Corporate Giving and Fundraising
In this chapter we examined corporate giving, noting that although the aggregate amount donated in the United States is impressive it is only a tiny fraction of the overall philanthropic support attracting to the sector. We have also seen that corporate are no more or less generous than they have been in the past, contributing a relatively static percentage of their pre-tax profits to good causes. What we have seen, in recent years, however, is a general move away from truly philanthropic support towards giving that is strategic or dual agenda. Corporations are increasingly regarding their support of nonprofits as a tool to further the interests of their own organization.
Scale of Corporate Support
Giving USA reports that corporate donations totaled $14.5-billion in 2008. Although this might sound an impressive figure it represents an 8% decrease (in real terms) on the previous year.
Data from Giving USA (2009) also tells us that corporate support of the nonprofit sector represents only a small percentage of donated income, at a mere 5% of all voluntary giving. This includes the value of cash support, corporate foundation grantmaking, and in-kind donations. It does not include several key forms of corporate support, such as sponsorships and cause related marketing. These are not included in the Giving USA figures.
Statistical analysis from the Center on Philanthropy at Indiana University tells us that the determinants of the level of corporate giving are
- Corporate income/profit this year and last
- GDP this year and last
- Giving the previous year
- Corporate tax rates
Giving USA provides a wealth of statistics on corporate giving, with data going back over several decades allowing researches to plot trends and to conduct the kind of analysis we refer to above.
There are though many other sites on the web that provide data on the state and nature of corporate philanthropy in America. These include:
Their site contains research reports, benchmarking resources and guides to best practice in corporate philanthropy. We refer to this organization in our chapter because they have tracked corporate motives for offering support over time.
The Corporate Social Responsibility Newswire, provides news and reports on corporate involvement in the social responsibility and nonprofit organizations.
BCA is a national organization that works with business to develop and advance alliances with the arts that meet business objectives. The site offers examples of best practices of business investments in the arts, a summary of its latest research, and more.
BSR, based in San Francisco, is a membership organization that helps companies be commercially successful in ways that demonstrate respect for ethical values, people, communities and the environment. BSR’s online Global Business Responsibility Resource Center includes an introduction to corporate social responsibility, plus information on business ethics and community involvement.
The Center provides leadership in establishing corporate citizenship as a business essential, so that all companies act as economic and social assets to the communities they impact by integrating social interests with other core business objectives.
In the UK this guide provides details of around 500 companies in that country that give a combined total of £500 million in cash donations to voluntary and community organisations. The guide also contains information on in kind support, employee-led support and community contributions.
A U.K. organization whose purpose is to mobilize business for good. Its members commit to improving the way in which they manage their resources, be that their people or the planet. Business in the Community works across four areas of interest, namely; Workplace, Marketplace, Environment and Community. It shares knowledge and experience and their site contains a wealth of resources to facilitate businesses looking to develop a higher level of community engagement.
Why Do Corporations Give?
Burlingame and Young (1996) developed four models of how companies approach their giving and volunteering to nonprofits. The utilization of these models provides fundraisers with a context in which to approach businesses for support for their missions. The four major models are:
1. Corporate Productivity Model
This model starts from the basic premise that corporate giving will help the company increase profits and return more value to shareholders. From this perspective the term ‘corporate philanthropy’ is oxymoronic and terms such as ‘corporate citizenship’ or ‘strategic philanthropy’ would better convey the purpose of the engagement between the company and the nonprofit.
2. Ethical or Altruistic model
By contrast, the classical notion of corporate philanthropy is based on the premise that businesses and their leaders have a responsibility to be good corporate citizens and corporate giving and volunteering is a way to demonstrate this responsibility to society. It also assumes that corporations have discretionary resources. When a company is in difficult economic times one would not expect giving to be based upon this model. The giving program must have the capacity to be able to alert corporate leaders to community priorities and where the company might be a partner in seeking solutions.
3. Political Model
The political model is played out both externally and internally in many businesses. The external form is based on the idea that corporations use giving to build relationships that protect corporate power and influence thereby limiting governmental control over companies. Types of giving that are consistent with this model are projects that build closer bonds between the nonprofit and the company.
4. Stakeholder Model
The stakeholder theory of corporate giving is based upon the idea that the corporation is a complex entity that must respond to the needs and pressures of a variety of key stakeholders including shareholders, employees, suppliers, customers, community groups, and governmental officials. Under this framework, managing the company is best accomplished by managing the various stakeholder interests. Thus to be effective corporate giving activities need to help address various stakeholder interests.
