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5 Benefits of Donor-Advised Funds for Corporations

October 25, 2022
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Here are numerous reasons why donor-advised funds (DAFs) are the fastest growing charitable giving vehicle in the United States. They combine versatility, flexibility and simplicity when it comes to reporting to the Internal Revenue Service (IRS). Their appeal is widening too. Once confined largely to high net worth donors, their reach now extends to corporations of all sizes. Groundswell is playing a key part in empowering philanthropy using DAFs. Learn more about the five main benefits of donor-advised funds.

Recap of the Donor-Advised Fund

A DAF is a personal giving account with some big tax advantages and no minimum distribution requirements. That immediately puts it at an advantage compared to a private foundation, which must disburse a minimum of 5% annually. Giving to a DAF is straightforward, especially with Groundswell. You create a giving account and start making donations. There is no minimum annual contribution, and you don’t have to decide from the outset which charities you wish to support. The only restriction to be aware of is that the broker who manages the DAF retains control of how and when funds are disbursed. Donors can advise, but they do not make the final decision. Neither can you withdraw a donation once you’ve made it, since they are irrevocable.

5 Benefits of DAFs for Corporations

With these features of DAFs in mind, what can businesses look forward to in real terms? It’s not just a question of paying lower tax, even if that is the most eye-catching advantage. DAFs can make a positive impact on the internal business culture too. Here are five areas that make DAFs hard to resist.

1. Reduced Tax Liability

DAFs allow companies to look beyond short-term performance when it comes to charitable giving. That’s primarily because donations are immediately tax deductible at the time of giving, but the funds don’t have to be disbursed until later. In short, that means you can take advantage of tax deductions in a windfall year and advise on where funds should be disbursed when you’re ready. Instead of giving only in bumper years and having to rein in philanthropy in leaner ones, corporations can lock in the tax deduction in the former and release the funds throughout the latter. From a tax planning perspective, the reduction in liability is significant. Individuals can offset up to 60% of their adjusted gross income, although charitable donations cannot exceed 25% of taxable income.

2. Save on Capital Gains

If the prospect of handing over 15% to 20% in capital gains tax to the IRS every time you liquidate assets rankles, donor-advised funds offer a welcome solution. You don’t have to pay capital gains tax on assets transferred to a DAF, whether they are stocks, bonds or real estate. Moreover, you can transfer assets at the fair market value rather than the purchase price, provided you have held them for more than a year. For corporations who’ve seen their assets perform strongly in a bull market, the idea of giving up a substantial portion of the gains to the government without having any say in where the money goes can be unpalatable. Donating the assets to a DAF allows the business to release the tax deduction and put those assets toward a more clearly defined purpose.

3. Multiple Donation Options

Many nonprofits are restricted from accepting complex assets (i.e., other than cash) as donations if they want to stay on the right side of IRS 501(c)3 regulations. Donor-advised funds provide the mechanism, however, for businesses to donate real estate, private and public stocks, or inventory. On the giving side, corporations can fuel their account with a variety of assets and amalgamate a large number of individual donations into an easy-to-administer fund. Compared to private foundations in particular, the administrative burden is significantly lower.

4. Unlock Investment Opportunities

Investments in donor-advised funds grow tax-free and you can donate mutual fund shares, trusts, private equity and hedge fund interests and even cryptocurrency. When it’s time to release the grants, you can unlock the appreciated value of the assets without deducting tax. Admittedly, that’s not always the approach some corporations take with their investments. Criticism is often leveled at DAFs as a means for institutional investors to “park” assets in funds and collect the upfront tax deduction without disbursing any grants. That’s “zombie philanthropy” in action, but Groundswell is geared toward moving grants as efficiently as possible to the nonprofits that desperately need support.

