Clare Yeowart

As anyone who works in the non-profit sector knows, charities are facing severe cutbacks in funding from government and other sources, while more people are in need of charities’ help as a result of the downturn. In these difficult times, businesses can provide much-needed support to the communities in which they work.

Over the last few months, New Philanthropy Capital (NPC) has been working on a new guide for corporate funders, which we launched today. Throughout our research, I have been struck once again by the huge potential that businesses have to achieve a charitable impact. They can offer a very valuable type of funding – flexible, able to take risks, and free from the restrictions that come with government money. Some corporate funders already maximise their impact by providing this kind of funding, but there are plenty more who could follow suit.

Of course, businesses themselves have also been affected by the economic downturn – the latest figures on UK company giving from the Directory of Social Change show that giving by companies dropped from £808 million to £762 million between 2008 and 2010. We need to be realistic about corporate funding not being a panacea for all the sector’s ills. But, at the same time, the downturn is a good opportunity for companies to sharpen their focus on how they use their resources, both financial and non-financial – whether they are making every penny or hour of a volunteer’s time go as far as possible, and whether they are responding to the changing needs of individuals and charities they support.

We’ve met a lot of corporate funders who are doing really exciting things to support their local communities or focus on issues where they can drive changes at a strategic level. In our guide we feature stories from a range of businesses and corporate foundations that have really thought about how their philanthropy can make an impact. Zurich Community Trust’s ‘Transformation programmes’ support challenging social issues that lack funding, such as parental misuse of alcohol and drugs. Aviva hopes its Street to School (S2S) programme will achieve a multiplier effect – that the impact of successful school programmes will be multiplied by creating teacher training resources.

The guide outlines five steps to effective giving, from choosing what to fund to reviewing impact. One challenge corporate funders often come up against is identifying issues and causes that are aligned with their corporate identity and culture, while also addressing real needs. Once they’ve chosen a broad area of focus – such as education, youth crime or mental health – funders should take time to try to understand needs in that area, so they can ensure their funding is tackling the most pressing problems. Nationwide chose to focus its corporate giving on areas that were related to its core business: housing, financial exclusion and employability. The building society asked NPC to conduct background research into each area to help it decide which issues to prioritise. Our analysis of needs helped them identify key problems in each area, and explore how these affect people’s lives and how they are changing in the economic downturn. It also investigated how government and charities are addressing these problems, so that Nationwide could see where there are gaps in funding, which groups need most attention, and how they might structure their corporate giving to achieve the greatest impact.

Corporate funders have many demands on their time, so devoting resources to researching their giving is not easy. But, wherever possible, we believe it is well worth the investment. If funders spend the time getting to grips with needs, then they can make sure their giving is carefully targeted to make a real difference to the communities they care about.

Clare Yeowart is a senior consultant at New Philanthropy Capital, and co-author of NPC’s new guide to corporate giving