Other authors, such as Sargeant and Jay (2004) have adopted a more simplistic perspective on the rationale for corporate giving, drawing a distinction only between philanthropic giving which does not directly benefit the corporate and giving of a self-interested kind that does.
Examples of Business Support
There are many examples online of organizations promoting their approach to philanthropy.
Bank of America map out their approach to philanthropy.
Similarly, Boeing’s Global Corporate Citizenship describes all of its philanthropic and community service efforts.
Starbucks Coffee’s Social Responsibility page also illustrates how they are involved in the community. Note the relationship between Starbucks Company and the Starbucks Foundation. This is an example of how some corporations divide their donations between different budgets, such as marketing budgets and associated foundations.
Forms of Business Support
Whatever the initial motive for engaging with a nonprofit there are a variety of different forms of corporate support that can be solicited. A selection of the most common are listed below:
This remains the most common form of corporate support of nonprofits and in many countries (including the United States) is popular partly because there are corporation tax benefits that can accrue as a consequence of the gift.
Donations of Stocks/Shares
In some countries corporations can also elect to give stocks and shares to a nonprofit of their choice. Again, this is typically tax efficient since the gift accrues a tax deduction equal to the value of those shares at the time of donation.
Nonprofits can gain from the association with a business since that business may promote its link to the cause and thereby heighten public awareness of the issue and/or organization.
Gifts of Products/Services (also known as Gifts-in-Kind).
Frequently the goods or services produced by a corporate can be of value to the beneficiaries of a charity. The donation of food at or near its ‘sell-by’ or ‘expiry date’ to soup kitchens is one such example.
Some corporations will agree to second staff to a nonprofit where specific expertise is being sought. This may be management expertise or perhaps technical expertise where this would assist in improving the service provision to beneficiaries.
Corporations are often willing to sponsor a particular aspect of a nonprofits service provision in return for an acknowledgement, or perhaps placement of the organization’s name or logo. Organizations may also sponsor events or gala dinners that offer brand enhancement to the corporate whilst at the same time facilitating fundraising for the nonprofit from those present.
There are many sites online dealing with the issue of sponsorship. From a corporate perspective we like the resources included at IEG’s Sponsorship.com. IEG describes itself IEG is the leading provider of consulting, valuation, measurement, research and training to the global sponsorship industry. Its site is packed full of useful information on the topic, including the latest research, information on best practice and case studies illustrating successful approaches.
Corporations can sometimes open up access to their workforce for other forms of fundraising. In such cases there are a variety of activities that may typically be organized to solicit funds from members of the workforce. Each of these may be established either as a stand-alone program or as part of an integrated pattern of corporate support where the organization too will participate in giving, perhaps through a variety of the methods alluded to above.
Employee fundraising can either be initiated by a corporate opening up access for a nonprofit to its workforce, or it may be initiated by individual members of the workforce who put pressure on the employer to support the philanthropic activity that they are already engaged in. Both forms are common and there are a variety of activities that come under this general heading.
1. Workplace Giving or Federated Funds
A federated fund is a cooperative enterprise, owned and controlled by the nonprofit members, whose purpose is raising program and operating capital for each member agency. It serves as a contribution vehicle for donors to direct charitable dollars to the groups and issues they care about. A payroll gift to the federation is usually distributed to all the member organizations, or donors can target gifts to specific groups in the federation.
Users interested in workplace giving may find the following two articles helpful; Re-Examining Workplace Giving Programs by Marjorie Polycarpe and Charity Navigator’s Guide To Giving in the Workplace.
Users in the U.K. will know workplace giving as payroll giving, although the model for payroll giving is very different. In the UK employers are able to establish payroll giving schemes through which donors can give to any charity of their choosing. This breadth of choice is accomplished by the use of an agency charity which collects the donations (and their destinations) from the employer’s payroll each month and then ensures that each individual’s donation is passed along to the benefiting nonprofit.
Payroll Giving appeals to some supporters because it enables the gift to be made from their gross salary – i.e. (before tax is deducted), and thus to receive immediate tax relief of up to £4 for every £10 donated. This is illustrated below
|Employee pledges||Cost to standard rate taxpayer||Cost to higher rate taxpayer|
|£5.00 per month||£4.00||£3.00|
|£8.00 per month||£6.40||£4.80|
|£10.00 per month||£8.00||£6.00|
|£15.00 per month||£12.00||£9.00|
More information on the scheme can be found at the Payroll Giving Centre. This is an information service aimed at businesses, charities and the general public. This site hosts free guidance materials, promotional literature and useful links to help you make the most of Payroll Giving.