5. Increased Employee Engagement

Donor-advised funds empower companies to align their charitable giving to their corporate goals. Instead of making smaller, less formal donations on an ad hoc, reactive basis, leadership can collaborate with employees on a long-term philanthropy structure:

  • Focus donations on the sector your business operates in. For example, if your business is in the hospitality sector, you can “give back” by supporting charitable causes linked to food banks, sustainability or homelessness.
  • Tie your donations to your founder story or company ethos. Donations can ensure that the obstacles the company had to overcome in its early years are resolved for future generations (from equity and diversity to health and accessibility).
  • Invite input from your employees and customers and reflect their wishes. What matters to them?

DAFs provide a great way to define and improve company culture. A more engaged workforce leads to a more profitable and productive company, after all. You’ll also have a stronger case for attracting top talent if you can demonstrate a commitment to causes that resonate with your future employees and offer a stakeholder role as part of your financial wellness benefits.Employees can sit on the committees that set philanthropic goals and nominate causes to support. Whether the committee decides to support a single cause or a collection of charities linked to a global mission, a proactive approach gives clarity and consistency. It also makes it easier to deal with ongoing requests for charitable support during the financial year. While there is no obligation for a business to reveal the causes it supports through a DAF, it’s an opportunity for transparency and positive PR. List the nonprofit organizations the company supports in company reports and on the website, and show fundraisers how to apply for grants.

How Groundswell Is Different

The philanthropy-as-a-service (PhaaS) model pioneered by Groundswell is giving fresh impetus to corporate giving. Not only do we allow your business to set up a giving account faster, we provide a better giving experience too:

  • Accessible: You don’t have to be a high net worth individual with millions to spare. Groundswell allows you to start with a contribution of just $1.
  • Efficient: We create personal giving accounts for each employee, which can be easily administered without tracking receipts and vetting nonprofits. Think of it as a 401(k) for corporate giving.
  • Discreet: All employee donations are kept private, so your giving program is more equitable and inclusive. We respect that charitable giving is an anonymous, private affair for many.
  • Diverse: Instead of nailing your company mission to a single cause, Groundswell allows you to respect and support all of your employees’ diverse perspectives.

You’ve seen the benefits. Now learn more about maximizing the ease and efficiency of your corporate giving, as well as boosting employee engagement, with Groundswell.

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Unlocking Philanthropy: A Ready-to-Use Corporate Giving Policy for Modern Businesses

Sample Corporate Giving Policy You Can Use Today

In today’s socially conscious environment, more companies than ever are recognizing the value of corporate philanthropy. Not only can a robust giving policy boost a brand’s image and reputation, but it can also play a pivotal role in community development and global betterment. If your company is considering the establishment of a formal corporate giving policy or refining its existing strategy, this sample policy might be the perfect starting point for you.

Download Sample Policy

Pillars of a Strong Corporate Giving Policy

Corporate giving programs range from employer donation matching programs to full blown corporate social responsibility programs with grantmaking and volunteerism.  Many companies find somewhere in the middle that aligns with their size, budget, geographic presence and most importantly company values and commitment to diversity and inclusion. But what truly makes a corporate giving policy stand out? Let’s delve into the key features, from donation matching to the strategic use of platforms like Groundswell.

1. Donation Matching: Doubling the Impact

One of the most effective tools in a giving policy is donation matching. This is where companies match employee donations to eligible non-profits, effectively doubling the contribution. Such programs not only amplify the impact but also motivate employees to participate, knowing their chosen cause will receive twice the support.

2. Charitable Stipends: Encouraging Employee Choice

Charitable stipends are allowances given to employees to donate to a non-profit of their choice. This not only encourages a culture of giving but also empowers employees to support causes they’re passionate about. The stipends can be a fixed amount annually or can vary based on the employee’s role or tenure.

3. Dollars for Doers: Volunteering Translated to Contributions

“Dollars for Doers” programs convert volunteer hours into monetary donations. When employees volunteer their time for a cause, the company makes a donation equivalent to the hours spent. This fosters a culture of hands-on involvement and ensures that both time and money are being donated to valuable initiatives.

4. Corporate Grants: Sowing Seeds for Bigger Change

Beyond individual employee contributions, companies can set aside a dedicated fund for corporate grants. These grants can be given to non-profits, research initiatives, or community projects that align with the company’s CSR objectives. Such grants can lead to substantial, long-term changes and foster strong partnerships with community leaders and organizations.

