Corporations have three “doors”

How are things going for you this year in raising money from the private sector?

Many nonprofits find that the effort they put in to connecting with companies doesn’t seem to generate the sustainable, longer-term dollars that they hoped for. Some nonprofit development directors don’t even consider corporate funding to be realistically within reach, so they give it very little effort. Done well, however, the strategy of corporate fundraising represents a significant untapped potential for you.

Here’s a fundamental model we’ve used for years, but well worth repeating. The concept is that for-profit entities, regardless of size or industry, have three “doors.” Notice which “door” you are using—or should be using—and whether your approach is really garnering the success you seek.

DOOR #1: The first door is called membership. This is a very small door around the side of the building where the corporation sets aside a small amount of money to join chambers of commerce, trade associations, and civic groups such as the Lions and Rotary. This kind of check-writing may be sort of obligatory, perfunctory, a cost of doing business in a community. Such contributions are generally in the $300-500 range. If you have a membership program or can develop a corporate category within an overall donor program, this is one way to get on the corporate radar screen, albeit in a small way.

In a broader sense, this door is also the one you’re using if you ask a corporation to purchase tickets or a table, buy an ad, donate food, etc. in a “one-off” approach. The drawbacks to approaching a corporation through this door are many, of course, because it is transactional, small, not strategic, and not really a sustainable relationship.

Whatever you gain by using this door probably has to be negotiated over and over, so there is always a risk of being cut because the decision usually rests with one individual at the firm. It can be difficult to transition your nonprofit into a larger, more lasting connection with an organization once this is the nickel-and-dime sort of role you’ve represented.

Because the dollars involved are small, the corporation approached through this door may not be terribly concerned with your mission story or impact, and using this door may never give you a real chance to share it.

DOOR #2: The second door, not the easiest to spot, is the philanthropic entrance. A generation or more ago, this was the traditional door used by the majority of nonprofit organizations, although corporate philanthropy decreased significantly in the recession (some would argue that it was virtually dead, anyway) and may never recover.

Corporate grants are usually in the $1,000-$10,000 range and are given on a year-to-year basis. The corporate giving staff person, if there is one, is housed in the public relations department (a tip-off to the next level of funding) and their goal is to spread very limited philanthropic dollars over a large number of organizations.

Corporations like their employees to be involved in the giving process, and so you know that a corporate person on your board or a committee can be instrumental in securing continued or long-term funding for your group.

If the corporation you’re targeting does not have a presence in your community, the chances of receiving support are minimal.

However, even though companies in your community are always your best bet, be on the lookout for corporations that will be moving to your area or that are planning to buy out an existing company. They want some quick visibility, so this could be an excellent opportunity to get your organization’s message across before they arrive and you’re facing competition with many other groups.

The health care and banking industries are prime examples of a rapidly changing business climate where companies are attempting to build a corporate identity and community acceptance as quickly as possible.

DOOR #3: The third door, right at the front of the building, is the marketing entrance. Corporations spend billions of dollars every year to market their goods and services, so your goal is to figure out how the company’s involvement with you will tangibly benefit them (we all know what you stand to gain). If your nonprofit can assist the company in enhancing its image, reaching potential customers, or reinforcing existing customer relationships, they will want to work with you. Meanwhile, corporations like to tax shelter some of their marketing dollars through nonprofit connections.

Today and for the future, the majority of corporate dollars going to nonprofit groups comes from marketing rather than philanthropic budgets. In cause-related marketing, the relationship moves from “grantor-grantee” to one in which projects are set up to benefit both the company and the nonprofit. Bill Shore, director of Share our Strength and author of Revolution of the Heart, was a pioneer of this technique back in the 1980s with Charge Against Hunger, a partnership with American Express. Now, of course, we see it everywhere.

What are companies looking to gain from cause-related marketing? Usually, most companies are hoping that they will be seen as:

. . . a friendly and caring corporate citizen responding to critical community needs (corporations are traditionally involved in basic services like food banks, homeless shelters, and obvious community programs for high-risk youth or K-12 education);

. . . a savvy and sensitive entity poised to communicate with and serve a particular demographic, i.e., Spanish-preferred households or urban Millennials or older adults;

. . . a protector of the environment — “save the rain forest” or otherwise “green” products are everywhere on retail shelves, although the actual benefit or impact may be unclear, and at this point what makes a product green can be difficult for the consumer to define or quantify;

. . . a champion of workers, grassroots commerce, and/or social justice — the fair-trade movement is very positive, although it also gets used as a marketing label when the actual connection may be oblique or tiny in the context of a corporation’s overall procurement or sourcing model;

. . . a company that treats its employees well and encourages wellness in the broadest sense, including healthy eating and fitness initiatives.

Remember that which “door” you’re knocking on is key to your success in raising money in the business world. And, although it may seem contrary to the very reason many of us work in the nonprofit sector to begin with, you must think like a corporate sales or marketing person, with the firm’s self-interest and bottom line profits in mind.

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