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Monday, December 11, 2017

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What Leaders Need to Know About Corporate Funding
Karen Eber Davis

June, 2011

The musical, How to Succeed in Business Without Really Trying, traces the adventures of a window washer who climbs the corporate ladder in several days. Your nonprofit can succeed in obtaining business funding. However, it will take time and effort. This article provides a board primer to help you understand and earn this vital source of nonprofit income.

1. Why do corporations and businesses fund nonprofit organizations?

  • Business opportunities. Businesses seek to increase their customer base and goodwill among current customers. Nonprofits that reach their customers or potential customers provide an opportunity.
  • Employee Support. By maintaining loyal employees, businesses reduce recruitment expenses and improve employee morale. Supporting nonprofits demonstrates that the company has a heart.
  • Repayment. The funds represent a concrete expression of business’ gratitude for the community support that made success possible.
  • The Cause. A business leader has a passion for your mission. Business income provides him or her with a vehicle to act on their passion.
  • Strategic. The business recognizes that working with a nonprofit is a chance to meet these or similar objectives with one check.

2. What are some examples of business support of nonprofits?

  • “In 2009, Cisco and the Cisco Foundation announced a three-year cash, product, and services grant of up to $4.5M to help City Year build a collaboration and communications platform . . .” (Cisco Website)
  • The Verizon Foundation funded the Boys and Girls Clubs of Miami for $10,000 to support Project Learn. The project provides children with homework assistance and through educational games that sharpen their reading and math skills. (Verizon Foundation Website)
  • An Easter Seals successfully sells gala tables for $2,500. The package includes a complimentary table for eight, website recognition, a half-page program advertisement, an event banner and four invitations to a VIP Reception.

3. What types of support do corporations and businesses offer?

Four types are typical:

a. Grants or Gifts. These are competitive opportunities that reflect corporate responsibility and citizenship values. For the most part, corporate giving is like icing, a thin layer spread wide.

b. Sponsorships. Cash or in-kind resources paid to a nonprofit. For the business, these represent marketing opportunities and are paid for from this budget rather than the philanthropic one. Sponsorships include many variations like event-naming rights and annual awards.

c. Cause Marketing also relates to a firm’s marketing. The term is used in several different ways. In some cases, it involves a donation with purchase. In others, cause marketing is about “the cause.” A pet food company engages in cause marketing that supports proper pet nutrition with your group and other nonprofits that deal with animal welfare. Besides income, cause marketing helps nonprofits to reach sizeable new audiences. Businesses benefit by increased sales.

d. In-kind. These include goods and staff hours that a business gives to a nonprofit. Often they involve merchandise a business sells or staff loans in the case of employees. In-kind gifts from all sources will be discussed in a fall issue of Added Value.

4. Is this a common source of nonprofit income?

Yes, it represents one of seven sources of nonprofit income. (Read about the others here.)  Historically, corporations represent just one to two percent of all nonprofit income. For many, it is a budget enhancement, not a major income source. For others, it is a lifeline. City Year, for example, receives 24 percent of its funding from this source.

5. Besides the money, what are the benefits of business support to a nonprofit?

  • Credibility. Business support enhances a nonprofit’s standing in the community. Partnerships like these enhance brands. Besides money, City Year receives national recognition in part because of its many corporate partners.
  • Resources. The process of exploring potential business relationships helps nonprofits to identify untapped assets they can monetize. Additionally, business relationships often allow you access to their personnel, allowing you to grow your expertise in areas like technology and marketing.
  • Community connections. Business people know other people. Your business partnerships can help you to find new board members, volunteers, and donors.
  • Reach. When well executed, sponsorships and cause marketing help nonprofits to reach new customers and educate the community about missions in ways that would be impossible otherwise.

