11 Oct Development Planning from Scratch – Corporate Funders
I doubt there is any donor segment more confusing to plan for than corporate/business. It’s confusing because of the stories we make up about why particular companies SHOULD give us money. It’s confusing because of United Way. It’s confusing because some companies are really outlets for individual philanthropy and others are dressed up to look like foundations. And it’s confusing because many board directors can visualize approaching a company for a donation much more easily than they can approaching an individual.
In my Conservancy experience, I once solicited a company in central Wisconsin. It was a family-owned company and the family was supportive generally, though the elder generation was aging. The company foundation was headed by a TNC board member. She gave away an amount of money each year based on company profits. I was asking for $30,000.
This was her answer that I never forgot:
“David, sure. I could give you $30,000 for your project, and sure, the project is right in our service territory. But what are you going to do for me? The company name on a rock out on a trailhead?
“Or – I could give 30 libraries spread throughout our service territory $1,000 each to buy a computer. And each library would then put a sign on the monitor thanking our company for the generous gift that made this workstation possible.
“Now what would you do?”
She taught me a great lesson that day. (I told her I thought she should give TNC $1,000 for a computer – she ended up giving us $5,000.)
So as you plan for next year’s cultivation and solicitation activity with the corporate/business segment, here are some lessons to help keep perspective:
- Corporate philanthropy is an oxymoron. Businesses give money away as a business decision. There is an exchange involved, and they’re buying something – publicity, visibility, feel-good for the employees, or something. It’s important to know what that something is.
- Companies owned by board members are already counted in our planning sequence as Board gifts. (See Segmenting) And companies owned by Top 100 members are already counted in our planning sequence as Top 100 gifts – the fact that the gift was written on a company check is secondary to the fact that the decision to give was made by a single individual or family acting as a philanthropist.
- As a segment nationally, the business community gives about 5% of the money given away in the U.S every year (individuals give about 87%). It is true that many organizations receive more than 5% of their contributions from the business community. This is more likely due to the organizations leaving individual money on the table than to some amazing success strategy with businesses.
- The great majority of these gifts are very small, and based on a price point mentality – bang for the buck. The potential for a particular company gift to grow significantly over time is pretty small, too.
- Because of the relatively small dollar amounts involved and the fact that many business giving decisions are made based on last year’s charity list, once you get on the list, staying there is much easier.
- It’s hard to reach new companies through the mail. You need to go meet them.
So how do you make sense out of all that? Here are my key takeaways:
First – strategically – making and cultivating a connection with a key decision-maker has the potential for moving a corporate gift over to a Top 100 gift. That person would need to be the founder, owner, corporate board chair, or some other position with serious influence in the company. Someone who might make the decision to give even if it wasn’t strictly in the best interest of the company that year. Caution: be honest about the true potential here.
Second, approach new companies in person, by asking the person you meet with what the company needs to get from its community gifts. You might have a list of 50 things you’re prepared to do for them (or a printed list of corporate sponsor benefits), but before you start talking at all, ask and listen.
Third, have a threshold gift in mind. If a company is worth spending time with every year, how much should they be giving? For most organizations, I would say $1,000 would be a good threshold, but you might consider $2,000, $5,000, or even more. Why? Because that same time invested in cultivating relationships with individual donors could easily yield such giving with the potential for much more.
I completed a development audit for a land trust some years ago now. This land trust was very proud of its corporate program. They had good board participation, they met with most of the companies each year, and several of the companies had been giving steadily for more than ten years. Everything was really cool – right? The picture that emerged from the development audit, however, was a little different.
- 159 companies gave a total of $350,000 that year. A big number by any standard.
- 2 gifts were extraordinary and connected to a significant project in which the companies had a publicity stake.
- 10 others were giving $5,000 or more each year.
- The next 12 were giving $1,000 or more each year.
- The remaining 135 were giving less than $1,000 and averaging $150.
So $330,000 of the $350,000 came from 24 companies. I asked them – “Why not stop there?” Why not take all that organizational energy and enthusiasm visiting the other 135 – especially from board members – and devote it to cultivating individual donors for major gifts? (Unlike cultivating individuals, the $20,000 coming from 135 companies was not going to grow over time and not one of them was ever going to leave a bequest when it died.)
Here’s another factor I run into a lot: I never went back to check, but I suspect that many of the smaller corporate gifts came in the form of in-kind donations of goods and services related to an event. This creates an interesting dynamic. From an organizational perspective, is it easier to solicit cash from a donor and spend it on wine for the fundraising gala, or is it easier to solicit the wine as a corporate donation? The first can easily be done in the mail. The latter is solicited in person, or at least on the phone.
