Beginner’s Guide to Corporate Philanthropy
December 25, 2018
When most people think of grants, they think of foundations and maybe government agencies. However, corporations can also be a source of grant funding. Some corporate grant programs—particularly those sponsored by large, multinational corporations—look identical to the grant programs run by foundations and include a formal application process and well-defined programmatic areas. Other companies choose to limit their giving to a handful of local nonprofits with support consisting of one-time cash gifts or in-kind donations of goods or services.
Applying to foundations for funding can take time and effort, but it’s a relatively straightforward process with lots of existing resources to help nonprofits identify funders and prepare applications. Corporate giving programs tend to get less attention, leading many nonprofit organizations to be confused about how to approach companies for support or to not consider corporate donors at all.
Below is an introduction to corporate philanthropy, including the forms it can take and how to research potential corporate donors.
TYPES OF CORPORATE GIVING: CASH, NON-CASH, AND DONATIONS OF GOODS AND SERVICES
Corporations give back to communities in several ways, from providing grants and cash gifts to donating goods and volunteer services.
As mentioned above, some corporations establish a foundation and administer a formal grant program very similar to what you would see with any other private foundation. If the company’s foundation is based in the US, it’s governed by the same regulations as other foundations and by law must give away at least 5% of its assets each year to maintain its foundation status. Corporate foundations often have a shorter application processes than private foundations (sometimes a simple 1-page online application) and lighter reporting requirements.
If a company chooses not to establish a foundation, it may give cash gifts through other mechanisms such as an employee matching gift program. Under matching gift programs, the company will match, dollar-for-dollar, any cash donations their employees make to qualifying nonprofits.
Other types of support, such as donations of goods and services, can take several forms:
Sponsorships: Instead of writing a check to a nonprofit, a company could choose to sponsor a fundraising event such as a walk-a-thon or bike race. In exchange for covering the costs associated with holding the event, the company gets its logo displayed prominently on marketing materials and at the event itself.
Marketing: Another form of corporate support occurs when a company decides to affiliate itself with a specific nonprofit and brand its products, website, and other marketing materials with the logo of the nonprofit to indicate its endorsement. The co-branding of products serves a couple of purposes. First, by displaying the nonprofit’s logo on its products, the company is providing free advertising for the nonprofit and raising awareness about the nonprofit’s mission. In other cases, the company might endorse a cause and add a nonprofit’s logo to product packaging as well as donate a percentage of the sales to the organization.
Non-cash gifts (also known as “in-kind” support): Corporate donations don’t have to be in the form of cash gifts. Support can also take the form of donated goods (sometimes, but not always, manufactured by the company) or discounted or free professional services. The latter could involve the company permitting staff to volunteer a few hours a week during their regular work hours. It also includes secondments that allow a company employee to work full-time for a nonprofit for a set period of time—sometimes as long as a year—while keeping their job at the company and drawing their regular salary and benefits.
WHY CORPORATIONS SUPPORT NONPROFITS
Corporations have giving programs for a few reasons, including:
Recruitment Tool: Companies have come to realize that having a corporate social responsibility (CSR) program helps with staff recruitment. Given a choice between two potential employers offering similar benefits and job responsibilities, increasingly individuals are choosing to work for the company that has a CSR program and offers employees time off to pursue volunteer opportunities.
Tax Benefits: Companies can realize significant tax advantages by donating in-kind or cash gifts to nonprofits.
Business Development: By donating to well-known causes or nonprofits, companies can increase their visibility; the increased visibility can help a company to reach business goals such as expanding its customer base or establishing relationships with government officials.
Image Enhancement: Companies frequently donate to issues or communities to compensate for negative publicity related to the nature of its work or its impact on local communities. For example, a mining company might donate to an environmental group or a housing developer might give to the local homeless shelter.
The fact that corporate donors donate to nonprofits to serve their own needs shouldn’t come as a surprise, and it’s not necessarily a bad thing. After all, foundations operate similarly in that every foundation has a mission and funds nonprofits to help them to achieve it. The big difference between a corporate donor and a foundation is that foundations make grants to further a mission that has a social good at its heart, whereas corporate donors make gifts to complement or advance their business interests. This isn’t to say the company and its employees don’t feel good about giving back to the community—that probably is very important to them—but those good feelings aren’t the primary drivers behind the company’s philanthropic work. Knowing what motivates a company is essential, because you need to apply a different approach when pursuing funding from a corporate donor than from a foundation or government agency.
ELIGIBILITY REQUIREMENTS (LOCATION, LOCATION!)
Corporate giving programs almost always have strict eligibility requirements that require applicant organizations to be located in a geographic location where the company has o presence.
Because of the tendency of corporate giving programs to have geographic eligibility requirements, when you are searching for corporate funding, it’s helpful to start your research by looking at the companies that have a physical presence of any kind (e.g., headquarters, manufacturing, retail outlets) in your local community. Depending on where you live, this could include small- and medium-sized local businesses all the way up to large national and multinational companies.
