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In the year 2022, corporations gave over $21 billion to nonprofits. Corporate giving is not simply something that happens around the holidays as a public relations appeal; corporations are finding ways to participate in charity and change the world year-round.
There are two major paths toward this: corporate foundations and corporate responsibility (CR) programs. A foundation requires the corporation to create its own charitable branch and is often funded by the corporation’s profits. In contrast, a CR program is a way for corporations to help other charities and nonprofits, via grants, employee volunteer programs and more.
Here, we outline the differences between the two types of corporate giving, as well as the benefits and drawbacks of working with each option.
The most notable difference lies within how much labor each one consumes. Creating a foundation would mean hiring a team to run the branch, funneling corporate profits into the foundation arm, and maintaining the foundation year over year, requiring a great deal of labor and investment. On the other hand, a CR program can require very minimal participation and far fewer employees.
Another distinction is how much power a corporation has over the place they’re giving funds and labor to. With a foundation, the corporation is completely in charge and able to make decisions under the same leadership that runs their for-profit work. However, with a CR Program, the corporation is often choosing a nonprofit to work with and is not able to have a say in what that nonprofit does to complete their overall mission.
MORE: Why a nonprofit’s reputation can make a difference in fundraising
From a nonprofit lens, there are quite a few benefits of partnering with corporate foundations. For instance, once the partnership is set, your institution has a guaranteed major donor. Because corporations tend to fund their own foundations via profit donations and endowments, the nonprofits who work with them are more securely financed.
Partnering with such a foundation can also be advantageous due to visibility. A smaller nonprofit likely does not have the kind of marketing team that large corporations do. Corporate foundations typically have more resources, public relations connections, and public awareness than most nonprofits so this partnership can help you get your message out into the world.
Partnering with a corporate foundation is not without its pitfalls. Nonprofits should be wary of foundations that serve their corporation above the nonprofit’s mission, and they need to be cognizant of the corporation’s public reputation and be aware of any potential scandals.
For example, if a healthcare nonprofit is partnering with a pharmaceutical company, they might need to ensure that the company is aligned with the overall mission and not simply creating a foundation for public recognition’s sake. You should also do donor due diligence to make sure that the pharmaceutical company is above board and won’t lead to negative publicity for your organization. That will help to protect the nonprofit’s reputation and ensure that financial decisions and news coverage are in line with your overall goals.
Also, because these foundations often get a percentage of annual profits, on years where the corporation itself suffers, the foundation could go under-funded, making it more volatile and harder to expect specific funds.
MORE: The ultimate donor due diligence checklist
For nonprofits, corporate responsibility programs can be a major source of aid. Sometimes called corporate social responsibility (CSR), these programs are how corporations uplift charitable organizations that align with their overall ethos. Partnering with them could mean increased volunteers, new donations, and more marketing campaigns that drive to your institution.
One typical CR program is a company match offering in which the corporation matches each employee’s donations to a cause. Matches are proven to drive people to donate more in general: a recent survey showed that 84% of people were more likely to give if they knew their donation would be matched.
CR programs also raise awareness for the nonprofit, educating the company’s employees and consumers about the good that the charity is doing for the world. This type of exposure can be a game-changer for an institution.
Because CR programs rely on corporate promises, they can be unreliable. A company might have a great year and decide to do a large match campaign, but they may pull back on their commitment the next year due to financial issues, so it’s hard to rely upon these programs for steady donations.
Similarly, rotating short-term volunteer projects can be damaging for nonprofits. If corporations give their employees one day a year to volunteer at their selected organization, that means the organization must dedicate time to train and teach a volunteer how to help them, and the person might never return.
Volunteer programs tend to be the most lucrative when the volunteers spend more than one day a year working for the organization, so this shorter commitment could be more of a hinderance than a gain.
MORE: Make the most of your nonprofit fundraising efforts
Nonprofits can seek out these programs in similar fashions to how they find other high-profile donors with robust donor prospecting. Tools like Nexis® for Development Professionals allow you to create donor profiles from your research, easy-to-use search features, and many other ways to find donors and corporations that align with your company’s mission. It could be as simple as finding which corporations donate to similar nonprofits and appealing to them to include your own company in their corporate giving plan.
At the end of the day, corporate giving can be a massive source of funding and aid. Both corporate foundations and CR programs are undoubtedly helpful for the recipients, so either option will surely bring many good things for a company.
When choosing between the two, it’s important to consider things like reputation and your own company’s needs. If you need many more volunteers for small projects, a CR program might be a perfect fit. On the other hand, if you find a corporation that aligns with your mission and want a steadier flow of donations, a foundation could be the better option.
It’s important, before making any decision, to use tools like Nexis® for Development Professionals to see the bigger picture of the corporation you plan to work with, and ensure that their other donations and company patterns are in accordance with the standards your nonprofit holds itself to. For more trends in donor prospecting, download the LexisNexis State of Donor Prospecting 2024 report.