Some users may be interested in learning more about how donors are recruited into the scheme. This is usually done by a specialist payroll giving agency, who make presentations to staff and assist employers in getting a scheme off the ground. One such agency in the UK is Sharing the Caring. They work with a wide range of employers and currently count among their clients large corporates such as Tesco, Sainsbury, B&Q, Rolls-Royce, Marks & Spencer, BBC, local councils and Lloyds TSB. Sharing the Caring represents over 110 charities. But they ensure that donors are free to give to any charity of their choice. Around 10% of the pledges they generate are for causes that are not their client charities. Sharing the Caring is part of the Charities Aid Foundation and as such any profits they make remain within the voluntary sector.
2. Employee Matching Gifts
Employee matching gifts are contributions from a corporate employer that match contributions to a charitable organization by a corporate employee.
3. Workplace Events
The employer may donate time or space for the hosting of a charity event that members of staff may participate in. This may be a social gathering or dinner, but it may equally be an ‘activity’ such as a sponsored walk, golf, tennis, swimming or challenge event. Whilst it is the employees themselves who fundraise, it is often the case that an employer will donate funds too, perhaps matching the funds generated by the employees.
4. Workplace Collections
Often where particular members of staff have a link or commitment to a particular cause they will raise funds simply by collecting cash donations from their peers. Typically, permission would be sought from the employer for this to happen on work premises and/or the employer’s time (Scanlan 1997).
5. Group Presentations
A further common form of employee fundraising involves the nonprofit in making a presentation to groups of staff who have expressed an interest in the cause. The goal here is to explain to members of staff how they can get involved with the work of the organization or in fundraising for it and to suggest activities that these groups of individuals may engage in. Such presentations are usually made on the company’s premises and/or on company time.
Cause Related Marketing
Varadarajan and Menon (1988, p60) define cause related marketing as
‘A process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in revenue providing exchanges that satisfy organizational and individual objectives’
There are many recent examples of successful CRM partnerships. In 2009 Yoplait repeated a promotion in which it donated 10 cents to the Susan G Komen Breast Cancer Foundation for every pink lid on packages of Yoplait products mailed to them before the end of the year. The promotion promised a minimum guaranteed donation of $500,000 and a cap of $1.5 million.
The best online resource we know of on this topic is the Cause Marketing Forum. They define CRM more broadly than we do above, so the content of the site covers many other forms of corporate support. They offer case studies, news, articles, interviews with leading cause marketers.
We also like OnPhilanthropy.com. This site offers several e-newsletters containing information on corporate giving, nonprofit marketing and related topics.
Many users will find the CRM blog available on the cause related marketing blogspot to be a useful source of comment and advice. It can be found here.
Finally, it should be remembered that not every commentator is completely enamored with the notion of CRM. We recommend a controversial article by Angela Eikenberry which is available at the Stanford Social Innovation Review.
Corporate Fundraising Practice
There are a number of online resources which offer the fundraiser utility in identifying and qualifying corporate prospects. In the United States Corporate Giving Online was an online database of corporate donors that support nonprofit organizations and programs through grants as well as in-kind donations of equipment, products, professional services, and volunteers, that has now been retired.
A similar service is available in the U.K. from the Directory of Social Change.
There are also web resources designed to help with the approach to corporate fundraising in general. The Resource Alliance, for example, have posted a good piece by Zoltan Valcsicsak, a senior manager with the Levi Strauss Foundation. The article is available here.
While the Covering Kids and Families, a former project of the Robert Wood Johnson Foundation, is no longer active, their website houses valuable resources about corporate fundraising. Included is a guide to developing a fundraising plan, an essential for any nonprofit just getting started in this avenue of fundraising.
The web also contains numerous examples of successful fundraising practice. The St. Jude Children’s Research Hospital for example, offers a well-developed website to engage corporate donors.
Hands On DC offers a detailed explanation of the benefits for potential corporate partner of each possible level of sponsorship.
For small nonprofits, displaying sponsorship levels can be quite simple. The Sandy Amphitheater for example, provides a short list of benefits for each level, clearly conveying the added advantages for a greater gift. They fulfill their promise by prominently including their sponsor’s logos on the homepage (see bottom left corner).
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