Why Choose Groundswell for Your Giving Initiatives?

Incorporating these elements into a giving policy requires streamlined management, transparency, and ease of execution. This is where platforms like Groundswell come into the picture.

Groundswell offers an efficient and affordable solution for companies aiming to elevate their philanthropic endeavors. Here’s why it’s the ideal choice:

  • User-Friendly Interface: Groundswell’s platform is designed for both companies and employees, ensuring smooth navigation and straightforward donation processes.
  • Versatility: Whether it’s donation matching, handling charitable stipends, or managing corporate grants, Groundswell offers solutions tailored to each company’s unique needs.
  • Cost-Effective: Groundswell provides a comprehensive suite of tools at competitive prices, ensuring that more of your money goes towards the cause rather than platform fees.
  • Transparency: Track donations, monitor employee involvement, and generate detailed reports to measure the impact—all in one place.

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An effective corporate giving policy is a blend of structure, employee engagement, and impactful contributions. By incorporating elements like donation matching, charitable stipends, “Dollars for Doers,” and corporate grants, businesses can create a ripple effect of positive change. And with platforms like Groundswell, executing these initiatives becomes not just feasible but also highly efficient and cost-effective.

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5 Tips to Boost Engagement & Impact on Giving Tuesday

Leverage GivingTuesday to boost generosity

Every November, the Tuesday after Thanksgiving is known as GivingTuesday, which often serves as the unofficial start of end-of-year giving campaigns. This comes on the heels of holiday shopping deals on Black Friday, Small Business Saturday, and Cyber Monday. It is a worldwide phenomenon, inspiring millions to lean into the end-of-year holiday spirit with generosity and compassion. For many charities, GivingTuesday has become their biggest day for donations – and can help resource their ability to have an even greater impact in the year ahead.

For companies, GivingTuesday and the end-of-year giving season offers an opportunity to double down on their commitment to social responsibility, strengthen relationships with employees, and boost their impact in the community and broader world.

At Groundswell, we partner with companies all across the country to design and launch GivingTuesday campaigns – leveraging our easy-to-use platform that makes it easy for employees to participate and send donations to the causes and charities that they care most about. Below are some best practices to boost engagement and inspire generosity during the giving season.

1. Make Giving Easy:

A lot of giving platforms out there make it incredibly hard to donate. Some don’t have all 1.5 million IRS-approved charities listed. Others require employees to navigate through a web of intranet or sharepoint sites to find the giving program landing page. And others require that HR is notified of any donations an employee wants to make. At Groundswell – we are committed to removing all of the friction, and ensuring that employees can find charities easily, through a platform that is accessible from the palm of their hand, so they can give whenever they want to.

2. Launch a GivingTuesday Match Campaign:

Through Groundswell you can customize and launch a special GivingTuesday match campaign in a matter of minutes. Simply pick the nonprofits to include in the special campaign, select the start and end-date for the campaign, and then determine the match – 2x, 3x – along with any overall budget limits, then you’re done!

3. Boost engagement by involving ERGs:

Share nonprofit recommendations from Employee Resource Groups to provide inspiration around causes and nonprofits that matter to your employees. You can feature these nonprofits on dedicated ERG Corporate Spotlights and Campaigns that will be visible to all employees on their Groundswell dashboard.

4. Surprise (and Delight) Employees With A Gift to Give:

Consider sending a surprise “gift to give” to reward those already participating in your giving program (and to incentivize others to enroll). These gifts might be used to further maximize impact through the existing campaign, or to donate to other nonprofits your employees care about. Groundswell’s custom gift feature allows companies to easily schedule and send gifts with little to no administrative burden.

5. Level up with Volunteer Matching:

Groundswell’s Volunteer Matching program – sometimes known as Dollars for Doers – recognizes that some employees may not have funds to contribute, but have time – and rewards them in the same way. It’s an inclusive approach that invites everyone to participate in GivingTuesday, even those who may not be able to donate their own funds.

