CORPORATE GIVING

Limits of giving

Corporations do not give as much money to charity as people believe. Overall, corporations give only 8% of all the non-government money given to all charities in Canada. The total dollars of corporate giving has declined sharply in the early 1990s. With increasing requests and reduced budgets and staffs, many companies cannot even respond to grant applicants. Even when the response is favourable, a delay of four to six months is common.

Corporations, unlike foundations or governments, have no mandate to give. No one regulates their decisions, or tells them who they can or cannot support. In fact, a few shareholders occasionally object to the company spending their dividends on any charity, no matter how respectable.

Companies tend to be very conservative. They don't like to fund organizations that are likely to make waves, so advocacy groups have a particularly difficult time arranging support. Companies seldom want to be seen to be involved in social issues that could result in controversy — although there are notable exceptions, such as The Body Shop³.

Despite these comments, there are still good reasons to seek corporate donations, if you are not in a hurry.

First, there is a substantial sum of money available overall. Companies give about $400 million in cash and much more in gifts in kind. The Royal Bank alone, which consistently gives more money than almost any other company in Canada, donates approximately $10 to $12 million to charities each year.

Corporate contributions can also provide good leverage to get other donations. The symbolic value of getting a grant from a corporation can be even more important than the actual dollars. Corporate financing can also broaden a nonprofit group's base of support, and reduce its dependence on a single precarious source of income.

Corporations also have access to other resources, beyond dollars, which can be valuable to a nonprofit group. If you have a funding relationship with a corporation, you are more likely to get non-cash contributions. They are also a good source of volunteers.

Businesses expect business-like behaviour

Corporations tend to be very results-oriented, while charities are more process-oriented, according to Julie White, the former corporate donations officer for Levi Strauss & Co (Canada) Inc. Charities are interested in how it is that you do what you do. The corporations want to know what it is that has been accomplished and what their grant will do. A lot of corporations think that nonprofits are run by a lot of `touchy-feely' types. You need to dispel that by being quite clear.

Although the tips below may seem obvious, corporate donation officers report that they are violated regularly.

Quantifiable results are preferred. Provide specific statements about what is a realistic outcome. Many corporations look at each proposal with an eye to opportunity cost. That means, “If we fund this, what are we not able to fund?” Proposed results are compared to decide which application will be more effective in dealing with the issue.

Avoid using jargon. Even if it's meaningful in your field, it may not be easily understood in a company's board room. Jargon is seen as a smoke screen clouding issues.

Don't assume that connections between social problems and your project are always obvious. For example, one day care centre asked for corporate support, tersely explaining that this would reduce the number of people from the community who went to prison. The potential connection was not explained step-by-step, and while it may have been obvious to the people who wrote the proposal, it was not to the corporate readers.

Have someone outside your field of interest read your application, looking for any confusing points, before you submit it.

Be on time for meetings with corporate people. Corporate donations officers have complained about representatives from nonprofit groups arriving for meetings up to an hour late. If you promise a report by a deadline, get it in. At the very least, if you are going to be late, contact the people in advance and let them know.

Respond quickly to requests for information. Companies understand that speedy reactions can be difficult for charities, especially small groups that do not have professional fundraising staff. However, when Levi Strauss & Co (Canada) Inc has gone to nonprofit groups in a pro-active way and offered funding they have been forced to wait for as long as eight months before the group responded.

Dress in businesslike clothing for meetings. Err on the side of conservative spit and polish. The first impression is important.

Documentation must look professional. Written material must be neat and to the point. Typos, especially in the name of the corporation or one of its executives, will eliminate even the best proposal. All numbers must add up. Send tax receipts promptly, with a proper thank-you letter. One organization, Levi Strauss & Co (Canada), waited three years to get their receipt.

Telling a company that you have purchased their product (or will if they give) generally does not help. A giant like IBM is likely to be unimpressed that you recently purchased one of their computers. Levi Strauss & Co (Canada) regularly hears from groups helping teenagers, who assume that gifts are part of marketing. These connections don't usually help increase the contributions, unless you are specifically discussing market-based sponsorship, or the company is making donations out of its public relations budget.

Telling companies which other corporations, foundations and other funders support you does help, unless you approach competitors. Corporations don't like to be the sole funder of a project, as a rule. They do, however, want to be the only ones in their industry most of the time, especially if they are taking a high-profile position or making a larger donation. Banks are an exception to this, and several may support the same group. Before approaching the competitors of a corporation that provides you with major support, ask your primary donor if they have any objections. This is true when you have been given sums in the $10,000 range (and not for $500) or when the sponsor's name goes on a poster or is otherwise publicly linked to a project.

Companies do like to see their donation provide leverage. If their gift will increase as a result of matching grants from another donor, let the company know.

