Article
Develop a grantmaking strategy for a successful corporate foundation
Dec. 13, 2024 · Authored by Wendy Campos
A corporate foundation is a philanthropic organization created and financially supported by a corporation. It can raise brand awareness, increase employee engagement, provide flexibility and control over giving, provide tax benefits, and allow an organization to give back to the community.
Grantmaking is one of the most important and common functions of a corporate foundation structured as a private nonoperating foundation. Private nonoperating foundations are required by the IRS to make qualifying distributions each year. These qualifying distributions typically include grants. Grants are made to public charities and exempt operating foundations that aren’t controlled by the grantor foundation.
Establish a successful grantmaking strategy for your organization’s corporate foundation with the following key considerations.
Make a spending plan
Determine how much the foundation is legally required to distribute and make a spending plan. A corporate foundation can create a spending plan based on minimum distribution limits set by the IRS, including minimum required distribution and minimum investment return. Also consider expected investment returns, operational needs, and foundation goals in crafting the spending plan.
Start with strategy
Define and articulate the corporate foundation’s mission, vision, and values within a strategic plan that can serve as the foundation’s road map, provide a framework for decision-making, and guide the foundation’s approach to grantmaking. A grantmaking strategy should identify funding priorities and target outcomes that fulfill your foundation’s mission.
Robust strategic plans can empower foundation leaders to prioritize grantmaking decisions that align with the foundation’s core values. A strategic plan shouldn’t be a rigid document, but a dynamic tool that sets long-term strategies and is responsive to emergent needs.
When a corporate foundation is one mode among several modes of corporate philanthropy, align a corporate foundation’s grantmaking strategy with overarching corporate giving strategy.
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