One question I frequently ask is why an organization feels it is important to have business support. The answer is usually related to gift revenue, and I’m usually able to point out that organizational return on investment is nearly always more significant with individuals than with businesses. Frankly, large gifts to a few non-profits are almost never in a business’ best interest, so most business giving is in very small amounts.
But there is another benefit to business support. Business support can lend credibility to the organization’s work. What are you doing to take full advantage of this potential? Publicizing gifts from businesses works for both you and the business, and is often connected to the reason for giving in the first place. But you can take that a step further by getting business leaders to comment publicly about their gift. Seeking quotes is good cultivation for the business donors and useful as endorsement material – both. When donations come in, interview the CEO or another senior executive and seeking permission to use a quote in promotional literature and on the website.
So – back to planning.
First take a serious look at your return on investment with corporate donors. For the most part, this is “high-touch” fundraising (as opposed to “high-tech”). It takes a lot of time on the part of both staff and board members. Understand how much it costs and how much it raises, and make appropriate decisions related to how many businesses you wish to cultivate.
Establish a threshold gift below which it really isn’t worth additional time spent. Perhaps a $5,000 annual gift as a lead event sponsor is worth the time and attention it takes to cultivate and maintain the key relationships with the company. Perhaps that same time and attention isn’t worth it for $150. I’m not prescribing any particular line here – it will be different for different organizations. I’m saying that you should know what your particular line is.
Concentrate as much of the work as possible to avoid allowing it to become “what the board does for fundraising.” For example, maybe March becomes your business relations month. Everybody spreads out and visits as many companies as possible within the month, to:
- ask for renewal sponsorships for the event(s),
- make initial visits to companies not yet giving to listen and learn what they need to get from their community giving program,
- request and secure quotable quotes from business leaders, and
- make presentations to employee groups about the organizational successes the company is helping make possible.
Explicitly get your board members involved. Show that you were listening last year (to the businesses) by referring back to what you learned about their community giving program and how you are delivering in that exchange. And ask how you might even enhance that relationship. But then after the board has finished its work with corporate giving, redeploy that same effort into building relationships with individual funders instead. Don’t overdo corporate work at the expense of individual cultivation work.
Understand the price point perspective and be consistent. If a $500 sponsorship gets a certain level of stuff (visibility, signage, podium recognition, and so on), make sure $1,000 sponsors get substantially more. Do you have enough stuff to offer to get a $10,000 sponsor?
And just as we did with the other segments, turn the relationship around and see it from the company’s perspective. What do they see from you? Just the annual renewal visit is not enough. Personally communicate with business donors often during the year – tidbits about progress, special invitations to events, and so on. This even goes for matching gift companies. Nothing creates atmosphere for future giving like the feeling that this year’s gift made a difference.
And just as we did for the other segments, Map It on the calendar.
Photo by Andreas Ronningen courtesy of Stocksnap.io.
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The Development Planning Sequence so far:
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Here’s what I’ve been thinking about for October. What are YOU thinking about?
For a significant number of organizations, donors giving at least $1,000 as their membership gift account for less than 10% of the donor base and more than 60% of the operations funding. Time to say THANK YOU! Time to get the most out of your appreciation events!
Mailing this early means that you can get a reminder letter out before Thanksgiving, and if you are inclined to send out a third letter, you will still have time to drop it before Christmas. BUT, If you will be mailing after October 20 or so, know that your results will be somewhat affected by the election mail. Mailings dropped after November 15 will have better results that mailings dropped between October 20 and the election.
I am NOT a tax advisor, and I am NOT an attorney. However, with that critical disclaimer:
Acknowledge any gift with a sincere statement of appreciation for what was actually given. For example,
- Thank you very much for your gift of $35.
- Thank you very much for your gift of 25 shares of XYZ stock.
- Thank you very much for donating your 4-wheel-drive truck.
- Thank you very much for volunteering to help us with the mailing last Saturday.
- Thank you for donating a homemade meal for 6-8 people for the auction.
Given what you know right now about what foundations, corporations, and individuals have committed, and what you know right now about what requests are still out there, and what you know right now about the requests you will yet write before 12/31, can you still project meeting your fundraising goals and getting to each of the budget numbers? If not, where will each number end up? If you wait until December 20th to figure out that you’re going to be short – it’s too late. Forewarned is forearmed.