Saturday, September 6, 2008

The Inconvenient Truth of Corporate Fundraising

Have you ever questioned the corporate/community ‘love-in’ line that we are often fed by a variety of media, fundraising commentators and corporate enterprises themselves? Corporate philanthropy, triple bottom line, corporate social responsibility – call it what you will, I know I do – is not what many crank it up to be.

In 1966, before most of the buzz-phrases you and I know and love existed, companies in the USA gave a whopping 0.9 per cent of their profit away to good causes. This is according to Giving USA. Generous, huh?

Forty years on, and of course the percentage must be much higher now, right? I mean, what with the monumental shift in public attitudes towards corporate responsibility and ethics and all that – things have just got to have changed out of all recognition, haven’t they?

Ok, then, take a shot. Just how much more of their profit do you think US companies give away now? Don’t cheat by taking a peek at the end of the article. Instead, write down the figure you reckon and see just how close you get.

Exciting game, isn’t it? I think so. You see, corporate philanthropy is one of my favourite subjects. Corporate fundraising is so darn cool – it adds kudos, awareness, involvement and, of course, money to charity coffers. It’s a win-win ‘love-fest’ for all involved – where no one goes home empty-handed.

Or is it?

Well, actually, to some extent the answer is yes, there are loads of great examples. Looking at Australian charities, I checked out a few websites of those I know do well from corporates. NRMA Careflight do well (a roadside assistance/insurance company associating with a rescue helicopter charity), Westpac (a bank) give a nice slice of cash to Mission Australia (a welfare charity) and Canteen (young people living with cancer) do alright out of Toyota, Qantas and others.

And according to a Giving Australia report, companies said they gave AUS$ 2.2 billion in money in 2003/04 and a further AUS$ 1.1 billion in goods and services. Isn’t that wonderful?

Well – I’m not so sure it is. In fact, before you rush off to embrace your nearest corporate CEO, ask yourself this: if corporations are so generous, then where’s the bloody cash? One thing’s for sure, if you take the time to look at the annual reports of the top 20 charities, you won’t find much evidence of large amounts of money being given away by commercial organisations.

My cautionary words about corporate fundraising are not unique. Back in the early 1990s a guy called Stephen Lee had a few things to say about the topic. At the time he was the boss at the Institute of Charity Fundraising Managers, the then name of the UK’s Institute of Fundraising, the British equivalent of North America’s AFP, the Association of Fundraising Professionals. Now he is a very clever academic fundraising guru working at Henley Business School in the UK.

Anyway, Stephen told a story about the UK’s ‘One Per Cent’ club, a club supposedly made up of commercial organisations who give away one per cent of profit. It was a hilarious story, because the club members didn’t actually meet a key part of the membership criteria – giving one per cent of profit away! He stood up and called for charities to refuse corporate donations until companies stopped taking the mickey out of the whole corporate/community partnership business.

His point was that, in the deal between commercial companies and charities, the companies were the winners. Charities rarely knew how to fight for a good deal and ended up being nothing but a big pair of rose-tinted specs for the company. Charities jump through hoops to get a corporate deal and then get paraded like an unfaithful footballer’s pretty wife. Yes they get some jewels – but at what cost?

My point is not quite the same. I want to be more pragmatic. There is money out there – and it can be a lot, but charities need to be much more realistic about their expectations of corporate fundraising.

Let’s look at the facts. Nearly all donated corporate money comes from very few companies and goes to very few charities – most of which are well-known brands – UNICEF, WWF for example – or well-established hospitals, universities, etc.

Now look at the big, growing charities – they are growing from regular giving or government grants, not from corporate donations.

Before pursuing corporate fundraising as a provider of growth in your fundraising strategy you really need to answer these questions. Is corporate fundraising a good use of your limited resources? Can you realistically compete with the big brands, NSPCC, UNICEF, Careflight, Cancer Council and Mission Australia? Is your brand something that will help corporates sell more of whatever it is they exist to sell? Is it even your job to know the answer to that last question and, if so, why would you be any better at it than them?

One Australian company, Cavill and Co has been working with charities and corporates for many years, trying to marry up relationships. In their vision and values statement they hit the nail on the head, ‘... not for profits [need] to adopt an attitude of abundance and forge equitable partnerships with corporations ...’ Of course, my favourite word there is equitable.
The sponsors really do treat the charity’s staff, and therefore the charity, with very little respect. They expect the whole deal to be about how grateful the charity should be, not about an equal partnership.

Let me tell you a true story about a friend of mine who works for a charity that gets a lot of money from companies. My friend doesn’t want to be named so we’ll call him Erik. Erik was really excited about being appointed to a new job with this charity, and especially about the blue chip companies that were plastered all over the charity’s events material, and in the annual report.

But Erik has had a nightmare. The sponsors really do treat the charity’s staff, and therefore the charity, with very little respect. They expect the whole deal to be about how grateful the charity should be, not about an equal partnership. The companies rarely respect their end of the deal – nor acknowledge the benefits the charity brings to their public image.

Erik grew more and more disillusioned, and one day decided to do a simple bit of maths, income divided by staff time. And that’s when the penny dropped. The figures were clear. Despite basking in glory, his corporate fundraising staff were bringing in much less revenue than their contemporaries in other areas of fundraising in other charities Erik had worked with; areas such as major gifts, bequests and direct marketing.

At some of my recent masterclasses in Canada I asked the attending charities to send me their income by fundraising area divided by staff time per area. Suffice to say, from those who completed the homework, corporate fundraising came out pretty darned badly.

Doing it properlyI am not all doom and gloom. My company, Pareto Fundraising, is frequently engaged by charities to work on their corporate fundraising programmes. So does this mean I am a hypocrite? No, I am not saying reject corporate fundraising out of hand – merely challenging you to measure it properly, look at the returns, and accept the fact that for most charities it is flogging a dead horse.

And if you do go the corporate route, do it properly. If you hire a dedicated member of staff, ensure that whoever it is can ‘close the deal.’ Give him or her tight, fast targets and drop ‘em like hot rocks if results are not coming through. You will know in three months.

Don’t be fobbed off with ‘I’m doing research’, or ‘I’m working on our case for support’. Corporate fundraisers need to be out of the office – at the companies’ offices – more than in the charity’s. Ensure that you have indices that prove sales in the making, and hold them to tough sales targets within 12 months.

Your corporate fundraising programme needs to be strict from the start – you need to understand the value of your own brand, understand why they are supporting you, don’t accept partnerships unless standards are met, create a new internal code of practice and most importantly, don’t devote more energy and resources to this area than income from it deserves.

So, let’s finish with a comment about corporate philanthropy in the country for which we have the most data, the USA. And please don’t think, ‘Ah, but it is different here’. It isn’t.

The most generous country in the world, and home to some of the most successful and largest companies in the world, the USA is the nation that invented the ‘triple bottom line’ and to some extent ‘corporate social responsibility’.

What was your guess for how much US companies gave – as a percentage of profit – in 2006?
Forty years of change and the percentage of profit US corporates give has gone up from 0.9 per cent in 1966 to 0.7 per cent in 2006. Oops, did I say up?

Pareto Fundraising can help you with your fundraising strategy. Although our offices are in Hong Kong, Toronto, Brisbane, Sydney, Melbourne and Wanaka we deliver strategic advice and consulting worldwide.

To see if we can help you, please email

This information also appeared in F&P magazine and is also on SOFII - The Showcase of Fundraising Innovationand Inspiration.

No comments:

Disaster Fundraising Guide download it here