Companies should choose which charities to fund by looking at their effectiveness rather than judging them on such aspects as brand or administration costs, according to a new guide from the think tank New Philanthropy Capital.
Corporate Giving, which provides guidance for corporate funders in their charitable giving, says that giving by companies fell from £808m in 2008 to £762m in 2010 – a fall of 5.7 per cent. "It is crucial for companies to think about how to use their limited charitable resources in the best way possible," the report says.
The report was written by Lena Baumgartner, NPC’s head of funder effectiveness, and Rachel Findlay and Clare Yeowart, both senior consultants. It says corporate funding programmes are usually most effective when a company focuses its giving on particular social issues or geographical areas. It urges companies to think about how they can align their business and charitable objectives in order to do this.
Once a cause area has been decided, the guide says it is often a daunting task for companies to choose a charity to fund.
"It is often tempting to rely on criteria such as brand or administration costs when choosing a charity," it says. "But if you want to make the biggest impact with your money, it is important to try to judge charities by their effectiveness."
When selecting charities to fund, the guide encourages companies to consider, for example, the impact the charity has on the lives of the people it supports, whether it manages its money well and if it has strong management and governance.