A new tax reality is changing the economics of corporate philanthropy: companies can now only deduct charitable contributions that exceed 1% of taxable income. That shift is forcing a more explicit conversation inside businesses about the most financially advantageous approaches to philanthropy and how—or whether—those investments generate business value alongside social outcomes.

During a May 19 virtual Leader Roundtable, senior corporate impact and philanthropy leaders from the NationSwell community kicked off a conversation on how companies are reassessing philanthropic budgets, rethinking the balance between grants, in-kind assets, and ordinary business expenses, and sharpening how they define and measure impact ROI. Some of the most salient insights from the discussion appear below:

Key Takeaways:

Collaborate cross-functionally to establish the best organizational approach for navigating the 1% tax floor. To understand the best way for your organization to navigate the 1% tax floor, it is important to align with legal, tax, and government affairs teams early and strategically. Adjustments differ depending on organizational makeup, budget cycles, and legal parameters; bunching or front-loading grants is one mechanism that organizations are considering, but other strategies include shifting the balance between corporate and foundation dollars, reclassifying some philanthropic spend as ordinary business expense, or considering the use of donor-advised funds (DAFs). 

Proactively identify and introduce opportunities for shared value inside of your organization. Social impact leaders should work toward identifying opportunities to center their work around business strategy rather than aligning community programs to a business case retroactively. Programs can be set up for success if they meet the business’s standards for rigor, are grounded in data and collaboration with business leaders, and are communicated in the language of the business. 

Lean on both quantitative and qualitative frameworks to bring a human dimension to measurement discussions. Measuring hours, dollars, and people reached is important, but these metrics alone only tell part of the story. Stories and case studies can be equally important in communicating impact, especially when discussing long-term change. 

Frame social impact initiatives as a talent development and retention driver. Some organizations are partnering with HR and L&D teams to build a more defensible, data-driven people ROI story focused on employee engagement and retention. They are analyzing the relationship between impact programs and talent outcomes – engagement, retention, skill development, and more – using existing survey data or, in some cases, developing new surveys to collect and study primary data.

Invest in human skills development as a business opportunity. With increased AI adoption, the skills that volunteerism and community engagement build — collaboration, empathy, leadership — are becoming more strategically valuable to businesses. Organizations that reframe their impact programs as a vehicle for developing these skills may be better positioned to make credible ROI cases to the business, while also providing value to employees seeking these opportunities.