Corporate social responsibility (CSR) means your business has its heart in the right place, but it also means that you need to be aware of where your donations are going. Although there are plenty of worthy nonprofits and charities that could use your support, there are also occasional scams and untrustworthy organizations to avoid. Fortune 500 companies need to make sure a charity is completely valid before setting up a donation program.
Your company wants to choose a legitimate charity, but how can you be completely sure you've made the right choice?
We spoke with Beth Eller on our Truist team to learn how FrontStream evaluates charities for our corporate clients.
What are the typical reasons why Fortune 500 companies want to vet charities?
It’s important for companies hosting CSR campaigns to feel assured that the funds raised by their employees are distributed to legitimate nonprofit organizations. The internal vetting operation conducted by FrontStream addresses this need by conducting a thorough investigation of any suggested nonprofit that isn’t already validated and included in our NPO database. This process verifies legal authenticity and confirms accurate mailing information to ensure that a donor’s pledge is delivered to the legitimate nonprofit of their choice.
What does FrontStream typically look for when vetting a charity?
To determine NPO eligibility, we verify charities for compliance using public resources such as the IRS information that’s maintained on websites like the National Center for Charitable Statistics (NCCS), GuideStar, and Melissa Data. This is in addition to information we maintain directly from the IRS!
Primarily, the organization must qualify as an eligible charity to receive 100% tax-deductible donations, as defined by the IRS. Eligible organizations must have one of the following IRS statuses:
- 501(c)3 – The most common; this includes both private and public foundations in addition to Supporting Organizations.
- 501(c)4 – Only those that qualify as either ambulance rescue organizations or volunteer fire departments are eligible. Other 501(c)4 organizations are ineligible and cannot be supported.
- 501(c)19 – Organizations that qualify based on appropriate veteran membership quotas.
- 170(c) – Government institutions that qualify to receive tax-deductible donations. These include public schools and certain public works along with many city and county level government entities. For vetting of schools, we use an online database called NCES (National Center for Educational Statistics), which has almost all of the accredited schools in the US.
What are the most popular types of charities that Fortune 500s want to vet?
In the last decade, there’s been a paradigm shift in employee giving. Instead of traditional employee giving campaigns where employees can only donate to company-designated charities, corporations are now empowering employees to support a variety of causes that are important to them. It lets employees make a positive impact their own community, plus it boosts employee engagement and workplace satisfaction at the same time!
So companies don’t typically dictate what types of NPOs enter the vetting process; they are submitted by donors and usually go through vetting without the company’s knowledge. However, the most common type of charity vetted is the 501(c)3.
What kinds of causes do employees typically want to support?
Based on historic giving data across FrontStream campaigns, donors tend to give the most to organizations focused on education (either direct contributions to schools or to organizations that support education), health and human services, and community outreach.
How can charities help their organization be chosen to be part of an employee engagement campaign?
Research, research, research!
Starting in their own community, charities should research to find companies whose products and mission align with their own. For example, a charity that fights food scarcity would make sense to pair with a food production company or a large restaurant chain.
Another way charities can help make their cause front and center is to offer potential corporate partners an out-of-the-box employee giving software program, like Truist. This type of platform allows charities to have a greater voice in campaign messaging and appeals, analyze employee giving history to help establish deeper connections, and provide a user-friendly, corporate branded employee giving site. It’s a smart choice that can help take a lot of the legwork out of setting up a CSR program.