Five Ways a Corporate Donor-Advised Fund Can Help Clients Meet Their CSR Goals

Corporate social responsibility (CSR) may feel like a term that has reached workplace ubiquity but it’s much more than a buzzword. Today, CSR is a necessary component of healthy management practice, and with a corporate donor-advised fund (DAF), it’s easier than ever for a business to make a philanthropic impact.  

CSR refers to the range of practices businesses use in order to maintain ethical standards or achieve social and environmental benefits. Whether internal initiatives (like reducing a business’ carbon impact) or external opportunities (like an employee volunteer partnership with a local nonprofit), impactful CSR efforts are increasingly important for brand perception, building loyalty among employees and attracting investors and customers. According to Governance and Accountability Institute’s 2023 Sustainability Reporting in Focus report, the estimated number of S&P 500 companies publishing CSR reports ballooned from just 20% in 2011 to 98% in 2022.

Corporate philanthropy is an important component of CSR, serving as testament to the company’s values or mission. Donor-advised funds help streamline individual and family philanthropy, and DAFs for corporations, LLCs or partnerships can provide the same benefits for businesses. Setting up a corporate DAF with NPT is as easy as establishing a DAF for an individual donor. The corporation or other entity is considered the primary advisor and an officer of the entity can name up to two “authorized advisors” to recommend grants and manage investment strategy on behalf of the corporate donor*.  

With a corporate DAF, your client and their business can:

1. Save time, money and energy on administration

When corporate entities think of creating a charitable structure, many think of a foundation. But setting up a private foundation is time intensive, costly and requires staff to maintain. With a DAF, NPT handles back-end administration, including managing investments, recordkeeping, tax filing and grantmaking. Your client can even name their DAF, e.g. “The [Company Name] Foundation.”

2. Streamline international grantmaking 

Corporations that operate multi-nationally have global concerns—but distributing grants across borders can be a logistical challenge. NPT has years of expertise in making international grants via expenditure responsibility (ER) or equivalency determination (ED). By creating a corporate DAF, corporations pass along due diligence administration to NPT so they can focus on charitable impact. 

• Example: NPT partners with Hyatt Hotels to facilitate the Community Grants Program. With input from hotel employees, Hyatt identifies and supports impactful local charities around the world. NPT helps to ensure each grant recommendation meets IRS, Treasury Department and U.S. Patriot Act anti-terrorism standards, as well as other international requirements. 

3. Lean on NPT’s grant agreement expertise 

Corporations are no stranger to benchmarking—and their grantmaking doesn’t have to be any different. NPT can help corporate donors create grant agreements that stipulate expectations for charitable outcomes.   
 

• Example: NPT works with a technology company whose major CSR focus is ensuring access to clean water for vulnerable populations displaced by disaster and unrest. Through its corporate DAF, the company identifies nonprofits who have the local expertise to enact community interventions and structures complex gift agreements to include regular reporting on progress.  

4. Pass their tax savings on to their DAF for maximum impact 

DAFs offer the most favorable tax treatment for contributions of all types—including your client’s own company stock. Contributions of long-term appreciated assets other than publicly traded stock garner a fair market value deduction when made to a DAF, as opposed to cost basis for gifts of the same asset to a private foundation. Contributions to a DAF also offer more favorable tax deduction limits for gifts of cash, stock and personal property. The timing of DAF contributions can be a useful planning tool for your client’s business. Best of all, the value of the tax savings will be preserved in the balance of the DAF, allowing your client to do even more for their chosen causes. 

5. Access strategy and research to maximize giving goals 

Some CSR programs are quite robust, but for smaller teams, developing a giving strategy, identifying grantee organizations that align with CSR goals and building relationships with communities may require support. NPT’s Philanthropic Consulting team offers strategic guidance and research services to help define giving goals and identify grantee partners for your client. In addition, NPT’s experts can create metrics and dashboards that illustrate the company’s impact. These services are project-based and can be paid for by funds held in a corporate DAF. 

• Example: NPT’s Philanthropic Consulting team helped a CSR client identify new grantee partners in the areas of mentorship and safe communities. The CSR team defined geographic and programmatic criteria, as well as the importance of employee engagement opportunities. NPT researched more than 100 organizations and ultimately provided the client with six suitable options—saving the client time and sourcing organizations they would not have discovered on their own.  

If your business-owning clients are considering establishing a charitable vehicle or rethinking their corporate philanthropy strategy in the new year, it may be the right time to discuss a corporate DAF.  

When your client is ready to take their company’s CSR to the next level and is interested in exploring a corporate DAF, we’re here to help. Visit the For Advisors page to find the Regional Director for your area and get started.  

* Although we refer to “corporations” and “corporate DAFs” throughout this piece, the same applies to LLCs, partnerships and other legal entities.