We recently shared key findings from the JBWere Corporate Support Report. This week we delve deeper into the recommended considerations for a healthy nonprofit-corporate relationship.
A recent report from JBWere showed that corporate community investment is a thriving, but misunderstood and underutilised opportunity.
In our previous summary of the report’s key highlights, we shared that corporate support is worth around $5 billion per year. As businesses become increasingly aware of expectation from employees and customers for a positive demonstration of impact on community and environment, the opportunity for nonprofits to benefit grows. But NFPs must clearly understand the ‘shape’ of individual corporates to create successful partnerships.
In this article, we share how truly ‘understanding’ what is at stake in these partnerships can create mutually beneficial outcomes for corporates, nonprofits and, ultimately, the world around us.
Considerations for corporate community investment initiatives
When considering community initiatives, corporates needs to analyse a number of factors. These include what their motivation is for community investment, what its success will look like, how to integrate it with business operations, what nonprofit partners to engage and how to structure giving.
Many businesses are in the fortunate position of having the public’s trust and as trust in government stalls, people are looking to businesses and NGOs to address critical social and environmental issues.
Corporate giving works for the community and for nonprofits, but it must also work for the corporate. If done right, it does. A review of various studies by Alex Edmans at Grow the Pie found that a survey of the ‘100 Best Companies to Work for in America’ (corporate social responsibility was a factor) had a share price that beat their peers by 2.3% to 3.8% per annum over a 28-year period.
Corporates need to consider how to best structure their community engagement. In a nutshell, ownership of corporate giving at the top and middle management levels (which leads to organisation-wide buy-in) is more effective than ‘bolting it on’ to public or human relations.
Then comes the cause, with corporates achieving greater impact by focusing on a handful of major issues rather than spreading themselves thinly.
A further consideration is whether a separate legal structure or charitable foundation is desired. If so, will that entity be funded by an annual donation from the corporate, by a larger one-off donation, or a combination of the two?
In the US, data suggests giving from corporate foundations is around one third of total corporate community investment and Chief Executives for Corporate Purpose (CECP) found 79% of (surveyed) companies have a corporate foundation as part of their corporate giving program. JBWere estimates the number to be considerably lower in Australia, reflective of the more established concept of charitable foundations and structured giving in the US.
Pros and cons of a stand-alone foundation include demonstration of greater commitment to giving (pro), extra compliance (con), the growth of a corpus (pro), a loss of flexibility due to the investment policy linked to the corpus (con).
Regardless of how corporate giving is structured, there is widespread agreement that 1% of pre-tax profit is a legitimate goal for many corporates. This goal sits slightly above current global and Australian corporate giving averages.
What should corporates measure?
Recently, measurement efforts have progressed with the emergence of detailed environmental, social and governance (ESG) metrics and the growing acceptance of the UN’s Sustainable Development Goals (SDGs) as a common cause area or matrix framework.
Recent analysis by Jarrod Miles in the 2021 Giving Large report found 88% of larger companies analysed had adopted standards from either the Global Reporting Initiative (GRI) or B4SI, with 32% of those companies using both standards.
Currently, there are no universal parameters for measuring the financial value of corporate giving. For example, corporates may include matched donations or purchases related to giving, but exclude gifts facilitated by the company, such as workplace giving and customer donations. Some consistency would help corporates, nonprofits and the community to understand impact and draw comparisons between companies.
Other important areas to measure, depending on the nature of company activities, include staff engagement, customer recognition and reaction, and even market performance around significant announcements. Impact is the ultimate measure and, in most cases, might be better assessed by for-purpose partners with assessment costs funded by the corporate.
Partners and skill gaps
When businesses think about community investment, they should consider which nonprofits can add value, build connections, help guide the initiative and extend reach. For example, if a transport and distribution company’s stakeholder analysis suggested providing meals as their targeted activity, then for-purpose organisations with knowledge of local need and expertise in areas such as food rescue and health would be a great match.
Looking in the other direction, companies can offer a vast range of benefits to nonprofits. And larger companies may be able to bring other organisations and even governments together for impact in a way that many nonprofits would struggle to achieve.
The decision to provide volunteering opportunities for employees
It’s increasingly common for corporates to offer volunteering time to their staff but these initiatives do not always reach their potential. More creative thinking around the type of volunteering offered, rather than just accepting the hours available, can produce extraordinary results for nonprofits.
