Posts Tagged ‘corporate philanthropy’

7 ways companies will change how they invest in you

According to Credit Suisse’s latest Global Wealth report, Americans’ median net worth is just $44,900 per adult, placing the U.S. in 19th place behind Japan, Canada, Australia and much of Western Europe. An interesting statistic when you consider the level of individual philanthropy in the U.S. as compared with other countries. While individual giving is king in most funding mixes, it still pays to keep an eye on the donations coming in from businesses to your organization—especially in light of recent developments.

As corporate social responsibility evolves, businesses are questioning if traditional philanthropic giving is an antiquated expense line. Today, stakeholders and investors expect more integrated methods for tying social impact to core business activities. While this Executives have started to ask how their companies can stop giving money away and getting nothing in return is a worthwhile endeavor, many companies are finding the reality of cutting ties with charitable giving easier said than done.

According to Paul Klein, founder and president of Impakt, “Executives have started to ask how their companies can stop giving money away and getting nothing in return, but putting an end to corporate philanthropy isn’t easy. The reputational risk of leaving worthy charitable organizations out in the cold is considerable, making leaders reluctant to take decisive action. However, new approaches are possible, since the end of giving for nothing may not be far away.”

It’s also worth noting the latest data from The National Philanthropic Trust: giving among U.S. corporations accounted for only five percent of total giving to charities in 2011. This underwhelming statistic seems to support the lack of enthusiasm Klein has observed in his work with corporations.

In contrast, what continues to capture the hearts, minds and bottom lines of companies are partnerships that directly connect to the business’s existing business model. What’s more, according to the 2010 Cone Cause Evolution Study, 90 percent of consumers want companies to tell them the ways they are supporting causes. Eighty-three percent of Americans wish more of the products, services and retailers they use would support causes. While the end of philanthropy may be coming, businesses recognize consumer opinion and the need to do a better job of blending profit with purpose.

Klein has developed seven strategies at Impakt to help businesses phase out philanthropy and begin to embed social impact in their core business strategies. I’ve listed Klein’s recommendations here:

1. Develop a five-year exit strategy. Almost every large corporation supports at least one large charity in a significant way. In these cases, it’s important to identify a social objective that can be achieved over five years and allocate financial and other resources towards that objective on a diminishing basis. When the social objective has been achieved, the charity will no longer require support.

2. Begin investing in social change in other ways. “Charitable organizations don’t have a monopoly on social change, and sometimes social enterprises and other businesses can achieve better results.” If social change is important to your business, you should understand the strengths and weaknesses of all the players and start to reallocate charitable dollars toward organizations that deliver the most value, regardless of their sectors.

3. Focus on opportunities that can deliver return on investment. Pure philanthropy has virtually no business value. It’s altruistic and intended to help charities in ways that can’t be measured. Corporations can start shifting philanthropic spending toward social investments that have the potential of creating ROI. That might mean, for example, making a loan to someone with little or no credit to help start a business.

4. Stop funding charitable initiatives that don’t get results. Even without conducting a formal evaluation, you likely already know which organizations aren’t performing. Stop supporting those groups in 2015. Then take a year to reduce or eliminate funding for other organizations that may be of more value but aren’t the right partners for your business. During the transition, provide funding for capacity building to help organizations become more sustainable without your support.

5. Move CSR to finance or operations. Doing so is anathema to CSR managers (most of whom report to marketing or H.R.), but it will increase accountability, ensure business programs that have social value are resourced properly, and support the strategy for exiting out of donations. The transition will be difficult but the results will be better.

6. Focus on value. Start asking how you can give or invest less while bringing about greater social change. This is a standard question for businesses but it’s rarely posed to charities. Organizations that can help you answer it will be worthy of continued support.

7. Embed social change in your business. Financial institutions should find new ways to give vulnerable people access to capital. Companies in extractive industries such as mining or oil and gas should put a high priority on adding more indigenous suppliers and employees. Car companies should focus on sustainable transportation. Pharmaceutical companies need to create new revenue models that focus on preventing illness.

