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The Business of Corporate Giving
L. Scott Schultz, President
March 17, 2006

The Status of Corporate Giving
Corporate giving has changed and is changing…

In my thirty plus years in this business, I have seen what I believe to be three phases of corporate giving: altruism, self-interest and strategic philanthropy.

First, let’s put corporate giving into perspective.

Current status of corporate giving:
In 2004, approximately $248.52 billion was raised in this country.

• $181 billion, or 75.6%, was raised from living individuals;
• Another $19.8 billion, or 8%, came from bequests;
• Foundations gave another $28.8 billion, or 11.6%; and
• Corporations accounted for $12 billion, or 4.8%.

[Due to giving in response to the Tsunami, Katrina and earthquakes in the Middle East, corporate giving in 2005 should easily exceed these levels]

One-third to one-half of corporate giving reflected above is in the form of in-kind donations.

Corporate giving is significant, but not relative to other forms of fundraising. Nevertheless, we see many nonprofit organizations; especially smaller nonprofits, arts/culture and social services spend an inordinate amount of time on this sector.

Altruism (Corporate Social Responsibility)
Corporate giving used to be about “philanthropy;” giving was primarily altruistic.

Corporations were expected to support diverse community needs in the areas in which they did business. Corporate executives were sought after for board positions because they would bring, and could generate, significant contributed support.

In Philadelphia, companies such as Scott Paper, SmithKline, ARCO Chemical, Rohm and Haas, the banks, financial services and insurance companies led the way in giving to support the arts, United Way, education and healthcare.

The term “corporate social responsibility” was used to describe the corporate commitment to nonprofit causes.

Self interest
Over the years, this situation changed dramatically. M&As, corporate scandals, shareholder scrutiny and declining profit situations, changed the way corporations did business with the nonprofit sector. Corporations began seeking direct benefits – i.e. sales, shareholder value – or used their giving to supplement corporate marketing and branding strategies. And this made sense. The marketplace had made it clear that they prefer to do business with companies that support nonprofits:

• 72% of employed Americans say they prefer to work for a company that supports charitable causes;
• 92% of Americans think it is important for companies to make charitable contributions or donate products and/or services to nonprofit causes;
• 87% of Americans believe that workplace volunteer opportunities contribute to the well being of their communities; and
• 61% believe that corporate community involvement helps to communicate a company’s values.

Corporate donations have been replaced, in large part, by sponsorships – motivated by a completely different set of rules and expectations. Sponsorships were, and are, designed to improve a company’s bottom-line. Corporate giving, through marketing and promotion, now greatly exceeds direct, philanthropic support.

Strategic Philanthropy (The Corporate Citizenship Industry)
Corporate giving is swinging back toward philanthropy, but not to what it was.

Today, corporate giving is evolving into “strategic philanthropy” whereby many corporations are supporting targeted nonprofit organizations that reflect their own mission and the markets they serve. They are concentrating on focus and results.

Organizations such as The Committee to Encourage Corporate Philanthropy – chaired by Sandy Weill (Citigroup), Co-founded by Ken Derr, (Chevron) and Paul Newman – reflect the emerging (and enduring) balance between philanthropic and bottom-line goals.

All donors – corporate, foundation and individual – have become “investors.”

How to Generate Corporate Support in Today’s Climate for Giving
Corporate giving has changed; but it is far from dead. Fundraisers need to adopt a different mindset and approach.

• Understand the difference between sponsorship and philanthropy.
• Do your research; what are the prospects’ marketing goals?
• Make a clear determination of the type of funding you are seeking.
• Conduct an inventory of your assets and determine exposure potential – create value for your sponsorship partner – explore all of your selling points.
• Be creative – provide extraordinary recognition opportunities:
  • Signage;
  • Product demonstrations;
  • Advertising;
  • Editorial coverage; and
  • Exclusive access to donors.
• Consider sponsor exclusivity, include in determination of value, make them pay.
• Focus on the sponsor’s interests rather than your needs.
• Identify a connection – board, staff, vendors – to gain access to prospect.

Look for other ways to raise money and build relationships, such as:

• Cause marketing;
• In-kind support; and
• Volunteer involvement.

Develop opportunities to build awareness for the cause; your case for support.

Use corporate sponsorship to gain access to and engage business executives.

Use business volunteers to cultivate and solicit their “peers.”

Schultz & Williams is a national consulting firm based in Philadelphia providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.