Understanding the Corporate Funder Mentality
What are corporate funders thinking as it relates to charitable giving in the 21st Century?
In 2013, according to the Giving USA Foundation, corporations donated $16.76 billion to charity. Although as a total percentage of giving, this is significantly less than donations by individuals, it is still sizable and an important element of a comprehensive revenue strategy.
In order to obtain charitable dollars from corporations, it is essential to understand these entities themselves. There are two key funnels for obtaining financial support.
The first is through corporate sponsored foundations. These foundations have the following attributes:
- They are separate legal entities.
- Their donations typically reflect corporate interests.
- They have a close relationship with the parent company.
- They usually manage small endowments and rely on contributions from the parent company and/or its subsidiaries for funding.
- They must adhere to corporate foundation laws, which includes public disclosure requirements.
The second way corporations provide charitable funding is through their direct giving programs, which are typically allocated budgets that are overseen by an individual or department within a corporation. Oftentimes, the marketing team is tasked with managing these discretionary funds as a function of their work communicating the corporate image and brand internally and externally. Therefore, for this type of funding, it is important to bear in mind direct giving programs:
- Encompasses cash donations, in-kind, matching gifts, use of corporate facilities for events or meetings and pro-bono staff expertise.
- Can support initiatives or organizations whose mission may not fall within the corporate foundation guidelines.
- Are not separate legal entities and do not have public disclosure requirements.
Once nonprofits have this basic understanding of corporate funding, they should become familiar with what motivates companies to give to charity. Generally, corporations provide resources to nonprofits because giving interests align with their business strategy and these donations benefit their employees, families and the communities where they operate.
It is fundamental for nonprofits to keep in mind that corporations do not exist to give money away to charity. Their obligations are to their shareholders, customers, employees and, most importantly, the bottom line. Therefore, it behooves nonprofits to always acknowledge the interests and motivations of a corporation when they seek funding. Ultimately, proposal requests should underscore how support will help the corporation achieve its own goals.
Companies want to help support charities that are aligned with their business interests. However, they also have to weigh these objectives with their concerns around giving, which include being deluged with requests, and particularly from organizations that have not done their homework. Corporations are also careful not to raise expectations, again, because their primary priorities are to make a profit and meet the goals of their shareholders. Companies are also mindful not to provoke the displeasure of their investors who may regard the corporation’s charitable activity as “giving away” profits and they are always vigilant not to associate their brand with a nonprofit partner if there is a hint of a crisis or scandal with the charity.
In conclusion, for nonprofits to successfully execute a corporate giving program, they need to be familiar with their mentality. Charitable corporate donations are a component of a company’s overall business strategy, and these entities are looking to present themselves as socially responsible organizations to their constituents and the broader community in a way that is always aligned with their goals and objectives.