How to Unlock $5B for Charities

In December, Mackenzie Scott announced that she’d donated an additional $4.1B to 384 charities in four months, an unprecedented pace and approach to philanthropy. She focused primarily on organizations providing short-term emergency assistance and tackling long-term inequities. Recipients included organizations that provide food aid, debt relief, employment training, legal representation, and education to historically marginalized people. She left it up to the organizations to decide how to spend it.

Her approach was referred to as “admirable” and “countercultural.” It also reinvigorated conversations about inequity in the US economic system - a point Scott made herself.

“This pandemic has been a wrecking ball in the lives of Americans already struggling. Economic losses and health outcomes alike have been worse for women, for people of color, and for people living in poverty. Meanwhile, it has substantially increased the wealth of billionaires.” - Mackenzie Scott

Another $5B+ Unlocked, More Left on the Table

There was another $5B+ that went to thousands of charities last year, also unrestricted, that received a lot less attention. That is the best estimate of funds that flowed from employee giving programs to not for profit organizations, a mix of individual employee donations and corporate matches. While that number is impressive and a critical source of charity support, would you be shocked to learn that an additional $4-$7B in available matching funds went unclaimed?

I know I was when I first heard that number. It was the first statistic that made me think that WeSpire should consider adding Giving to our platform. The second statistic was when I saw the average participation rate in matching programs - 10%. I was confident we could dramatically improve that number, especially considering our behavior-based approach that inspires people to take action. We added that module in late 2019 and so far, our prediction was correct and our participation rate is already 60% higher. If everyone took our approach, there is $3B right there.

However, over the past two years observing corporate giving programs and collecting relevant data, I have realized that there are even more innovative approaches to unlocking those funds. In addition, when you think about what employers want out of matches besides “good corporate citizen” credit, there are pools of funds that could be available for not for profit donations, leading to a similar business impact, that dwarf the matching budget.

Novel approaches to Corporate Employee Giving

Let’s start with an approach that turns the idea of matching upside down - the employee donation bank. We have a customer, who decided to place funds into each employee’s account on WeSpire to make donations. In just three months, 62% of those funds have been donated. This approach maintains employee choice about where to direct the funds, leaves the funds unrestricted to the charity, gives the employee the ability to add to the donation, and companies can still match if desired. But, it also removes one of the most significant barriers, which is the employees perceived ability to make any donation. There is still a need to motivate people to make a decision at all and to enhance the funds, but overall the result is a program that is more egalitarian and that more effectively distributes what the corporation is willing to donate, via employees, each year to charity.

However, it’s the recent WeSpire research about employee interest in pro-social incentives that points to where the big money could be sitting. Corporations spend an estimated 1-2% of wages on rewards and recognition each year. Just in the US, that translates to $186-$372 billion dollars. When surveyed about their interest in rewards this year, the number two item of interest from employees? Donations made to not for profits. If corporations moved even 2.5% of rewards dollars to this type of incentive, there is another $5 billion dollars. Imagine the positive social, environment and business impact if they did 10%?

Why would they do this? The research shows that employee happiness and performance improve when companies use pro-social incentives. It also shows that 71% of employees say it is imperative or very important to work where culture is supportive of giving and corporate volunteerism.

The first matching program started at GE in 1954 and inspired most large companies to follow suit. But as social responsibility becomes more central to company purpose and business strategy, it’s time for innovation and creativity to inspire even greater giving.