Community contributions are voluntary donations distributed to community organisations. A community organisation is usually a registered Non-Profit Organisation, but can also include government departments, schools, universities and local sporting clubs. Community contributions usually do not involve donations made to individuals, employees or family members of employees. The support to an organisation should demonstrate a charitable purpose.
Contributions which are mandatory as a legal or regulatory obligation are not considered community contributions. Standard business practice is also not considered a community contribution and refers to what is considered usual business and a company behaving responsibly. This relates to protecting the health and safety of employees, or services and products with a community benefit.
Examples of voluntary community contributions are:
- Donating cash to the local sporting club to improve ground conditions
- Donating products to the council to build a playground
- Provision of travel vouchers for a fundraising event
- Permitting an employee to volunteer with the fire brigade during company time
An example of a mandatory contribution is:
- The council permit to build a shopping centre, requires provision of buses to collect elderly passengers from a local senior facility
Examples of standard business practices are:
- A company manufacturing enabling devices for disabled people
- An employee welfare program or provision of gym memberships to employees
How we contribute
To understand the totality of a company’s contributions to the community, three areas of involvement are recorded. The type of contributions is provided as cash, time or in-kind donations.
Total cash contributed to a beneficiary as a straightforward cash donation.
Examples of cash donations include;
- Direct donations
- Social sponsorship
- Matched employee giving
Time refers to employee involvement relating to a community activity. The employee’s time should be calculated at the cost to the business and not the retail value of the employee’s time. Only record the volunteering hours inside of company time and not additional hours provided outside of company time.
Examples of activities that can be reported include:
- Employee volunteering
- Fundraising activities
- Secondments to community organisations
- Supervision of work experience placements
There are a number of ways to establish the rate per hour for employee costs. The first point of consultation to establish a rate is usually the HR department, as they can provide a range based on the employees employment category. An estimate based on employment category is sufficient if there are sensitivities with providing staff salary data. Depending on the volume of volunteering data to be recorded, national staff pay averages can also be included if recording large volumes of staff time and activity. Many companies will apply a four category table to record staff rates, an example of this may be;
- Admin – $25 per hour
- Professional – $40 hour
- Management – $50 hour
- Director – $80 per hour
Alternatively if there are a large number of employees volunteering, an average can be calculated to effectively represent the cost to the business. An example of this may be; fifty staff volunteer their time to run in a 10km fun-run (during business hours) to raise funds for one of the company’s community partners. Include all participation in the lead up to the fun-run such as; signing up friends and family for financial support and team briefing. All the participating staff are from different areas of the business such as warehouse, admin, management and sales. In this instance, calculate the total estimated wages by the number of participants to obtain an average hourly rate:
No of staff
Area of the business
Average rate per hour
Record the volunteering time as follows: 50 staff x 4 hours x $34.25 per hour
It’s important to record the details around obtaining this formula in the comments section of the online form to ensure the consistency of recording future community activity.
Companies can also record other resources and services provided to community organisations. These in-kind contributions can include product, second-hand company equipment and professional services.
Some examples of the types of in-kind contributions include:
- Office space, equipment and utilities to staff from a community organisation
- Free venue hire for a fundraising event
- Product donations such as catering, drinks, clothing, sunscreen or printed collateral
- Graphic design, IT expertise and web hosting
- Advertising in a printed publication or online at no cost
- Refurbished computer and equipment
- Professional services such as accounting, legal or medical
In-kind contributions should always be reported reflecting the cost to the business and not the retail value. This can be easier in same cases than others. Examples of various scenarios are listed below:
1. If you have donated a section of your office space to a community organisation, then based on the area occupied and the type of equipment you have provided you could include:
- Rent paid for the area they occupy (percentage of rent)
- Utility bills such as phone, electricity and a portion of staff benefits such as milk, tea and coffee
- Provision of desks, computers and printers
2. Free venue hire and provision of catering for a charity fundraising event:
- Cost to the business for the provision of drinks and food
- Cost of staff provided to run the event
- Utility costs (some organisations will have this more readily available than others, include what you can)
- Project management costs relating to organising the event
- Cleaning costs
Note: Do not record lost opportunity costs, such as the venue hire.
3. Donating a company’s used IT equipment
- The written down value can be applied
- If the equipment has a value of $0, then the usual rule of thumb is to use 20% of the original cost of the equipment
Other costs such as transport and time organising the logistics of cleaning, packing and sending the goods should also be included. Many organisations will still report separately on the retail value to the community organisation to highlight the significance of the company’s contribution.
In addition to donations of cash, time and in-kind contributions, the operation costs of managing the community affairs function can be captured and recorded. These costs can include staff salaries, travel, and overheads such as office space, phone and utility bills, a portion of the annual report, promoting community activity to employees and wider community, workplace giving administration and consulting costs.
Examples of management costs include:
- Community affairs staff – salaries and benefits (only include the percentage of their role responsible for overseeing community affairs)
- Operations costs – phone, internet, computer equipment, meeting and travel expenses
- Consulting – Research, partnership negotiation, evaluation and reporting
- Attending community related seminars or publication subscriptions
- Communication – Annual report (apportionment relevant to community activity i.e. number of pages), internally to staff, promotion of employee engagement programs, website content and promoting community partners
The Motivation for contributing
An important question for companies to ask is why are we contributing to the community? Specific categories are the global standard for defining the motivation for contributing to the community. This provides an understanding of the strategic approach of community involvement and to what degree they are aligned to the business. The three categories are listed below.
A charitable donation is a one off donation where there is no additional support or relationship with the community organisation.
- Emergency relief donation to Red Cross in response to an appeal
- Local children’s sporting club requests a donation so they can buy new shoes
- Permitting employees to respond to an emergency relief event during company time (for e.g. as a fire fighter)
Community Investment relates to on-going support and a longer term relationship with a community organisation. This motivation often relates to the particular areas of focus and social issues the company wishes to address. Often, the company will contribute with additional resources other than cash, to engage employees and provide expertise and in-kind contributions. This motivation relates to a clear intention to contribute to a specific social issue or organisation for an extended period of time.
- Three year partnership with a registered Non For Profit to contribute $10,000 per year
- Annual fun run participation with employees using company time to coordinate fundraising initiatives
- The director of the business sits on the board of a Non-Profit attending
- Board meetings during business hours
Commercial initiatives in the community
Commercial initiatives in the community refer to a mixed motivation where there is a clear benefit to the community and also to the business. This type of motivation usually involves a social sponsorship or exchange in the relationship. The business may receive logo placement or promotion in exchange for their support to the community organisation. Other examples of this motivation include sponsorship to a community event or activity where the motivation of the business is to increase sales or enhance reputation. The departments that usually manage these relationships are related to marketing and branding rather than a community affairs function. Only record the costs that relate to the actual benefit of the community.
- Provision of a prize donation to a women’s charity luncheon with the business’s core demographic attending. Logo placement and company recognition provided in exchange for prize donation
- Providing a cadetship program to a local underprivileged community with intention to retain staff as employees
- Cause related marketing program such as Breast Cancer Foundation on Mount Franklin Water bottles