After you assess the companies in your immediate geographic area, you can branch out to look at companies with regional or national operations. A last step would be to research multinational companies that do not have a presence in your community or possibly even your country, but which may have a global giving program that imposes few geographic restrictions. As with traditional foundations, the larger the company, the harder it will be to attract the company’s attention to secure a donation or grant. In contrast, an advantage of pursuing local companies is that the applicant pool should be smaller and less competitive.
HOW TO FIND CORPORATE DONORS
There are several ways to uncover corporate giving programs, many of which are identical to the steps you would use to research foundations:
Foundation Database: If a company has created a foundation, you should be able to find the foundation in donor databases such as Foundation Directory Online, GrantStation, and others. If a company has a formal CSR program that publishes guidelines on what it supports, usually the CSR program will also be listed in the popular donor databases.
Company Website: If you have a company in mind, the fastest and most direct way to find out whether they have a giving program is to search the company website. CSR programs are not always easy to find on company websites. Sometimes the corporate philanthropy is showcased prominently, other times you may need to search the company website using search terms like “philanthropy,” “CSR,” “grants”, and “community” to surface the information you’re seeking. Even if you find a company’s CSR program described in a donor database, you’ll still want to confirm the information by visiting the company website.
Press Releases and News Stories: Company philanthropy programs often receive attention in the news when a cause or nonprofit the company supports makes headlines. Sometimes the company itself is the source of the news. For example, after a natural disaster, a company may release a public statement about its efforts to support victims and the affected communities. News releases about a company’s philanthropic activities are worth tracking and can be a good source of information about a company’s interests. From a news article, you might learn about a company’s in-kind support of organizations similar to yours or learn the name of the point person who oversees the company’s corporate giving. If you have a list of companies you are interested in, you can set up Google alerts to monitor the latest news about each company.
Physical Proximity: Returning to the issue of eligibility, since most companies restrict their giving to the nonprofits located in physical proximity to one of their offices or facilities, consider starting your research of corporate donors by looking at the companies that have a physical presence in your immediate community. If you’re not sure where to start, you could begin by asking neighbors and friends who their employers are. Not only could this question help generate a list of companies with CSR programs but it could also lead to the discovery of other forms of support such as matching gift programs.
Other Organizations: Organizations that do similar work or that are located in the same geographic area as your organization are excellent resources for uncovering the names of potential donors. By looking at an organization’s annual reports, tax filings, press releases, and website, you can learn who funds them, and that funder list may include the names of corporations you have not heard of before or reached out to for support.
Government Agencies: Local government officials can be an excellent source of information about company CSR programs in your geographic area. When you meet with government officials, consider using the opportunity to raise the topic of corporate philanthropy and learn about potential corporate donors and their interests.
Additionally, for general information on how to secure corporate support, a useful resource is Grantspace, a free service provided by the Foundation Center.
THREE THINGS TO KEEP IN MIND BEFORE APPROACHING A CORPORATE DONOR
Foundations fund programmatic areas that further their philanthropic mission. Corporate donors develop philanthropic programs that complement their business interests. A corporate donor’s business motivations is the first thing you’ll want to consider before you approach them. Other things to consider include:
Big Corporations Are Not Necessarily the Best Donors: When nonprofits start thinking about corporate donors, the tendency is to think of large national and multi-national companies with familiar names like Coca-Cola, Dannon, Nestle, Microsoft, and Cargill. While there’s nothing wrong with considering large companies that are household names, for most nonprofits—especially small or recently launched nonprofits—the larger companies are not going to be good bets. Working with a large corporation is similar in many ways to working with a government donor or private foundation and often requires preparing a formal application along with supporting materials. Even for large nonprofits with sophisticated business development operations, establishing a relationship with a corporate entity can be complicated and time consuming, frequently involving a lengthy negotiation process to work out the details of a potential collaboration. Additionally, the larger, well-known companies are bombarded by requests from nonprofits, which makes for steeper competition for corporate support. For nonprofits of all sizes, approaching local and regional small-to-midsize companies can often be a better strategy. The smaller the company, the easier the application process is likely to be and the lower the competition. A small, local company is also more likely to support basic community services than would a large, multinational company with headquarters in another region or country.
Companies Look for Branding Opportunities: If your organization has a limited social media presence and an outdated website, it’s going to be hard to attract corporate funding. While corporations have philanthropy programs to “do good” in the communities where they have a presence, they usually support nonprofits or causes that can help them to improve their reputation and raise awareness of their brand. Before you start thinking about approaching corporate donors, perform an audit to see how your nonprofit is regarded in your local community and online. If you don’t have a website or consistent activity on social media, build those areas up first before reaching out to potential donors.
Company Philanthropy Programs Are Narrowly Defined: In addition to limiting their philanthropic work to the geographic areas where they have a physical presence, corporate philanthropy programs almost always limit their support to a few areas that directly relate to the company’s business. Just as you need to screen foundations to verify that your organization fits within their stated programmatic interests, you need to do the same with corporate foundations and CSR programs. In addition to making sure that your organization meets any geographic eligibility requirements, research the company’s giving program and its current business portfolio to evaluate whether your organization’s work fits with the direction of the company. If the answer isn’t a clear “yes,” you might want to consider dropping the company from your list of potential funders and looking elsewhere for support.
