State Farm Insurance is by all measures a behemoth. But what distinguishes its community involvement program from other corporate philanthropy programs is its deep integration in the company. This is why Clayton Adams, Vice President of Community Development, claims that the company’s program is ‘beyond checkbook philanthropy.’

The mission of State Farm as a company is to help people mitigate risk and recover from disasters. As such, the company has had a deep connection to its communities since its inception. It does everything it can to show that its famous logo, “Like a good neighbor, State Farm is there,” is much more than just a logo. Causes supported by State Farm are chosen because of a strategic link to its business and mission, and potential to help build a reputation of trust. These are: auto safety, education, and community development. Auto safety is a natural as the nations top auto insurer. It supports awareness in this arena as well as research at hospitals into child passenger safety. Both education and community development, however, are not so clearly linked to the business.

Adams explains that the company looks at these with a very long-term view. In order to help build better communities, and thus have more informed and affluent consumers, it must now invest in education and development for the future. These are also closely tied to the mission of being there to help communities in times of need, like a good neighbor. Involvement in causes is not variable.

The company takes pride in saying that in good times and bad it will try to be a good neighbor. For example, in 2005, the company actually suffered an underwriting loss and a net income one fourth that in 2004. This was in part due to the plethora of natural disasters that year. Yet State Farm did halt its community involvement programs, opting to continue as usual and help the communities recover from hard times even if it meant a blow to the bottom line. This is an example of how the company can use its considerable size to weather times and uphold commitments made.

State Farm supports its causes with many different programs. These range from scholarships and grants to volunteer days and swaps between employees and local teachers to give teachers a chance at professional development. State Farm also encourages employees who might not want to donate to volunteer by giving grants to charities at which employees volunteer for more than 40 hours. For State Farm this is a ‘triple-win’ because it helps the nonprofit with volunteers and funding, it helps State Farm encourage its employees to be involved, and it helps the employees learn from volunteering and become empowered.

Community programs are chosen using a central structure, where the community department lays out a game plan and then seeks feedback and ideas from the field. Thus central might decide that education is a long-term strategic decision for the future of the company and the country, and different divisions would then come up with methods of supporting education initiatives. In approving partners, State Farm is fairly strict. It has five general requirements for any charity to be considered: 1) the nonprofit must have an economic and social impact, 2) its mission must meet the mission and serve the potential customers of State Farm, 3) it must have a successful track record, 4) it must have committed leaders, and 5) it must allow State Farm employees to volunteer. Although these requirements sound demanding, there are still many nonprofits that meet these.

The company tries to then tailor community development programs to the specific needs of communities through selecting local and relevant charities, and letting the communities determine the best solutions, whether they be financial education or commercial and retail development. The community involvement department at State Farm had three main pieces of advice for those getting involved in similar programs.

First, make sure that you are treating the relationship as a partnership rather than just philanthropy. The philanthropy mindset is dangerous, and will prevent you from getting the most out of the program. Second, be patient at the start of the partnership. Relationships evolve, and many programs might need time before they are really functioning optimally. Finally, make every effort to understand the nonprofit you are working with and try to make sure that they also understand your expectations. This will help prevent miscommunication and increase efficiency. Internally, Adams has made sure that State Farm is striving to understand the partners by acting as a constant internal reminder of the purpose of partnerships and hence need to approach them with this desire to understand and learn.

By Louise Doyle
Based on interview with Clayton Adams, Vice President of Community Development at State Farm Insurance, Tony Woller, and Mike Williams, Manager of Media Relations at State Farm Insurance, conducted by Susan Hyatt.

More information on State Farm Insurance can be found at: http://www.statefarm.com.