Klein’s recommendations may be alarming if you’re a nonprofit that has a large focus on traditional corporate giving; however, his thoughts are a sound warning that your strategies must attain new levels of ROI. Joe Waters, author of Fundraising with Businesses, says asking companies to simply write a check is tired. Nonprofits need to get creative and look for ways to engage employees and customers while impacting the business’s bottom line. These partnerships will always be easy to justify and renew in the finance department where Klein recommends they be managed.

At Execute Now!, we advise clients on a myriad of financial areas relating to corporate social responsibility. We create financial scenarios for nonprofit clients interested in weighing their options among potential partnerships. We also provide forecasting for various types of funding based on their dependability. Finally, we shed light on what a business partner will be looking for in the finance/operations departments to optimize reporting.

Personally, I found Klein’s use of the phrase, “giving for nothing,” a disappointing representation of the corporate perspective he’s working with today. On the other hand, nonprofits looking for the positive note in his seven strategies should focus on how each tactic informs how charities must aspire to work with companies if they choose to keep them in the funding mix.

See also:

Fundraising with Businesses

Cash Flow Strategies

Zilch: The Power of Zero in Business

Image credits: gooddaysfromcdf.org, thegiftofgiving.com, volunteerhub.com

Leave a reply

Waters’ new book gives you license to steal

“To be successful in anything you need inspiration. It’s what drives us to keep pushing and excelling. Without it you just hit a dead end. You stop learning and exploring,” explains cause marketing author Joe Waters.

Joe Waters recently inspired us with his new book Fundraising with Businesses: 40 New and Improved Strategies for Nonprofits, which tells a great success story in each of his 40 chapters dedicated to a revenue strategy with companies. I’ve excerpted one of his stories to give you inspiration and glimpse of Waters’ numerous featured partnerships:

Hashtag fundraiser

Over the holidays in 2012, global supermarket chain Lidl offered to donate five four-course Christmas dinners to food banks in Belgium for each tweet with the hashtag #luxevooriedereen, which is Dutch for “luxury for everyone.” The campaign went viral and spread rapidly on Twitter. While Lidl had privately committed to only 1,000 meals, they graciously increased their donation to 10,000 meals.

License to steal!

Waters advises you that when your nonprofit uses hashtag fundraisers and social media in general, you have to plan for the unexpected and be clear on your donation. After Waters explores the case story, some of the meaty sections that follow are “How it Works in 1-2-3,” “Things to Remember,” and “Steal These Ideas!” Who wouldn’t want to read a section called “Steal These Ideas!”? Brilliant.

Too big, too small or just right?

Despite the fact that cause marketing has been in existence since the early 1980s, author Joe Waters is still surprised by the amount of confusion surrounding this idea. Additionally, smaller nonprofits that represent the bulk of our sector are misdiagnosing why great cause marketing partnerships are passing them by and going to the bigger nonprofits. Too often, smaller charities approach businesses for cash gifts when they could be leveraging much more if they are willing to get creative.

“Just because you’re small doesn’t mean you have to think small,” says Waters. He asks, “What if the business is new or struggling?” Does your strategy account for the other assets the business may bring to the table if it can’t write a check? Or, if the company does have money to give, can you see beyond the check and realize the enormous amount of possible donations from customers and employees through an innovative campaign?

Welcome pieces of advice

Each of Waters’ chapters are further bolstered by advice boxes where Waters shares best practices in areas such as “Three Types of Decision Makers,” “Four Ways to Turn Unwanted Gifts Into Nonprofit Gold,” or “Ten Fundraising Ideas for B2B [Business to Business] Companies.”

I encourage you to indulge in a little guilt-free stealing and experiment with Waters’ Fundraising with Businesses. Your bottom line won’t be sorry.

See also:

The End of Fundraising: Raise More by Selling Your Impact

How to Write Fundraising Materials that Raise More Money

The Influential Fundraiser

Leave a reply

Welcome! Please provide your log-in information below.
Forget your password?
Enter your email or user name and your log-in information will be sent to the email on file.