A new, collaborative approach to community investment is gaining momentum as more companies choose to involve diverse groups of stakeholders in their philanthropic decision-making. This shift marks a departure from the traditional model, where businesses independently allocated funds, leaving nonprofits to compete for support. Instead, employees, consumers, community members, and partners are now being given a voice in where companies invest their philanthropic dollars.

Why This Shift Is Happening

There are several driving forces behind this evolution. Significant societal changes — such as the pandemic, the racial justice movement, climate change, and the Great Resignation — have raised public expectations for companies to step up and act on social and environmental issues. Stakeholders increasingly want businesses to reflect their values and engage them directly in corporate giving decisions.

A recent survey highlights this trend:

• 78% of employees are more likely to work for organizations that provide transparency in charitable donations.
• 73% of consumers are more likely to support businesses that seek their input on where donations go.
• 84% of consumers and 86% of employees believe that customers, employees, and investors should have a role in corporate giving.

This growing interest from stakeholders has prompted forward-thinking companies to listen and act by involving more voices in their community investment strategies.

Moving Toward Trust-Based Philanthropy

In addition to including more stakeholders, companies are shifting from transactional grant-giving to trust-based philanthropy. This model emphasizes building strong, genuine partnerships with nonprofits rather than imposing strict requirements and asking grantees to bend to company standards.

Traditional grant applications are time-consuming for nonprofits, forcing them to provide basic information that funders could easily find elsewhere. Additionally, many companies expect detailed reports on outcomes, even though systemic social issues like poverty or climate change can take decades to address.

Trust-based philanthropy encourages funders to be transparent, patient, and humble. It acknowledges that meaningful change takes time, and unrestricted, multi-year funding is often essential for nonprofits to have a lasting impact. By easing application processes and focusing on trust, companies can support nonprofits in their mission-critical work without adding unnecessary burdens.

Companies Leading the Charge

Some companies are already adopting this more inclusive and trust-based approach to corporate giving. For example, a well-known financial services firm streamlined its grant process by offering unrestricted grants and eliminating quarterly impact reports. They now have quick calls with potential nonprofit partners, trust them as experts in their field, and require only an optional end-of-year survey. This transformative shift in their grant making approach aims to build deeper, more meaningful partnerships with nonprofits, rather than focusing solely on internal metrics.

Another company has integrated community advisors into its decision-making process, allowing individuals with deep knowledge and lived experience to nominate organizations for multi-year grants. This model fosters a stronger connection between businesses and the communities they aim to support, driving more impactful and equitable philanthropy.

In addition to financial support, companies are also leveraging their products to enable nonprofits to expand their reach and deliver critical services. By providing in-kind product donations, such as technology tools, companies are helping nonprofits focus on what matters most: serving their communities.

The Benefits of Stakeholder Philanthropy

Involving stakeholders in community investment decisions has several benefits for businesses:

• Increased employee engagement: Employees feel more connected to their company’s mission when they have a say in its charitable activities.
• Enhanced customer affinity: Consumers are more likely to support brands that reflect their values and invite them to participate in social impact efforts.
• Stronger social impact: By engaging those with lived experiences, companies can direct funds more effectively toward systemic change and community needs.
• Greater brand trust: Transparency and inclusivity in corporate giving build trust with stakeholders, enhancing the company’s reputation.

Embracing the Future of Corporate Giving

Stakeholder philanthropy represents a powerful shift in how companies approach community investment. By including employees, consumers, and community members in decision-making, businesses can better align their philanthropic efforts with the needs and values of their stakeholders. This collaborative approach not only strengthens social impact but also helps companies build deeper connections with their employees and customers.

As purpose-driven brands continue to embrace stakeholder philanthropy, they have the opportunity to make a lasting difference — not only in their businesses, but also in tackling critical social and environmental challenges. The future of corporate giving is one where community voices matter, and where companies are true partners in driving systemic change.