Ensure you have the basics covered as you build and maintain corporate funding relationships.

Corporate giving is a key part of the funding landscape for social purpose organisations

Corporate funding relationships can help social purpose organisations to enhance their impact; they provide financial support as well as access to new networks, skills and resources (quite often over a number of years). However, corporates are changing the way they give; targeting effort and resources toward organisations that align with their business and social priorities.

At the same time, developing and maintaining funding relationships is hard work; organisations typically require access to a network of potential donors and well-resourced staff to pursue and manage those donors.

In A major donor funding plan in six steps, we outline a process for developing a plan to find, engage and steward major donors.

Corporate giving is ‘big business’.

Following on from that, this article identifies three issues that will help social purpose leaders to assess the prospect of working with corporates to achieve their purpose.

1. Understanding the market: What are the current trends and patterns in corporate giving?
2. Internal skills and capabilities: What do organisations need to do to build and maintain corporate funding relationships?
3. Social impact: What are the potential benefits of pursuing corporate partnerships?

The article draws on SVA’s journey with companies such as J.P. Morgan, AMP and Macquarie Bank as well as SVA Consulting’s work with organisations keen to develop and build long-lasting corporate funding relationships.

What are the trends in corporate giving?

Corporate giving is ‘big business’. Scores of organisations rely on corporate funds and support to finance and deliver programs and ongoing operations. The 2005 Giving Australia report (still the most comprehensive analysis of philanthropic giving in Australia) estimated that businesses provided $3.3bn in cash, goods and services to non-profits in the 2003-04 financial year (of which $2.21bn was cash).^[1]

Ten years on with a larger economy, the value of corporate giving will have increased significantly. With the same report finding that individuals provided $7.7bn to non-profits in the year to January 2005 (excluding the response to the Asian Tsunami) corporate giving can be seen as a key part of the funding landscape for social purpose organisations.

In this context, we have observed five trends. While not an exhaustive list, these trends highlight some of the key ways corporates structure their giving.

1. Prioritising issues: corporates supporting organisations that address social problems and needs that align with their own interests (e.g. education, health, the arts, etc.). For many corporates, these issues are aligned with their commercial priorities and focus
2. Matching geographies: corporates supporting organisations that operate in the same communities and locations as they do
3. Picking growth stages: corporates supporting organisations at a particular stage (or cycle) of growth (e.g. start-ups, new initiatives or organisations looking to scale)
4. Supporting staff: corporates supporting organisations that their own staff already support, often resulting in matched giving programs, to maintain and deepen the relationship
5. Engaging partners: corporates seeking opportunities to work alongside organisations to deliver programs and activities, including through volunteer opportunities.

Some of these trends are mirrored at the international level where a recent survey on corporate giving (published by the US based CECP, formerly known as the Committee Encouraging Corporate Philanthropy) found 33% of leading international companies in 2012 invested 50% or more of giving to one program area (e.g. education), up from 22% in 2007.^[2]

…strong commitment to support the organisations that staff back and that facilitate volunteer opportunities.

The same survey found that matching-gifts comprised a median of 12% of a company’s total cash giving while more than 55% of companies provided employees with the opportunity to volunteer with domestic organisations during paid work. These figures highlight corporates’ priorities as well as their strong commitment to support the organisations that staff back and that facilitate volunteer opportunities.

Within Australia, property group The GPT Group (GPT) is an example of a corporate whose giving program demonstrates a number of the above trends. In particular, GPT’s giving program focuses on sector priorities (including environmental sustainability, healthy living, social inclusion and learning and employment); supports partners in set geographies; and provides opportunities for employee engagement. GPT’s approach also looks to support partners that deliver on business objectives, such as brand and reputation.

These trends can also be seen in a recent partnership between financial services organisation J.P. Morgan and SVA. SVA was able to link J.P. Morgan with the Beacon Foundation – one of SVA’s ‘venture partners’ – and its work supporting young people into sustainable employment through its Real Futures Generation (RFG) program.

The funding from J.P. Morgan has enabled the program to expand in New South Wales and Victoria (geographies where the bank has operations) as well as allow Beacon to establish business relationships in new sectors that will result in jobs for young people. The relationship also facilitates a two-way dialogue between executives and students; J.P. Morgan executives participate in a collaborative development session with teachers to link business back to the curriculum while students visit J.P. Morgan offices to meet with executives to hear about different career paths.

Finally, corporates are continuing to fund organisations via corporate sponsorships. Corporate sponsorship is particularly common in the arts. However, it is also used to support social purpose organisations to finance (what is likely to be) a high-profile event or campaign. In such contexts, corporates will typically seek to promote their brand to existing or new customers through the initiative.

What is needed to build and maintain corporate funding relationships?

Developing and maintaining corporate funding relationships – like any relationship – requires time and effort. Specifically, it requires the right networks and people (at the start) as well as a commitment to allocate resources to nurture and support those relationships.

It is rare for funding relationships to be established without some kind of pre-existing relationship or ‘warm introduction’…

Firstly, pre-existing relationships between social purpose organisations and corporates are a critical factor for developing new funding relationships. To discuss potential opportunities, the right people need to be connected at the outset. It is very rare for funding relationships to be established without some kind of pre-existing relationship or ‘warm introduction’ (where someone knows someone). Exceptions are where the social purpose organisation has a strong brand or presence and where corporates have open funding rounds (typically through their foundations).