The decision to provide a workplace giving program
There has been a gradual increase in the number of Australian employees joining workplace giving (WPG) programs in the past decade, with that number now exceeding 200,000. Total donations have grown to $52 million annually and, in many cases, employee gifts are matched by the employer. That said, the participation rate at workplaces offering the scheme remains low at around 5%. This is a huge opportunity for nonprofits.
Over in the US, 92% of companies surveyed by CECP provided WPG programs and 24% of employees participated. Successful programs don’t just get the mechanics right, they are actively promoted to the workforce, with senior management taking an active lead, and use company matching of donations to increase engagement and impact.
“The more successful workplace giving programs involve not just having WPG mechanics in place but also promotion among the workforce and a lead from senior management along with company matching of donations.”
A further option for corporates to consider is supporting ShareGift Australia. Following the UK model, ShareGift’s purpose is to make it easy and cost effective for shareholders to grow philanthropy in Australia through the donation of shares and related proceeds to charity. It has donated $3.65 million to community to date.
What is beyond cash, goods and services?
The Pledge 1% movement is one example of companies embedding community investment into their structures and has been widely adopted by start-ups and the tech sector. Launched in 2014 by Salesforce Foundation, Atlassian and Entrepreneurs Foundation of Colorado, there are now over 10,000 companies from 100 countries, including more than 100 from Australia, signed up to pledge 1% of equity, time, product and profit to community.
Some companies are are making even bigger commitments to corporate philanthropy. The co-founders of Australian-founded graphic design giant, Canva, recently announced their intention to donate the majority of their 30% private holdings to the Canva Foundation.
Corporates are also in the position to lend advocacy support around social issues. Climate action is currently the most widespread example of this with a 2021 report by the Energy and Climate Intelligence Unit and Oxford Net Zero, claiming 21% of the world’s 2000 largest public companies have net zero commitments.
Considerations for community and the for-purpose sector
Why engage with the corporate sector?
In short, it is large and brings assets, skills and influence most for-purpose organisations lack. It is also growing at a faster rate than most other forms of giving in Australia.
Another important factor is the potential for longer term partnerships (compared to other giving relationships). While private foundations do offer multi-year funding, often over three to five years, many corporate relationships run for much longer. For example, Bakers Delight have partnered with Breast Cancer Network Australia for 20 years.
What should nonprofits seek from a corporate relationship?
The report encourages nonprofits to look beyond cash donations, suggesting there is far more you can negotiate to lift both the value and longevity of a corporate relationship.
Questions nonprofits should consider include:
- Does the potential support of a corporate’s employee or customer base help our broader fundraising support or the cause we are engaged with?
- Does the potential for the corporate to be influenced in their own operations by our knowledge of the cause enhance the overall impact achieved? For example, in relation to areas such as gender balance, lending or insurance restrictions for certain beneficiary groups or emission levels.
- Might their advocacy help sway minds and change regulations or other industry participants’ actions?
How to approach the potential partnership
Research is the key, suggests the report. Sparking a corporate relationship depends on knowing a business well and effectively communicating why it would be a good idea for them to partner with you.
Understanding the size, operations and motivations of a corporate – and what expertise you bring to the table to complement this structure – is key to getting corporate support across the line. Click here to read more about the ‘shape’ of corporates and how to find the right fit for your nonprofit.
Can our nonprofit can manage this corporate relationship?
Corporate partnerships are generally more demanding on nonprofit resources than other types of fundraising or relationships. Some nonprofits consider major gift and corporate fundraising to be the same, but they require distinct skill sets. Reporting, promotion and volunteer offerings need to be considered from a resourcing perspective. Bending to corporate requirements should not result in ‘mission drift’ for your organisation.
Consider return on investment, factoring in time and the shift of focus from other projects as well as hard costs. Benefits should exceed effort when it comes to a corporate relationship (just as you would expect to make more from an appeal than you spent on it). Ask if you can also estimate the return for the corporate – what are they getting from the relationship and are the benefits balanced between the two parties?
What concerns should nonprofits have?
Finally, it is important to consider risks and pitfalls, because not every corporate relationship will align with your values and ethics. Consider the reaction and perception of beneficiaries, staff and other donors and funders if you were to bring a corporate partner on board.
Remember that your reputation is one of the factors that will attract corporates in the first place, so you want to maintain it. It is critical that the corporates you partner with do not have any operational activities that are harmful to the very people or causes you are trying to help.
So, there you have it – food for thought on both the corporate and nonprofit side of forming a partnership. These relationships can deliver incredible value and impact but getting to that point depends on choosing the right partnerships and giving careful thought to getting the most out of them.
To read part one of our Corporate Support Report summary, click here.
To view the full Corporate Support Report, click here.