the company's match and on the types of qualified, tax-exempt organizations that the company will support.

Dollars for doers. This giving program makes cash grants to organizations where employees volunteer a certain amount of time.

Challenge grants. The company makes a grant on the condition that the recipient raise funds from other sources, usually within a certain period of time. The company might require, for example, that the recipient raise an amount equal to the amount of the company's grant. (This is sometimes called a "matching grant.")

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In-kind contributions. These can consist of products, supplies, property, or excess inventory. They can also include services such as printing, Web site development, and use of meeting rooms. In-kind gifts are tax-deductible within certain limits.

Loaned talent. You may offer the time and expertise of employees, allowing them to help an organization on company time. Employee "loans" can be either for single events or projects, or on a regular, longer-term basis. This type of contribution provides nonprofits with expertise to which they would not ordinarily have access, and increases your employees' leadership skills and understanding of community needs.

Employee engagement. Employee engagement opportunities may range from encouraging workplace giving through the United Way and matching employee gifts to nonprofit organizations, to sponsoring company teams in fundraising walks and runs, to encouraging employees to volunteer in a company-sponsored initiative. You may or may not decide to link employee volunteering to the fulfilling of the company's business goals; many small companies simply encourage employees to volunteer in their communities.

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Alliance members have access to sample documents (e.g., letters, guidelines) in the Members Only section of our Web site.

Partial text reprinted with permission from the Forum of Regional Associations of Grantmakers

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