Billions of dollars are donated each year through a combination of corporate foundations, and corporate offices, and those figures are on the increase (see “Trends in Corporate Philanthropy”), but is the price of entanglement potentially too high? Government regulators such as state attorneys general express concern about “cause-related marketing” relationships in which much higher paybacks accrue to corporations than to nonprofits,1 and recently the Senate Finance Committee issued a report criticizing pharmaceutical companies’ grantmaking to medical schools.2 Outside of government, nonprofit watchdogs have warned grant seekers about the explicit and implicit strings attached to corporate support and the potential damage such support can inflict on the reputations of unsuspecting nonprofits.3 Thus nonprofits are wise to approach these relationships as a mature partner with a realistic understanding of the exchange proposition.
Corporate fixation on “strategic” philanthropy4 means that potential partner companies, from the local furniture store to the biggest corporation, will try to extract the greatest value they can from their grants. Nonprofits need to maximize benefits and protect against potential risks with the same vigor as their corporate partners.
To help you with your consideration of risk versus benefits, we have provided a partial checklist in the box below, but first some discussion from nonprofits that have benefited from corporate money.
What’s It All About?
“We as nonprofits have to do our homework,” says Tim Sheahan, president and CEO of the Boys & Girls Clubs of Metro Denver. For those that do, the rewards can be significant. “We actually have the Denver Broncos funding a Boys & Girls Club location, as well as providing broader support to our organization,” Sheahan says. “We have a five-year commitment—we’re in year four of it already—and they are very interested in renewing it. This partnership has been a win-win for both the Boys & Girls Clubs and the Denver Broncos and a phenomenal investment in our local youth.” Naturally, the Broncos didn’t decide to support just any Boys & Girls Club, but the Denver Broncos Boys & Girls Club branch in particular. A key attraction was the public identification of the Broncos’ brand with philanthropy; explicit identification meant publicity, credit, and value.
The Center for Arts in Natick, Massachusetts (TCAN), also successfully collaborates with local businesses. “Our recent partnership with a high-end furniture chain that just opened a new location nearby has provided the store with good local publicity, and TCAN with a new way to reach potential members. The company’s focus on the aesthetics of interior design, combined with our focus on the arts, makes the partnership a great fit,” says David Lavalley, TCAN’s executive director.
Taking a slightly different approach, the Minnesota Council of Nonprofits (MCN) partners with a wide variety of local businesses and larger corporations through foundation grants, event sponsorship, ad placement, and special-membership categories that bring company representatives closer to its members. “Part of our strategy is to carefully discern where the joint interest is and to pursue those mutually beneficial relationships while being careful to protect the interests of MCN and its members,” says Leslie Nitabach, the council’s development and membership manager. “Does this mean that we will sometimes turn down an opportunity? You bet.”
As tempting as this potential pool of investment might be, each of these nonprofit leaders cautions that corporate contributions come with some obligations, expectations, and associations that nonprofits must consider before sealing any partnership. “It used to be, from the corporate fundraising side, ‘Sure, we’ll sponsor a kid, and it makes us feel good,’ and that kind of thing,” Sheahan says. “But now we’re seeing corporations want more bang for the buck. They want to know what they’re going to get out of it and whether it will come out of the marketing budget or philanthropy budget.”
A recent study conducted by the Center on Philanthropy at Indiana University and sponsored by the Target Corporation entitled “Corporate Philanthropy: The Age of Integration” concurs: “Overall, the companies consider support for nonprofit organizations a key business function, not a marginal activity.”5 The report identifies several trends within corporate philanthropy, including the following:
- a representation of the essence of what the company stands for rather than an effort to boost revenue in direct ways;
- a way to strengthen the corporation’s internal and external linkages, with different goals for internal and external relationships and, frequently, different management strategies applied to these relationships ;
- a “trialogue” among corporations, nonprofits, and the public (comprising consumers and community members), with all participating at nearly equal “volume”;
- negotiation with nonprofits as formal, multiyear partnerships with contracts and terms and with both partners participating in the responsibilities; and
- an approach that emphasizes building capacity or changing a field of knowledge or practice rather than supporting change in the lives of individuals.
These corporations want to maintain a positive image and want various constituencies within the public to view them as good corporate citizens.
According to the report, corporate philanthropy is one way to help build loyalty. Giving may be focused on strengthening close links such as on employees, customers, suppliers/vendors, shareholders/owners and local community (sites); while other giving may be focused on strengthening more distant links such as the global community/international public, regulators/policy makers, opinion makers/media/stock market, and the general public.
“We’re finding that corporations are much more targeted and have defined their interests a lot more than in the past,” says Lavalley. “And, they have also more narrowly defined their philanthropic interests as well. For example, in education or health care they might seek programs more closely aligned with their business mission. They still participate in philanthropy, but they’re looking for something much more connected to their business objectives.” According to the Center on Philanthropy at Indiana University’s report, companies are focusing corporate giving programs into efforts that show the essence of what they stand for. For example, Procter & Gamble espouses the motto “Live, learn, and thrive”; Wachovia’s is “Employee engagement, stronger communities, diversity”; and IBM’s is “Innovative use of technology to solve problems.” So, explains Nitabach, “if a corporate donor wants to reach moms with kids, because that’s who buys most of their stuff, and they say that that’s their brand, and they’re pretty clear about that. Not every organization can go in and get general operating support from that donor. It has to be about ‘How are you going to reach moms and kids?’ And it can be through the arts, and it can be through other means; but at the end of the day, the organization must clearly demonstrate how they are going to help the company appeal to moms and kids, because that’s who the company wants to impress.”
Step Right Up
“Matching the organization’s needs with the strategic goals of the donor—that is paramount,” says Lavalley. “We think carefully about the partnerships that we enter into as well to make sure that it’s going to feel right to the people who are supporting us currently. This is where a competent development organization can add value, by researching your own donor or patron base and seeing if you have existing relationships with the donor organization, individuals who might provide a better understanding of the things that are important to the donor. Often these are right in front of us. Also, connecting with the local chamber of commerce, you’ll find a number of businesses large enough to be very interested in some level of philanthropy, but maybe less than that huge, megacorporation that happens to have a headquarters in your area.”
Timing is also important, notes Lavalley. “Understand the business cycle. There are times of the year when they spend this money, and if they don’t spend it, they lose it. So if you miss that window of opportunity, you’re probably out of it until the following year.”
What’s in a Relationship?
Nonprofit-corporate partnerships pose their own communication challenges. Differences in style and process, combined with the changing field of grantmaking toward more automated processes mean that nonprofits entering this area will have to adapt. Increasingly, larger companies are using online applications and screening as well as relying heavily on Web sites to communicate grant and partnership priorities. According to the Center on Philanthropy at Indiana University’s report, many funders see these mechanisms as a way to be “more transparent in their decision making about corporate support for nonprofits.” Yet for some organizations, the establishment of a relationship before an application is submitted is critical in developing a partnership. “We’ve had limited success with those kinds of online applications,” says Lavalley. “What we’ve been most successful with is where we have some sort of personal relationship with the foundation or the organization.”
He adds that once a rela