After years of recession-battered budgets, nonprofits finally are getting good news: U.S. charitable donations appear to be rebounding. Corporate giving, in particular, increased a cumulative 14.7% since 2010, according to the Giving USA Foundation. The median of total giving by companies jumped 23% last year and is almost back to pre-recession levels.
Many, but not all, nonprofits are getting some lift from that rising tide. A survey by the Nonprofit Research Collaborative found that 42% of nonprofits said they received more corporate funding in 2012 than in 2011.
Converging trends, however, are shaping how such funds will be allocated in the future. Most notable is pressure from customers and employees for companies to become better corporate citizens. At the same time, business-oriented thinking is coming to bear on philanthropy, including “impact investment” approaches, leveraging non-cash assets, more strategic planning and a desire to align charity and corporate missions.
These changes are spawning new expectations for nonprofits – but also revealing new resources for them to tap. Here are six trends to understand to successfully engage corporate donors.
1. It’s not charity; it’s corporate strategy. Corporate philanthropy has had a reputation – sometimes deserved – of being diffuse and reactionary. Today companies are applying the same kind of strategic focus to philanthropic decisions that they do to the rest of the business. A mission statement and declaration of values, usually tied to a broader corporate social responsibility (CSR) framework, keep corporate giving on track. Executives in corporate philanthropy are becoming more proactive about advancing specific goals. Nonprofit groups that grasp and take advantage of this framework will have a head start on finding corporate partners for their work.
2. The ROI mindset. Multiple movements have grown up around the idea that businesses can do good while doing well, such as social entrepreneurship, impact investing and the B Corps. These, too, are influencing corporate philanthropy. The concepts of “gifts” or “grants” is being supplanted by the idea of “social investments,” and by extension, companies are beginning to apply a return on investment (ROI) mentality to their philanthropic decisions.
In response, nonprofits are striving to develop new metrics that spell out the “return.” It is a significant departure for some organizations to go from measuring need to measuring outputs, outcomes, and impact. But it’s an important step to take. Such reporting reassures corporate donors that their nonprofit partner knows what success looks like and how to build on it. It also helps them understand – and communicate to internal and external stakeholders- how their donations are making a difference in the world.
3. A respectful partnership. Let’s be honest: Nonprofit and corporate values do not always align. Even within philanthropy circles, corporate giving programs have often gotten a bum rap as little more than dressed-up marketing dollars.
But such philanthropic snobbery is outdated and undermines an opportunity to engage a critical sector. Today’s corporations have a genuine stake in social issues, whether it is ensuring a sustainable market for products, healthier customers, or a better community for their employees. Corporate foundations have been particularly instrumental to educational reform efforts, prompted by authentic concerns about their future workforce.
Given the complexity of today’s social problems, everyone – nonprofits, private philanthropists, the public sector and business leaders – needs to be contributing solutions. Nonprofits would be wise to actively draw more companies into these conversations.
4. The total toolbox. The most sophisticated giving programs leverage all the assets a corporation can bring to bear – not just their financial resources. We at Rockefeller Philanthropy Advisors (RPA) enjoy working with corporate funders because they have so many tools to use: their brand and customer loyalty, their products and distribution channels, the skills and talents of employees, and the clout of senior management to raise the visibility of an issue. As corporate philanthropy programs investigate the needs of nonprofits – and nonprofits get more creative about what they ask for – even more ways to join forces will be discovered.
5. The employee effect. When employees arrive at the office, they don’t stop caring about their community or the world. Smartly run companies look for ways to transform that philanthropic urge into workplace engagement. Matching gift programs are the just the starting point (though the best of them match as much as $15,000 a year per person). Some leading companies use employee committees to help steer grant money. Volunteerism programs encourage donating time to community groups. Some companies even loan out expert professionals to help build some skill or capacity at a nonprofit. But here is an open secret: Such programs are often wildly underused. With care and tending, and a little bit of research on what a company offers, employees can be a direct route to the philanthropic heart of the company.
6. The global puzzle. How does a company give back to “its community” when it has operations in nine countries and sells in another 22?
In 2011, only 14% of donations targeted international programs, according to a sample of Fortune 500 companies’ giving analyzed by the Committee Encouraging Corporate Philanthropy. CECP also asked attendees at its annual conference whether their giving reflected their company’s global footprint. Only 27% offered an unqualified “yes.” The plurality, 36%, said “We’re not there yet but moving in that direction.”
In short, corporate giving departments do not need to be convinced to make international issues a priority. They do need nonprofit partners that can help them navigate this tricky terrain.
All of these six trends are driving innovation at both corporations and nonprofits. The office of corporate giving is no longer the sleepy, final career stop of the soon-to-retire executive but, rather, a complex and sophisticated undertaking with dynamic leaders to match. Nonprofits are similarly raising their game.
The donor-grantee relationship has changed for the better, too. It is now a more strategic and equitable partnership. In this era of CSR, after all, nonprofit leaders present tremendous value to the company: expertise in how to make a meaningful impact on society.
(This article, originally posted on the Philanthropy Journal, is one in a weekly series highlighting the pARTnership Movement, Americans for the Arts’ campaign to reach business leaders with the message that partnering with the arts can build their competitive advantage. Visit our website to find out how both businesses and local arts agencies can get involved!)