In the last 40 years businesses have changed their approach to charity. Before that time charitable giving was a moral cleanser or karma-builder. Companies made their profits and gave a bit away, while high-earning executives might do the same.
More recently corporates have woken up to the strategic benefits of philanthropic partnering. The net result is broadly similar – charities still get money, but now the benefactor keeps one eye on what all this altruism is doing for the bottom line.
In the last ten years, according to Ian Bruce, professor at Cass Business School’s Centre for Charity Effectiveness, strategies for working with charities rank almost as high as marketing campaigns and financial planning. Even for startups, it’s high on the agenda.
This “growing up” of corporate philanthropy represents a big opportunity for both sides of the equation. When it works, charities get an enormous marketing boost, presence in untapped sectors, access to large workforces and, of course, money in the bank.
For businesses, the riches are no less clear. Working with a charity delivers instant goodwill, marketing collateral, a recruitment incentive and a nice morale booster for employees who want to make a difference.
But the maturation of this market means corporates take a more calculated approach to who they work with and why. For charities, this has turned the race to partner with the best businesses into an enormous scrum.
They must compete like the most tenacious capitalists to win contracts with major players of the commercial world. They must continue to do charitable work, naturally, but also invest time and money pitching to businesses for their comradeship.
But too many failed pitches and the average donator on the street will wonder why more money isn’t going towards mosquito nets and soup kitchens, which could result in bad public relations. So it’s important to get it right first time; and here’s how it’s done.
‘ALIGNMENT’ IS MAGIC WORD
“To appeal to a corporate partner, there has to be a good fit between the business and the charity. Primarily this is centred on the cause, but also there should be a fit around distribution networks,” says Professor Bruce.
Essentially this means charities must ask not what corporates can do for them, but what they can do for corporates. Businesses are looking for relevant partners with common ground who understand their proposition and can demonstrate value in a relationship.
Good examples of project overlap include the Woodland Trust’s partnering with IKEA, Docmail and Highland Spring. Each example shares different common ground, but in each case the business can use its association with the charity to pass a message to the consumer.
Charities must ask not what corporates can do for them, but what they can do for corporates
“You have to understand what ‘value’ you offer businesses – is it brand alignment? Is it CSR [corporate social responsibility]? Is it an opportunity to engage and develop their staff? There has to be some level of commerciality in the pitch,” agrees Vikash Shah, visiting professor of entrepreneurship at MIT Sloan School of Management in Massachusetts.
Being proactive is another important factor in the formula for winning corporate partners. These are receiving pitches all the time, so communications must stand out.
“The charity sector is competitive and whatever the worthiness of their respective causes, charities compete for funding, attention and talent,” says Alun James, UK chief executive of Four Communications Group, which works with charities to help them approach commercial partners.
“Those charities that take a proactive approach, while not taking their eye off the day job, and engage businesses and find common platforms are more likely to secure more, and potentially better, partners.
“Understanding, flexibility and measurement are the key traits charities need to adopt when looking for a corporate partner. Understanding a business’s objectives and audiences enables the charity to develop a tailored response.”
BE A GOOD BET
Businesses are attracted to good bets. They apportion money and effort to operations which will in all likelihood make the best returns. They also mitigate risks zealously and try to create arbitrage – the elimination of risk – wherever possible.
Charities should be aware of these two guiding principles and provide evidence to bolster investment appetite on the one hand and assuage doubts on the other. Chief executives want to know they are delivering a good deal with no skeletons in cupboards waiting to jump out.
John Bird, general manager, peer-to-peer, at fundraising software business Blackbaud Europe, says charities need to show they are better than others. “Compare the ROI [return on investment] on other ways they could spend that money to build their brand or help their staff,” he says.
Meanwhile, Simon Atkins charities specialist and partner at accountancy firm Clement Keys, says the standard of reporting is also key. “To encourage interest from corporate partners and investors charities must be transparent and open about how they report to their stakeholders,” he says.
“This can be achieved by publishing a trustees’ report as part of the organisation’s annual financial statements. The document should ideally contain information about the positive social impact that the organisation has had over the past year and it is usually hosted publically on its website. The information allows potential corporate sponsors to anticipate the impact that their donations will have and provides reassurance the money they invest will be effectively used to contribute to the charity’s social objectives.”