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What Business Wants

This article originally appeared in The Chronicle of Philanthropy.

Companies want to be seen as doing good for their community and the world. Charities can help — and benefit.

By Megan O’Neil

Keefe Harrison aspired to a life as a field biologist. In her late teens and 20s, she tagged sea turtles in Costa Rica, studied reindeer husbandry in Finland, and lamented to college professors about environmental degradation and global warming.

So two decades later, when the nonprofit leader found herself flanked by lobbyists for Coca-Cola and Procter & Gamble, navigating Congress to discuss budget items with Appropriations Committee members, it gave her pause.

But only briefly.

“I would tell my 19-year-old self that we need to think about what we have available to make change with. And corporations are one of our biggest actors when it comes to being able to support, drive, insist on change, especially in this current political environment,” says Harrison, chief executive of the Recycling Partnership. “We’re not getting this from our federal leadership.”

From 2013 to 2017, Harrison says, the nonprofit — which is less than five years old and works to improve residential recycling — raised $10 million from corporate donors. Midway through this year, Harrison and her colleagues had already doubled the group’s annual revenue, thanks largely to corporate funding. And in late July, the nonprofit announced it had received a new $10 million pledge over five years from the PepsiCo Foundation. More than 85 percent of the nonprofit’s total support comes from companies.

Attracting corporate dollars to the Recycling Project has everything to do with helping companies hit sustainability goals through the recycling of bottles, cans, and other packaging that otherwise ends up on streets and in waterways in what some call “branded trash.”

“Companies really want to show that they are leaders in the space in stepping up to do what they believe is right in recovering those bottles and cans,” Harrison says.

The Recycling Partnership’s strategy —offering solutions to a major business problem — is emblematic of how nonprofits should approach their corporate fundraising, say nonprofit leaders and corporate donors.

Companies are seeking a broader array of partnerships with nonprofits than ever before in areas like education and work-force development, diversity and inclusion, and environmental sustainability. These kinds of corporate objectives present new opportunities for nonprofits — if they can come to the table with ways to add value to companies’ strategies in key areas.

“To the extent that nonprofits understand what those strategies are, understand what those pressures are, and come armed to companies with ideas for how they can help those companies while helping themselves, then you’ve got a win-win situation,” says Timothy McClimon, president of the American Express Foundation.

Giving Enough?

Corporate donations remain a small slice of all charitable giving. Companies gave just 5 percent of the $410 billion in total giving in the United States in 2017, according to the annual “Giving USA” report.

It shows that total giving climbed by about 8 percent to $19.9 billion in 2017, up from $18.4 billion in 2016. Cash giving by the companies totaled $4.5 billion in 2017, up from $4.3 billion in 2016. The top recipients were community causes, K-12 groups, and higher education. Those were followed by the arts and the environment, which displaced health and children as the fourth and fifth causes for corporate giving.

The Chronicle recently surveyed the 300 largest U.S. companies on the Fortune 500. Of those, 69 provided giving data for 2017, and 63 of those companies provided data for both 2016 and 2017. All comparison figures in this story are for the 63 companies that provided two years of data. The median share of companies’ pre-tax profits donated in 2017 was about 1 percent, according to the Chronicle analysis.

That’s not enough, some contend. Curt Weeden, a corporate-philanthropy expert at Georgetown University, notes that donations from individuals hover around 2 percent of disposable income. And the tax law allows companies to set aside 10 percent of pre-tax income for charitable giving.

CEOs should be saying to themselves, “Well, hell, we can at least do 2 percent. And as long as it is strategically planned and administered, so it’s in the parameters of what we do as a company, then we should be doing it,” says Weeden, who previously oversaw corporate giving at Johnson and Johnson.

Still, even as some debate whether companies give enough, those who study and work in corporate philanthropy agree that how corporations give has shifted dramatically in the past decade.

For one thing, what constitutes corporate philanthropy and corporate social responsibility is being redefined, says Peter Frumkin, research director of the Satell Institute, a think tank focused on corporate social responsibility.

“The language has changed because the field has changed,” he says. “It is part of the fabric of a lot of companies. They weave it into the core business functions of the firm. It’s not just an appendage, like it used to be.”

One-off checks and CEO pet causes are increasingly a thing of the past, overtaken by strategies built into supply chains, marketing, and government relations, among other parts of businesses. And the most sophisticated companies are tracking and quantifying results, experts say.

“I don’t necessarily think that the question should just be about how much you give. But what is the impact of your giving?” says Rodney Bullard, executive director of the Chickfil-A Foundation. The corporation has pledged $30 million and helped raised tens of millions more to support Atlanta’s high-poverty Westside neighborhoods under an effort called the Westside Future Fund. “At the end of the day, we’re trying to really look at how are we are moving the needle. Not just how much money we give to a particular organization but how did the organization use that money? What was the return on social investment? How was a life or a community changed?”

Gina Tesla, vice president for IBM’s Corporate Citizenship department, says that when she was in graduate school in the mid-2000s there was a single course being taught at Cornell on corporate sustainability. Now, when she goes back to lecture, there is an array of programs on the subject. It’s a heightened level of interest that she sees reflected in the company’s current and prospective employees. Analysts and investors, too, want to know what corporations are doing from an environmental, social, and governance perspective, Tesla says, and corporations are shouldering increased reporting obligations for things like the Dow Jones Sustainability Index.

“We are very, very serious about the work that we’re doing, and there are really high expectations on us,” says Gina Tesla, vice president for IBM’s Corporate Citizenship department. “We are tied directly to the CEO and the C-suite. That’s fantastic, and I wouldn’t want it any other way. But that also drives a lot of pressure and expectations on us to be delivering the most value that we possibly can.”