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12 Employee Benefits Survey Questions Modern Companies Should Ask

In today's business environment, having the right and highest performing talent is more critical than ever. With benefits packages playing a vital role in these decisions, how can companies truly gauge their effectiveness? By initiating regular employee benefits surveys.

Scroll down for a free survey template below.

Let's dive in to the importance of asking the following questions.

Is our workforce satisfied with the current employee benefits package?

Gaining insights from "how satisfied are you with our company’s benefits package?" can offer companies a quick pulse on the effectiveness of their benefits. A dip in satisfaction might signal a need for re-evaluation, especially if you're looking to maximize your budget.

How comprehensive are the employee benefits we offer?

Do employees feel that the organization covers a wide range of their needs? Asking, "do you feel our benefits package is comprehensive in its offering?" can shed light on any potential gaps in coverage.

Are we showing true commitment to Diversity, Equity, & Inclusion through our benefits?

Are the company's efforts in promoting DE&I resonating? This can be gauged by asking if the benefits genuinely support diversity and inclusion. If they aren't, here's an opportunity to collect ideas directly from your employees.

Read more about how to make sure your giving program is equitable and inclusive.

Do our benefits reflect our company culture and values?

The question, "do you feel our benefits package supports our cultural values?" will highlight any potential discrepancies in practicing what you're preaching.

Did you know? Two-thirds of employees say it’s important for a company to align to their values.

Are we catering to the needs of a remote or multi-location workforce?

With remote work on the rise, is the company adapting its benefits accordingly? It's essential to find out if employees feel supported, regardless of their work setting.

Would employees recommend the company based on our benefits?

This is an easy one to skip, but it's a great question to ask. See how influential your benefits package is for employee referrals. Determining if employees would advocate for the company based on its benefits can be a key metric for recruitment.

How do specific benefit categories fare?

By querying satisfaction levels across various benefits – physical health, social impact, mental health, financial health, and fringe benefits – can companies discern which areas are thriving and which need enhancement?

What additional benefits do employees desire?

Is there a particular benefit that could make a difference in employee satisfaction and retention? Discovering this can be as straightforward as asking, "if you could choose one benefit not currently offered, what would it be?"

If your workforce desires a more meaningful benefit, see why decentralizing your corporate philanthropy strategy can achieve greater impact at scale.

How often should I send an employee survey about our benefits?

While every business has their own set of unique needs, conducing a quarterly employee survey at minimum can help you get a pulse check.

There will be some natural and unplanned peaks in valleys throughout the year that can drastically affect employee morale and company culture. By proactively seeking feedback through surveys, companies can foster a culture of continuous improvement, ensuring they remain at the forefront of employee satisfaction.

What are some affordable benefit options we can provide employees?

Corporate matching or giving programs can be a low-cost addition to your benefit offering that supports your employees’ unique passions and perspectives through charitable giving and boosts your company’s commitment to social impact.  Groundswell offers a comprehensive solution with a simple implementation and nearly zero administration burden.

[Free Template] Employee Benefits Survey Questions

  1. How satisfied are you with our company’s benefits package?
  2. Do you feel our benefits package is comprehensive in its offering?
  3. Do you feel our benefits package supports our cultural values?
  4. Do you feel our benefits package supports our commitment to Diversity & Inclusion?
  5. Do you feel our benefits package supports our remote or multi-location workforce?
  6. How likely are you to recommend applying based on our benefits package?
  7. How satisfied are you with our physical health benefits (i.e. health care, sick leave, etc)?
  8. How satisfied are you with our social impact benefits (i.e. corporate matching, volunteering, etc)?
  9. How satisfied are you with our mental health benefits (i.e. vacation time, EAP, etc)?
  10. How satisfied are you with our financial health benefits? (i.e. retirement, student loan assistance, etc)
  11. How satisfied are you with our fringe benefits and perks? (i.e. fitness subsidies, stipends, etc)
  12. If you could choose one benefit not currently offered, what would it be?
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