One of the biggest problems nonprofits face is how to diversify their means of financial support. Whether it’s grants or annual campaigns, relying on one or two ways to fundraise can sometimes lead to financial insecurity. Different methods such as corporate giving can balance fundraising strategies and help boost your organization in a big way.
Traditional foundations only have one mechanism for support. But corporations often have more ways to help nonprofits. Many companies have direct corporate-giving programs in addition to a foundation entity. However, grants awarded by companies are not held to the same standards as private foundations, which are required by law to give out five percent of their assets each year.
Annual grant totals are directly related to a company’s current profits. If annual profits are down, companies can be less inclined to give to charities. But on the other hand, foundations can be more restrictive because grantees must match their strategy, goals, and mission statement perfectly. Corporate giving programs are more flexible in this regard.
Corporate giving can come in the form of sponsorship, which is a payment by a business to a nonprofit in support of activities such as programs and special events. Successful sponsorships will be mutually beneficial to sponsors and nonprofits. But depending on how much the corporation will gain from the partnership, they may not be able to deduct their sponsorship as a donation. It’s important that companies agree to what they are sponsoring and in what way. If a company is advertising or linking directly to a place where they are selling a product or services, the agreement is no longer considered a sponsorship.
It’s important to remember that companies don’t just sponsor programs or events out of the goodness of their hearts. They may choose to align with your cause because it boosts the brand’s profile. Or they may be looking for more visibility among a different audience. That’s why event sponsorship is one of the most popular forms of corporate giving.
Cause-related marketing is another partnership in which a company will donate to a nonprofit anytime their product is purchased. One of the most popular examples of this type of sponsorship are donations made for breast cancer research and awareness during the month of October. A portion of the proceeds goes toward the foundation or organization behind the cause. This can be very beneficial for corporations because they can sell more products this way. The phrase first came from the credit card company American Express, which grew it’s membership with cause-related marketing. Toms shoes are an example of one-for-one donations.
These are large-scale examples of donations, but a small-scale example could be a youth softball team that joins forces with a local ice cream shop to raise money. Anytime someone buys ice cream at the shop, a portion of the proceeds goes to the sports team. So the team will likely encourage friends and family to eat at the ice cream shop so that both groups will benefit from increased sales and visibility.
Companies can also help nonprofits through their employees with matching gifts. Whenever an employee makes a charitable contribution, the employer can match it dollar for dollar or even double or triple the contribution amount. Matching-gift programs are also an avenue nonprofits can take if they are turned down for a grant or cause-related program. If a nonprofit knows that the company has a matching program, they can approach them for this reason.
About 21 percent of corporate giving is in a non-cash form, so there’s a good chance that what corporations donate is in the form of products or services. These are in-kind donations, and they can take the form of pro bono services, employee volunteerism and donated space for events and other activities.
For example, a mattress company may donate to a homeless shelter or electronics can be given to a school. These in-kind donations are most helpful when they are products the nonprofit already uses. They can significantly ease fundraising efforts and also look great in proposal budgets. Not only are product donations easier to receive from companies, but they can also serve as a stepping stone for cash funding down the line.
Product donation opportunities can be found at good360.org. Corporate-giving programs can be searched for at the Foundation Directory Online. This information comes from the Foundation Center, which provides webinars and resources for nonprofit fundraising.