Are Nonprofits Ready for the End of Corporate Philanthropy?

Boston's own Scott Beaudoin, who's also MS&L Worldwide's North America director of CSR and cause marketing, asked in PRWeek Insider's blog last week is this "The End of Corporate Philanthropy?"

Scott's prompt was Nestle SA Chairman Peter Brabeck-Letmathe's recent remarks that he's against corporate philanthropy because it could lead to a misuse of funds. (I guess he had already doubled checked that the company money used for client entertainment was all well spent.)

What Peter and Scott are in favor of are "social investments that are aligned with the business."

Like it or not, this is the future of corporate giving for businesses large and small. Of course, this won't be "giving" at all but rather strategic social investing. And the timing is right for several reasons.

  • With the drumbeat of earnings and ROI stronger than ever, companies can no longer fund generous philanthropy programs. Investment in causes, not giving, must be the mainstay if companies are to continue to play a meaningful role in addressing societal issues.
  • Thoughtful consumers get it. As Scott notes, "Research shows today's stakeholders understand that companies need to be profitable but also believe they can be purposeful and profitable at the same time."
  • To engage more small and medium size businesses with causes, partnerships need to be win-win as only the biggest companies can afford big budgets for philanthropy.

Reading Peter's remarks and Scott's post made me smile because a corporate culture focused on bottom-line benefits for both partners is my reality every day. Nestle SA has had the luxury and, thankfully, the desire to be philanthropic without the worry about the ROI on corporate giving. The restaurant chain I work with may share Nestle's generous instincts but it lacks their capacity. Interestingly, I've noticed that it's when a business is most focused on benefiting from a partnership with my nonprofit that they do the most good for my cause.

But the shift away from corporate philanthropy won't be easy for nonprofits. Going from receiving generous handouts to having to work for your food will take a bit of getting used to.

Here are three ways nonprofits can begin the shift away from corporate philanthropy.

Embrace the brave new world. Nonprofits shouldn't feel guilty that they have to engage businesses as, well, businesses and not donors. Remember, companies still want to make a difference, but they want to help you and society while they help themselves. Think win-win-win.

Make it easy for companies. Don't make them feel guilty that they used to give you money and now they make you work for it. Don't wait for them to tell YOU they need more from their partnership with you. Connect the dots so they don't have to. Create opportunities and programs that are tailored for companies (which leads to my next point).

Start a cause marketing program. The essence of cause marketing is mutual benefit. Whether you use pinups, percentage-of-sale, licensing, cause promotion, etc. cause marketing will help reduce your dependence on corporate giving and give businesses a new way to work with you that is grounded in win-win.

Long live corporate philanthropy. It's a little absurd to think that corporate philanthropy will just disappear. Walmart just gave $2 billion to fight hunger this past week (although I'm sure hunger causes resonate with Walmart's core customers so there is a strategic component to the gift). Will it be reduced? Sure, perhaps a lot. But it will always be there in some form so don't throw away your tin can just yet.

But a world with less corporate philanthropy is here. The challenge for nonprofits is to adapt to the new reality. What seems like the end of corporate philanthropy will actually be a new beginning of opportunity for nonprofits that are up for the challenge.

End or beginning. Which one will your nonprofit choose?

[Note: I'd like your help. I've given three ways nonprofits can begin the shift away from corporate philanthropy to corporate opportunity. What other ways can nonprofits easily and quickly make the move.]