IBM says that in 2017, it gave away $36.6 million in cash, $261.1 million in technology, and $34.8 million in services. Tesla says there is a time and place when cash donations are needed to support certain nonprofits and projects. But she and others controlling corporate purse strings say that companies have a lot more to o!er nonprofits than cash.

“Frankly, it would be a shame if we just wrote a check and walked away because we would not be giving the best that we have,” Tesla says. “We would not be providing a sustainable solution or recommendation or way of working for organizations that we are serving.”

Do the Research

So how can nonprofits fit into corporations’ strategies and secure corporate dollars? Do your homework, corporate donors say.

At American Express, which contributed $37.8 million in cash in 2017, according to the Chronicle corporate-giving survey, McClimon says he meets with nonprofit leaders who are clueless about the company’s philanthropic priorities. “They don’t come armed with anything other than an ask,” he says. “And in some cases, they don’t even come armed with an ask. I have to ask them, ‘Why are you here? What is it that we can do for you?’ ”

Not every nonprofit’s mission is going to have an obvious connection to a corporation’s business goals, says Carolyn Berkowitz, head of the Association of Corporate Citizenship Professionals, a membership organization for corporate philanthropy and corporate social-responsibility leaders. But every nonprofit can ask the necessary questions to figure out how their work may connect to a company’s goals beyond the traditional boundaries of corporate grant making, she says.

“What is a really great use of the company’s time, and what will really engage them differently is — after you have done your homework — to go in and ask them, ‘Tell me about your goals,’ ” Berkowitz says. ” ‘What are you trying to achieve through your corporate citizenship? What are the business problems your organization is facing? How are you solving them? How could we work together to leverage community issues and community performance as one way that your company is solving its pain points?’ ”

First Money, Then Volunteers

When Ed Lee, chief executive of Habitat for Humanity Greater Cincinnati, meets with a company, he knows he has valuable commodities to o!er, including employee engagement and corporate branding. Another potential benefit for companies: turning some of their lower-wage employees from renters into homeowners with a Habitat for Humanity home.

“We become part of the solution, part of their offerings to employees. That is of value,” Lee says. “Part of our pitch, then, to these companies is we would love to entertain your employees as volunteers, but if we don’t have funding, we don’t have projects to engage your volunteers on. So we really can’t commit to volunteerism at a high level unless we can also be certain of funding so that we have projects to actually work on.”

Lee, a former Procter & Gamble employee, has spent years building up the nonprofit’s corporate-fundraising operations. During its 2017 and 2018 fiscal years, his team pulled in just over $1.2 million from companies, roughly half of total annual fundraising. That share is much higher than at other Habitat for Humanity organizations, he says, which nationwide raise an average of about 20 percent of all of their contributions from corporations.

Many of the companies that donate to Habitat for Humanity Greater Cincinnati are focused on community issues, Lee says. So his nonprofit adjusted some of the language it uses, talking about revitalizing an entire community instead of helping individual families.

“That is part of what we’ve morphed into, is a different language that we talk to corporations, so when we present to corporations, it is much more about working together, partnering together to create sustainable solutions that they are interested in also.”

In some instances, nonprofits may be able to offer corporations a toehold in key markets or communities, experts say.

Lee and others note that corporations’ philanthropy, including volunteer opportunities, have become key for companies to recruit and retain millennial employees. Companies are getting creative, particularly tech companies where the competition for skilled workers is fierce and a company’s perceived social good could help lure the best new hires. For example, the cloud-computing company Box.org now gives its employees $500 to donate to nonprofits for making an employee referral instead of the commonly used cash bonus.

“We could potentially be at a sea change in terms of how the concept of corporate philanthropy is viewed for the future, and the demands that the millennial generation will have for companies if we want to get their great talent inside of our walls,” says Caroline Roan, president of the Pfizer Foundation.

And because big corporations will need an increasingly tech-savvy work force, fundraisers and other followers of corporate giving say they see more corporations steering their charitable dollars to nonprofits and programs that help prepare young people from socioeconomically disadvantaged backgrounds to work in jobs that demand high-tech skills and know-how.

Eager Partners

Harrison of The Recycling Partnership says she has been impressed again and again by the professionalism and seriousness of the corporate donors that her nonprofit works with.

“We are not afraid to remind people that they need to not only be ready to work with us but they need to work with each other. That collaboration between competitors is, I think, such a fascinating thing to cultivate. I think the corporate culture is ripe for that right now. They seem very tolerant and eager to partner with one another when it comes to solving social and environmental problems. I think that is something that more nonprofits should understand and be ready for. I think the timing is right.”

When Harrison talks to other nonprofit leaders about raising money from corporate donors, some express fears about losing their souls and risking being corrupted by the whims and wills of big companies.

Harrison knows those feelings well; at age 19, she never would have envisioned herself strolling through the halls of Congress with corporate lobbyists at her side. But multiplying the annual revenue for a nonprofit doing work that she cares deeply about has a way of changing a firebrand’s perspective. And Harrison has seen firsthand that nonprofits can manage powerful corporate relationships without selling out.

“Those companies need us and the purity of our intent just as much we need their corporate funding,” Harrison says. “What we have done with the partnership is build a nonprofit that bridges between governments and corporations so that we can create a solution that serves them both.”

Alex Daniels contributed to this article.

This article is part of:
WHAT CORPORATIONS WANT — AND CAN GIVE IN RETURN

A version of this article appeared in the:
SEPTEMBER 2018 ISSUE

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