Are you making a mess of donations?

“You need a set of criteria against which to judge all requests for donations and s system to deal with them.”

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Handling requests for donations on an ad hoc basis will lose you friends and damage relationships. Do it rationally and in the best interests of your business.

“Oh no! Not another begging letter!” It had seemed like a good idea at the time, but after making an ill-considered and spontaneous donation to the football club, I was getting bowled over with requests.

Apart from the time, we just didn’t have the cash. And when I turned one down, we were accused of favouritism. It was a mess. Instead of winning friends we were losing them. Every business manager needs to make decisions about giving money away.

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In business-speak it’s called corporate social investment (CSI). It should be an easy, pleasant task, but it’s fraught with pitfalls. Privately you can get away with spontaneous small donations, but when representing a business you’re on shaky ground. Apart from the question of wasting money, the business needs to be seen as fair to all concerned, or just like I did, you’ll start losing friends.

One option is to turn down all requests, but it’s a high-risk option for the business and your personal reputation. Any business stands or falls on relationships with the community, and even more so for rural businesses.

A friend owns a small local printing business. He’s an active supporter of the SPCA, and approached a local building supply store for a small donation. He was rudely turned away.

A few weeks later, he was in the market for R25 000 worth of building material, and made quite sure not to source it from that store! Even a courteous refusal could have worked.

You need to set criteria against which to judge requests and a system to deal with them. Searching for a model to help us develop a sensible CSI policy, I found nothing that made sense, so we started from scratch. Here’s how we did it.

  • Step 1: We decided how much we could afford, and included it in our annual budget.
  • Step 2: We consulted a cross-section of people including managers, employee representatives, charities, schools, clinics and sports clubs. Not only to get their ideas, but to bring them into the process and publicise the process we were following.
  • Step 3: We listed all the good causes, and it was a long list!
  • Step 4: We now needed to review our intentions. Where would the money bring the most lasting value, where could we be sure it was used for the purpose for which it was intended? a) The maxim “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime” led us to favour education above all else.
    b) We would only place funds into bank accounts registered in the organisation’s name.
    c) We would require an annual formal report back from the organisation before making a repeat donation.
    • Step 5: We identified the avenues for investment in which we felt we could make a contribution: education and training, health, business mentorship and churches.
    • Step 6: The available fund was subdivided and allocated to each avenue.
    • Step 7: Finally, we identified those entities capable of meeting our ground rules. Each one was then informed that we held a donation for them, and invited to contact us to arrange receipt. If we heard nothing within 30 days we allocated the money elsewhere.

No more ad hoc decisions. Everyone knew where they stood. Refusals were handled with courtesy and confidence, knowing that we’d done our homework. And the flood of begging letters became a trickle. We lost no more friends.

Email Peter Hughes on [email protected].