6. What are the risks?

  • Unsteady income. Fluctuations in economy and business priorities impact commitment and the availability of funds. Your mission is not the primary concern of a business.
  • New thinking. Change can be challenging for nonprofits. Especially with sponsorship and cause marketing, nonprofits often need to reframe their thinking from being a supplicant to a partner.
  • Fear of selling out. For some, working with a corporation, no matter the benefits, represents selling out. This is a bit like rejecting all medicines because of a bad experience with one prescription. By definition, successful business partnerships create wins for the business, the nonprofit, their customers, and, ideally, the community. Consider the now classic example of American Express’ support for the restoration of the Statue of Liberty.
  • Rejection. Rejection is a given. Nonprofits need to take the initiative to show creative opportunities to potential partners. Not all offers will be accepted.
  • Pricing. Pricing is tricky. Many special event tables are offered which fail to provide appropriate return on investment. On the other hand, many nonprofits give value and receive dimes instead of dollars.

7. What is your organization’s experience with corporate support?

Learn about the different business and corporate support your agency receives or might receive. Explore the benefits for both sides of the partnership. Ask questions like: What businesses fund us? What return do they receive for their investment? What assets do we have that we might offer? How can we create wins for the business, for us, and for our customers? Do we have the infrastructure in place to do a stellar job with these funds, especially after we get the money?

8. What is the role of the board?

Here are three useful actions for board members to take to support funding from this source.

  • Identify opportunities. Almost all nonprofits can access funding from well-known corporations or regional businesses. The latter include those with physical proximity, like the printer next door, and those with mission proximity, such as medical firms that also serve your patients. Many nonprofits overlook these.
  • Make connections. Help your personal business connections to be aware of the opportunities the nonprofit offers. Invite business friends to special events. Set up lunches so that a corporate friend has an opportunity to meet with your executive director or board chair to explore overlapping customers.
  • Balance. If you serve on a committee that supports this effort, seek ways to balance the needs of players. For instance, recognize that the nonprofit’s mailing list is a valuable asset. On the other hand, recognize the organization’s obligation to those on the list. Create wins for each partner and everyone’s’ customers.

9. What is exciting about this income source?

The best ways to partner with businesses to earn funds are still ahead of us. While fundraising in the nonprofit field is young (less than fifty years as a profession), business and corporate philanthropy is even newer. Models and ideas continue to be explored, accepted, rejected, and modified. Great potential exists to further corporate and nonprofit goals. The Chronicle of Philanthropy recently reported on a new $10 million dollar alliance between Dow Chemical and the Nature Conservancy that, “exemplifies the type of in-depth collaboration between business and charity that is needed to protect habitats.”

10. What is the general process of developing corporate support?

Grant: Nonprofits find these opportunities by exploring websites and by invitation. Usually the opportunities are well advertized, since announcing the opportunity supports the corporate brand. Expect intense competition. Apply early, because funds often run out. While labeled a grant or gift, assume that these are funds with strings e.g., a recent application asked, “Through a true partnership, where both parties benefit, how will you increase foot traffic at our stores?”

Sponsorship and Cause Marketing: First, many nonprofit need to recognize that they have multiple assets with value. Brent Barootes, with Sponsorship Group, suggests, “Know what you have to sell, conduct discovery sessions, and custom build proposals.” Sponsorship, he explains, is not about large audiences, but the right audiences. For most nonprofits, this represents a new approach. To start, consult texts like Patricia Martin’s, Made Possible By (good summary) and The Sponsorship Seeker’s Toolkit by Kim Skildum-Reid and Anne-Marie Grey (more detailed).

How to Succeed in Business

Corporate and business funding is possible for almost all nonprofit organizations. These include opportunities from large corporations, local businesses in your neighborhood, and those who serve your customers or volunteers. Corporate funding is in its infancy. Discover ways to work with businesses that benefit them, your nonprofit, your customers, and your mission. Don’t wash windows; succeed in earning business income.

Resources

Corporate and business support is only one of seven nonprofit income sources. This article on corporate funding is #4 in a series about each of the sources. For the earlier issues, click here.

For more on nonprofits and funding opportunities, listen to our collection of audio downloads, especially Money-tastic #2: Nonprofit Income Opportunities and Money-tastic #3: Creative Revenue Streams for Your Nonprofit.



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