Corporate giving: The new laws of supply and demand

Question:

Given that corporations increasingly are integrating their philanthropy into their businesses, how should nonprofits approach corporations for grants and donations?

Answer:

First of all, nonprofits need to understand what is going on in the corporate world.

It’s important to know how company prospects are doing financially, where they operate and what social challenges they face.

In my company, we work with corporations to identify and measure the business and social impact of their giving.  As a consequence, companies are much more outcomes-driven, and focused on results.

This helps companies make better decisions about how to allocate their resources, and demonstrate value internally.  This also helps nonprofits to know exactly what a company expects from its philanthropy.

* Understand a corporation’s desired impact or outcome

It used to be that money was the most valuable commodity in the “social capital marketplace.” Donors were “suppliers” of cash, and nonprofits were “demanders” of funds.

But there are now over a million charities, and an average of 1,100 nonprofits for every type of problem (for example, there are over 700 different nonprofits focused on breast cancer research alone).

As a result, impact is now more of a commodity than cash.  And so the laws of supply and demand have changed – donors now demand impact, and nonprofits supply results.

Knowing this, nonprofits need to recognize that philanthropy now is an investment, and corporate donors are looking for the best return.

* Know what your nonprofit has to offer

In order to sell your organization’s impact, you must be able to identify the social or business outcomes that your organization can deliver, such as improving visibility of an issue, influencing policy, changing attitudes or engaging volunteers.

This requires a change in thinking about your organization’s work – translating your program activities into saleable outcomes.

Most nonprofits define themselves by the work they do, like working with the disabled, the homeless or underserved youth; operating a museum; or encouraging recycling.

But today’s corporations do not want to invest in activities.  They want to purchase results, or outcomes.

For example, a corporate funder may wish to improve local high school graduation rates, which in turn will benefit the corporation with a better trained workforce.

Nonprofits seeking support should develop a more precise, targeted approach, focusing on their ability to contribute to increasing graduation rates.

* Measure impact and report results

Finally, your organization’s ability to deliver actual results is paramount.  Nonprofits must be able to quantify and measure their outcomes so they can clearly demonstrate value they are returning to their donors. Remember that corporate donors are being evaluated internally on their ability to deliver results too, and they must rely on their nonprofit partners to help them succeed.

Ask your funders what data they need and put in place a process to track and report your results.

–Compiled by Angela Strader


Jason Saul is the founder and managing director of Mission Measurement, a performance measurement consultancy based in Chicago.

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