December 11, 2017

For some nonprofits, corporate contributions are the saving grace that powers their operations.

Small nonprofits may receive a check from a local business that helps them get off the ground, or plan a major event. Large nonprofits often attract large corporate donations and sponsorships that sustain their programming year after year – in 2016, 68% of Feeding America’s cash budget came from corporate contributions and promotions.

Corporate contributions have a number of benefits over foundation funding: reporting requirements for corporate contributions are often less onerous than foundation reports, and can lessen the administrative load for nonprofit staff; and corporations may provide a source of unrestricted funds, which may be difficult to obtain from foundation sources.

While many nonprofits embrace corporate contributions as a business’s responsibility to the public, some fundraising professionals and board members may feel a sense of apprehension about accepting corporate donations, particularly when the corporation may have negative associations in their field of work. Should a health and wellness organization accept donations from a food and beverage company that has contributed to the obesity health crisis? Should an environmental conservation group refuse to accept donations from companies known to dodge emissions regulations? Are organizations morally obligated one way or the other – to either accept these donations as an earnest effort to improve relations and well-being within the community, or to reject these donations as a conflict of interest?

While there is no right-or-wrong standard for accepting corporate contributions, this post will address some common apprehensions and provide a number of perspectives on the issue.

Corporate Social Responsibility

In the 1960s when the idea of “corporate social responsibility” was first widely popularized, William Frederick, a professor of business and society, defined corporate social responsibility as a willingness to use economic and human resources not just for the narrow interests of private firms and persons, but more broadly for enhancing total social-economic welfare. Now in 2017, most large corporations have corporate social responsibility (CSR) departments, and produce yearly reports on their efforts. Businesses often attempt to enhance social welfare not just through internal operations (i.e., promoting diversity through hiring practices, creating more sustainable operations, etc.), but by supporting nonprofits primarily in the communities where they operate.

Other perspectives on corporation’s social responsibilities have been more prescriptive: H. Gordon Fitch argued that the role of CSR should not broadly be to solve benefit social welfare, but the “serious attempt to solve social problems caused wholly or in part by the corporation.” Based on this understanding, companies’ giving should reflect the social challenges created (intentionally or unintentionally) by their operations.

While many corporations fund areas related to their work, few select funding areas that acknowledge the potential social problems created by their corporate strategy. For example, Coca Cola will fund “active healthy living” programs, but has backed away from funding healthy diet- or obesity-related initiatives in recent years. Instead, many corporations have opted for “strategic philanthropy” that improve their competitive context – such as Cargill’s programs that fund research to improve agricultural productivity and nutrition.

Regardless of the company’s motives for creating a philanthropic fund, many nonprofit and fundraising professionals consider corporate giving a win-win situation. Nonprofits and their beneficiaries benefit from the funds provided, creating an increase in social good, while corporations benefit from the goodwill and name-recognition that typically goes along with donations to charitable causes. Though rarely does anyone consider corporate contributions to be purely philanthropic, few are bothered by the idea of mutual benefit for nonprofits and corporations.

On the other side, some nonprofits (including policy or law-based organizations) reject corporate contributions in an attempt to remain completely independent from corporate influence. More radically, others believe that corporate donations reduce public pressure on a company to improve potentially harmful practices, or that corporate giving policies are a band-aid solution that ends up creating more inequality – rather than an increase in social good – by avoiding real changes within corporations that would distribute wealth among workers more equitably. But with companies experiencing ever-increasing pressure from stakeholders to drive up profits, changes to corporate structures that don’t benefit the bottom line can seem a distant reality.

Establishing Your Nonprofits’ Stance

Whatever your philosophy about corporate giving, establishing a corporate contributions policy with your board is widely considered a best practice, and can prevent any potential problems down the road. Below are a couple questions we recommend discussing with your board, as a starting point for developing this policy:

Are there any types of corporations we are not willing to accept contributions from?

Some nonprofits choose not to accept or solicit donations from companies that contradict or negatively impact their work or mission. For example, the Environmental Defense Fund’s corporate donation policy prohibits them from accepting contributions from companies involved in: automobiles, chemicals, electric utilities, forestry, fishing, mining, nuclear power, oil/gas, pulp/paper, tobacco, waste management or weapons. Other organizations may be more liberal – accepting contributions from all, or only restricting donations from one or two categories. Some organizations place independence above all, and accept none. The extent to which your nonprofit restricts its corporate contributions will likely depend on your area of work – the Environmental Defense fund is more subject to potential attempts to influence its initiatives and policy work than an organization providing basic needs, and will be subject to greater scrutiny of its independence. In the end, a good guideline is: if you’re not comfortable with the company’s name on your website, t-shirts, or policy products, they are probably not a good partner for your organization. Speaking of…

What are we willing to provide corporations with in terms of name recognition and volunteer opportunities?

Corporations will often request a description of how their contribution will be recognized. Common methods include posting the corporation’s name and logo on your organization’s website, providing a shout-out on social media or in a monthly newsletter, or publically recognizing the contribution at an event. These requirements for recognition will likely be written into your grant agreement with the corporation, so be sure to read these carefully – and don’t be afraid to push back on any requirements that may not align with your abilities or wishes. And if you do accept the contribution – here are a couple ways to say “thanks!”

Additionally, corporations are often looking for volunteer opportunities (and photo opportunities!) for employees. If your company regularly scheduled group volunteer opportunities, this could be a benefit; however, if volunteers aren’t a primary part of your work, arranging a volunteer day could potentially be taxing for your staff.

What type of corporate contributions are we able to accept?

While cash donations are most common, some corporate contributions – namely donations of land, vehicles, or other property – can have tax and legal implications that smaller nonprofits may find difficult to navigate. Other in-kind donations may not make sense for your organization, if you don’t have the space to store, resources to maintain, or a practical need for the donation. While turning down a gift may seem like a faux pas when working to build a corporate relationship, kindly declining or suggesting an equivalent cash donation will be better in the long run than dealing with, say, a room full of outdated computers.

Conclusion

At the end of the day, whether you choose to accept corporate contributions – and if so, what kind – is between you and your board of directors. While the need to meet budget expectations is a constant source of pressure, organizations should carefully weigh both the risks and real benefits of aligning themselves with corporate sponsors.

For best practices for accepting both corporate and foundation giving, check out our post on developing a gift policy.

About the Author:

Dayna Gallagher