The Corporate Support Conundrum

11 Oct The Corporate Support Conundrum

11 October 2022

By David Allen, Development for Conservation

On every Board, there are a handful of Board members who are interested in aggressively pursuing corporate support. It seems logical to them that the business community would support community nonprofits as part of their commitment to community service. It should be easy money.

It’s also fundraising that is familiar. Lions, Kiwanis, and Optimist clubs are all built on the fundraising principle of business friends leveraging fundraising activities to build business relationships with each other. Even United Way has some of that feeling on a larger scale.

But let’s get real.

Nationally, business giving is less than 7% of the money given to nonprofits every year.

If you don’t have an arena roof that can be seen from space, Staples is not going to give you a million dollars.

In fact, Staples is probably not going to give you $10,000.

Several years ago, I had the privilege of analyzing one land trust’s well-developed corporate giving program. The program consistently raised $200,000 or so from about 150 different companies.

• The largest gift was $20,000,
• 3 companies made gifts of $10,000 and more,
• 7 companies made gifts between $5,000 and $10,000,
• 10 companies made gifts between $1,000 and $5,000,
• 10 companies made gifts between $500 and $1,000, and
• 120 made gifts less than $500.

Most of these gifts were solicited each year either in person or with a great deal of personalization. More than a few were leveraged through strong Board Director contacts. About a third, including many of the smaller gifts, were corporate matching gifts.

What’s not to like about this?

First, it’s the opportunity cost. The organizational energy involved in securing these business gifts was not trivial, and they only had $200,000 to show for it. If that same energy had been deployed into cultivating relationships with individual donors, this land trust could have raised multiple times that number. They could probably have found a single donor to give $200,000!

(In fairness to the organization involved, they were raising a great deal more than $200,000 each year. Their corporate program was a very small part of the fundraising work they were doing.)

But more importantly, corporate giving is almost never philanthropic. It’s transactional. And that means it’s scalable only by increasing the price point or adding businesses to the program.

What if this organization needed to raise $400,000 instead? Could they realistically double the amount of money each business would give each year?

The answer is probably No. Large gifts to a few non-profits are almost never in a business’ best interest, so most business giving tends toward very small amounts. Organizational return on investment is nearly always more significant with individuals than with businesses

There are notable exceptions in the land trust community. Their common factor is the ability of the business to connect its product with the land trust’s mission: microbreweries and clean water for example. I believe these experiences are repeatable, and there is some merit in seeking out similar partnerships.

The way to start is by listening. “Your business model requires a clean environment and especially clean water. What kind of project might be worth a $5,000 per year investment for you?” And then build out a program that meets that need.

But that kind of a program is arguably not worth it for annual amounts less than what? $10,000 a year? Maybe $5,000?

The bottom line is that the solicitation of businesses nearly always seems like a better idea than it turns out to be. We have to work just as hard to secure sponsorships of $100 or $500 as we would soliciting individual donors for $5,000 or $10,000.

Are there other reasons to court the business community?

Probably. Businesses are often more valuable for their endorsements than for their money. But the value of these program lies in the ability of the land trust to use those connections.

For example:

• Secure quotes from business leaders, ask the business owner, CEO, or other senior executive about their community support philosophy. Why is it important to them and their business to make a gift to the land trust? Ask if the CEO would be willing to post a video-taped endorsement on their website.
• Look for opportunities to leverage in-kind gifts. Most land trusts I see that are securing in-kind gifts are getting food items for small events or auction items. But what about items the organization needs that offset budgeted expenses? Like printing, for example. Or tools and equipment, office furniture, bookkeeping services, or travel? Many companies pay their employees to participate in “volunteer days.” Could you use a trails crew on one of your preserves?

The pursuit of the business community is always going to be attractive – because it’s transactional. Asking donors to give without a promise of equal value in return is far more intimidating and difficult. But the potential ROI is also far greater.

Spend your organizational energy on cultivating individual philanthropic support first. And pursue the business community for transactional giving with all the time you have left over.

Cheers, and Have a great week!

-da

PS: Your comments on these posts are welcomed and warmly requested. If you have not posted a comment before, or if you are using a new email address, please know that there may be a delay in seeing your posted comment. That’s my SPAM defense at work. I approve all comments as soon as I am able during the day.

See also: The Trouble with Transactional Giving

Photo by Ted Erski courtesy of Pixabay.