As grant professionals, we are often asked about seeking money (or in-kind donations) from corporations, and many organizations believe that obtaining money (or in-kind donations) from corporations involves a single approach. This is not the case.
In reality, there are many types of social investment by corporations.
Corporate Philanthropy
The first is corporate philanthropy. This type of giving may or may not be funneled through a separate foundation and may or may not be related to a core set of business products and services.
It could take the form or direct giving (cash or in-kind donations), indirect giving (through organizations like Gifts In-Kind International), volunteer time and talent, giving tied to volunteer hours or commitments, giving that matches gifts made by employees, giving based on employee contributions, or scholarships to employees’ dependents. It holds the lowest expectation of financial return and provides a tax break to corporations.
Some corporations select a set of larger national charities to support. Others focus on giving in their local communities. Almost all tie giving to the areas where their employees live and work.
Some corporations accept proposals for consideration. Others give to pre-selected organizations. In many cases, companies keep giving amounts relatively low so that they can support a greater number of organizations and realize a greater social impact.
Finally, some corporations have a specific foundation officer or staff. Others manage the foundation and corporate giving through another department.
For all of these reasons, when seeking corporate philanthropy, it is important to understand the giving dynamics of the organization and to develop a relationship with them based on this understanding.
Corporate Sponsorship
What many organizations do not realize is that sponsorship of events by corporations often 1) taps into a different pot of money (typically dollars allocated to marketing, not philanthropy), 2) is more often tied to a company’s core product or service line, 3) involves a different set of expectations for what the company would receive as a return on its investment, and 4) typically involves in a different application process.
As a form of advertising, companies do not receive a charitable tax break on this type of giving. Instead, it is recorded as a business expense.
Some corporations accept proposals for corporate sponsorship (typically online) similar to the way they accept proposals for corporate philanthropy, but in most cases, this is not true. Obtaining corporate sponsorship dollars often requires developing a relationship with the marketing folks at a company of interest. And, in most cases, the companies you approach will be directly involved with your cause in some way.
Another important thing to note … nonprofits are typically looking for sponsorships for two kinds of events, fundraising events like galas and community events that spread awareness about a specific issue. A review of many corporate sponsorship guidelines, as well as personal experience, has shown that most corporations prefer to fund the latter. After all, exposure for their brand, and connection between their brand and a targeted cause, benefits the brand more than a fundraising event geared only to a few hundred people.
Keep this in mind as you create events (and the development plan) for your organization. As with all nonprofit development, it all comes down to research and aligning the interests of your organization with the interests of your potential funding partners.
Cause Marketing
Think of cause marketing as a more sophisticated level of corporate sponsorship. The relationship is even stronger; the expectations are even higher; and the benefits are meant to be more long-term for both parties. In addition, you have the added layer of expectations from consumers who will be buying a product or service with the goal of supporting a cause they care about.
Cause marketing can be a tricky business. Though it’s a growing form of corporate sponsorship, one that benefits the bottom-line of both parties, consumer perception can quickly lead to success or failure – to a positive brand association or a negative one that impacts your organization long-term. It’s not a situation to be entered into lightly.
Cause marketing relationships are more resource intensive as well, involving elements of “grantmaking, consumer and employment engagement, operations, policy, and marketing communications,” according to Penelope Cagney, author of Nonprofit Consulting Essentials: What Nonprofits and Consultants Need to Know. “Cause marketing consultants work with nonprofits to develop packaging and sales strategies, selection of sponsorship opportunities, management approaches, and measurement metrics for sponsors.”
To learn more about cause marketing, I recommend following the Selfish Giving blog, hosted by Joe Waters. One particular post helps differentiate between traditional corporate sponsorship and cause marketing: Cause Marketing vs. Sponsorship – What’s the Difference?
According to Cagney, American Express coined the phrase “cause marketing” in 1983 and when it first emerged, there were concerns – like there are today about the growth in PRIs (program-related investments) – that cause marketing would usurp traditional corporate philanthropy. In practice, however, that threat never materialized. Instead, cause marketing has become another source of funding for nonprofits interested in developing a diversified revenue base and one more way to engage corporations in their missions.
Corporate Social Responsibility (CSR)
Corporate social responsibility has become quite a business buzzword these days. Unlike the areas mentioned above, which may contribute to the short-term community impact of a corporation, typically efforts classified under corporate social responsibility are far more future-oriented, more proactive, and more likely to be tied to a company’s corporate (rather than product/service) identity and culture. They are often tied to the concept of sustainability and related to improving society’s perception that the business “acts responsibly”.
Typically, efforts are driven by internal forces, not approaches from nonprofits and other community agencies – though long-term cause marketing partnerships may be developed as part of an overall CSR plan.
Exploring the priorities a company has set under its corporate social responsibility focus can provide additional insight into management’s long-term vision and goals. How a company engages its employees in company efforts may also be important.
To stay up-to-date in the field of corporate social responsibility (CSR), I recommend Vault.com’s In Good Company CSR blog by Aman Singh Das. Here’s a post to get you started: The Advertising Take on CSR: 6 Steps to Building a Responsible Company.
