Approaching Businesses

June 15, 2008       Pattie Johnson      

Grantseekers need to understand both the motivations behind corporate giving and the options for partnering with corporations to be successful at attracting their support. Unlike foundations, companies are in business to make money, not give it away. The company’s priorities are its customers, shareholders, employees, and bottom line. So why do companies give money, time, and resources to nonprofit organizations?

Most people think companies give to take advantage of the tax break for charitable donations (10 percent of pre-tax profits are deductible). But a tax deduction is not the primary motivating factor behind most corporate philanthropy. Giving can advance a company’s business objectives by increasing its visibility in the community with positive attention. Studies have shown that all else being equal, buyers will choose a product or service from a company that is viewed as socially responsible.

Therefore, some businesses want the “reflected glory” of associating their names with nonprofits. Companies also give to be good corporate citizens by returning a portion of their profits to the communities in which they do business and where their employees live and work.

Here are a few options to pitch these potential corporate sponsors.

Grants

Corporations provide direct cash grants to nonprofits through company-sponsored foundations, direct giving programs, or both. Company-sponsored foundations are separate legal entities from the businesses that establish them. The foundations might have an endowment from which to draw or may be dependent on annual gifts from the company.

Most corporate foundations are set up as private foundations and as such must disclose their assets and grants annually on Internal Revenue Service (IRS) Form 990-PF. Because the 990-PF is public information, researching a corporate foundation’s giving is easier than researching direct corporate giving programs, which are internal to the company, tied directly to company profits, and have no public disclosure requirement.

In-kind support

In-kind support might consist of donated products, equipment, services, or space. Since in-kind support could be easier and less expensive for a company to provide than a monetary grant, seeking it might be your first step in building a relationship with a particular business, which may lead ultimately to financial support as well.

Employee involvement

According to Matching Gift Details, more than 7,000 parent companies, divisions, and subsidiaries in the U.S. currently match their employees’ gifts to nonprofits. Some companies have formal employee volunteer programs, for example, providing tutors for a local school or executive staff to nonprofits that need expertise in such areas as accounting or public relations. Companies also may make small grants to organizations where their employees volunteer.

“Non-philanthropic” support

Corporate funding can also take the form of sponsorships or cause-related marketing (CRM). The funding comes not from money earmarked for charitable contributions but from another budget, such as marketing.

In the case of sponsorships, a corporation might underwrite an event or program in return for exposure on a large scale, such as the Olympics, or locally, such as buying a table at your annual ball.

CRM is intended to promote the company’s product or service while raising money for the nonprofit. CRM can be as simple as an agreement to donate a percentage of the purchase price for a particular item to a charity, or it can be more complex, such as an affinity credit card or the “leasing” of a nonprofit’s logo to promote a product. In most cases, companies are more likely to be interested in large, well-known nonprofits with excellent reputations.

Smaller organizations, however, should not overlook opportunities with smaller companies. For instance, a local supermarket might set aside specific days when a percentage of profits will be donated to a particular organization.

Tips for seeking corporate support

When looking to the business community for funding, grantseekers must consider the critical question, “How do we align the work of our organization with the philanthropic and business interests of the company?” Strategies to consider include:

  • Companies tend to give where they do business, so your first tactic might be to find out who’s in your backyard. Research where a company’s headquarters, plants, field offices, and subsidiaries are located.
  • While exploring your own backyard, don’t forget local small businesses. They are a great source for in-kind gifts, such as gift certificates to use as volunteer incentives or products for your silent auction.
  • Think about what your organization has to offer the business. Does your nonprofit offer services that could be used by the company’s employees? Could a partnership between your organization and a specific company help that firm sell more products or reach new customers? For example, if your agency works with children, you could focus on toy companies.
  • Know the work affiliations of your donors, board members, and volunteers. If someone affiliated with your organization is also affiliated with a specific company, that company may give grants where its employees volunteer, match employee contributions, or provide volunteers you could use.

Other considerations

When working with corporate partners, make sure you research the company and clearly understand all of their expectations up front to avoid conflicts with your organization’s programs and values. For example, many health-related charities will not accept funding from companies with tobacco interests. You might want to create a gift acceptance policy that outlines the conditions under which you will accept donations. Your good name and position in the community are important assets to be protected. NPT

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Pattie Johnson has been the director of the Foundation Center’s regional center in Atlanta since it opened in 1993. She has worked in academic, public, special, and law libraries and has extensive experience in the nonprofit sector.

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