Secondly, organisations need skilled fundraisers and partnership managers to ensure that they have the best chance of raising and keeping funds. They need to be able to present a clear value proposition as well as manage the relationship once it is established. Demonstrating the impact of the funding relationship (e.g. via reporting on outcomes) as well as involving senior staff to further develop ways that the organisations can achieve the common goals are examples of tactics often adopted.

…organisations need to allocate sufficient resources.

Thirdly, organisations need to allocate sufficient resources. As mentioned in A major donor funding plan in six steps, organisations often fall short on this; failing to adequately fund and resource the development and management of funding relationships. This may not be surprising – the cost of fundraising can be as high as half of the funds raised – however, it can be a key determinant in achieving funding targets.

SVA’s relationship with AMP Foundation is an example of a mature funding relationship with benefits that have evolved over time.

Alison Barry: “There is mutual learning – we talk about the challenges we encounter”.

AMP Foundation is a founding partner of SVA. Since 2001 when the Foundation funded the original business plan for the ‘social ventures initiative’, there has been alignment between the organisations’ goals. AMP Foundation focuses on two areas of SVA’s work: building capacity in the sector particularly in education and youth employment, and on increasing capital flow into the sector by growing impact investing. AMP Foundation provides both strategic funding and pro bono support.

Alison Barry, SVA’s Investor Relations Manager, describes the relationship with the Foundation as ‘deep’. “We have a meaningful relationship with the Foundation Manager and touch points across the organisations including SVA’s CEO and other directors, and the AMP Foundation Board.”

Data reporting on results is part of the commitment, however Barry says that in face-to-face meetings, the Foundation also uses evaluative inquiry to discuss progress. “There is mutual learning – we talk about the challenges we encounter and the Foundation works with us to help build the organisation.”

What is the potential of corporate funding relationships?

Relationships with corporates can provide important access to skills, resources and people that help organisations to extend their reach and impact as well as funding. Importantly, corporate partnerships when sustained over time can offer opportunities to build and explore new (and sometimes untested) strategies for developing innovative solutions to achieve impact.

STREAT’s partnership with The GPT Group (GPT) began in 2010 with the opening of a STREAT coffee cart in Melbourne Central. Over the last year,  STREAT’s pilot site with a monthly casual lease has evolved into a five year commercial agreement, becoming Melbourne Central’s first social enterprise tenant.

Since opening its doors at Melbourne Central, STREAT has served more than 319,000 coffees and trained more than 175 young people who were homeless or at risk of homelessness. Beyond the direct benefits for the young trainees, the cart and subsequent kiosk has played a key role in boosting STREAT’s volunteer ranks and developing a loyal customer base. GPT also provides ongoing support to STREAT, helping to organise and promote other fundraising activities at the centre such as ‘Sleepless in September’ – a sleep-out at Melbourne Central which raised $48,000 towards STREAT’s youth programs last year.

…both parties tested the waters to see whether there was alignment between their priorities…

Rebecca Scott, Co-founder and CEO of STREAT, likens the start of the relationship to dating where both parties tested the waters to see whether there was alignment between their priorities. After seeing how each operated and the early results, both organisations committed to the relationship and are now looking at opportunities to scale.

SVA Consulting’s own experience with the Macquarie Group Foundation (MGF) reflects the value of pursuing a corporate funding relationship. In 2006, SVA approached MGF to support the establishment of SVA Consulting – the first consulting business in Australia dedicated to supporting social sector organisations to improve their impact. The initial partnership agreement was three years of funding for the development of the business.

Over the subsequent partnership, the nature of the funding and the relationship evolved from one that was purely philanthropic towards a more strategic collaboration. MGF took the time to understand the needs and strengths of SVA Consulting, and, with the team, explored opportunities and ideas to broaden its impact. This resulted in the development of the SVA Quarterly and a series of related debates. These initiatives also help MGF to broaden its networks and profile across the community. Such mutual thinking has opened the door to a much richer set of relationship options and greater impact in the sector.

Looking forward

The relationship between the corporate world and the social sector continues to evolve as corporate interest in the social sector becomes more sophisticated. Looking to the future, Shared Value has the potential to drastically change the way in which corporates and organisations work together to achieve social change. Shared Value is a relatively new concept where corporates identify opportunities to create commercial value by achieving social ends.

…this may change how they work and structure themselves…

With this in mind, social purpose organisations are beginning to look for possibilities to work with corporates to help improve their competitiveness at the same time as delivering on their own purpose. For some, this may change how they work and structure themselves, potentially some organisations may operate from within the corporate.

Of course, the focus for any shared value initiative from the social purpose organisation perspective will be looking for ways and means to enhance their social impact through working with the corporate.

Whether a more traditional funding partnership or part of a shared value initiative, relationships with corporates clearly can be highly rewarding. However to  develop and then sustain they require concerted effort and resources.

This article is published in Issue 9 and Issue 13.

Endnotes

[1] Giving Australia – Summary of Findings, Oct 2005

[2] Giving in Numbers: 2013 Edition, Trends in Corporate Giving, CECP, 2013