Institutional donors really like imaginative and innovative projects that show new ways of doing things. It is amazing how many truly boring projects are submitted to corporations and foundations.

Including your group's annual report is essential in an application. It doesn't have to be flashy, but it should have a clear financial statement. Corporations do go through these line by line by line. If any figures are unusual, clarify them; don't hope the donor won't notice. Corporations may see a surplus as a reason not to give. If you have a surplus, explain if it is earmarked for a specific purpose or how it will be used. Anticipate their questions and answer them.

For a new organization, a good budget and financial plan will substitute for an annual report. Show where you expect to get support. If a funder will provide temporary support during your start up period, either as a donor or as an umbrella, this is an advantage.

Core funding can be obtained from corporations during the early stages of a nonprofit organization. It is very difficult for an established organization to get. The main reason is that corporations don't like to create dependency. They want to know that if they give you a grant for a while and then pull out, you will survive. Because corporate giving is based on a percentage of profits, donation officers do worry about what will happen if they continue to have declining funds.

Emergency funding is difficult for corporations to provide, unless you already have a good relationship with a company. It is usually a slow, cumbersome process to get money from a company. Don't expect much emergency help if you haven't cultivated an established relationship. Levi Strauss & Co (Canada), for example, has supported a number of shelters for battered women. When one of these had its windows blown out by an irate husband, Levi Strauss & Co (Canada) replaced the windows immediately.

Deficit funding is very, very difficult to get from corporations. A deficit is seen (often correctly) as a sign of bad management. Concentrate on getting funds for new projects, not to pay over-due bills. If you have a serious deficit, explain why, and state your plans to correct the problems that caused it. (Hint: It is not sufficient to say “We'll do more fundraising in future.”)

Endowments are not popular with corporations, either. They prefer to give funds for immediate use on projects, rather than have you invest it and live off the proceeds. They like to think that corporations are better at investing money for maximum return than nonprofits. If you invest in the corporation that gave you the money, they would just as soon give you the returns. If you don't invest in their company, they are upset to think they are providing another company with capital. Gifts to an endowment for a specific purpose, such as on-going research, are occasionally approved but donations simply for re-investing are rare.

Income-producing businesses run by nonprofits have been funded by corporations. They provided core funding in the start-up phase because they like this approach to self-sufficiency.

You must spend the money on what it is given for. Situations beyond anyone's control can change, and in such circumstances the donations officer will usually respond positively to a well documented request that the funds be reallocated for new purposes.

In at least one case, however, a financially troubled organization used a corporate grant earmarked for a project to pay the executive director's salary. Then the group collapsed. During a normal follow-up, the company, surprised to learn the group had gone out of existence, contacted members of the now-defunct board of directors. The board was surprised in turn, to learn that they had received a grant from that company. They were even more shocked to discover that they were legally responsible for how it was spent. The corporate donor seriously considered legal action against the board for repayment of the misused funds.

Board members do have a legal responsibility, as well as an ethical one, for how the funds are spent.

Thank-you letters mean a lot. People give grants, not companies. In Levi Strauss & Co (Canada), for example, 80% of the grants are approved by employee committees, which include sewing machine operators who work very hard to raise a portion of the gift to accompany the corporate grant.

Send follow-up reports on your progress. It is an excellent way to keep the company in touch with what you are doing. Even years after the grant has been spent, a note indicating your latest achievements can mean a lot to the donors. It may be posted on an employee bulletin board, summarized in the company newsletter or circulated to the board of directors. It reaffirms what the priorities are, and demonstrates how helpful the money can be.

Donations come out of profits. Employees and managers may ask why the money isn't going to salaries, and shareholders may ask why it isn't going to dividends. Company donations officers need to sell the program of community giving to employees and investors. Information on results helps them defend the program.

How to decide who to approach

Knowing who your prospects are is important. Choose carefully.

Do not send a form letter to hundreds of companies. This seldom brings in enough money to pay for the postage. Many nonprofit groups complain that the companies do not even respond with letters of rejection. Use a rifle, not a shotgun; that is, hit a few well, not scattering your efforts more widely with less effect.

Here is how to choose wisely, in priority order:

1. Who do you know? Contacts are valuable in getting grants. You may be surprised at how many contacts you discover you really do have (even if you think you have none) after you do the exercise that follows in a few pages.
   Find corporate insiders who have personal reasons to care deeply about your work, and use these allies. Many companies automatically short-list requests if one of their employees is a volunteer with the group.
   Many donations are made because of who asked, not what the group does. It's hard to say no to a major customer or supplier. Warm up to power brokers.
2. Who gives? Which companies give the most to nonprofits? The list below will show you how to choose.
3. Who will be interested in your projects? Even a generous giver may not be interested in what you do. On the other hand, a company that gives very little to the community in general, may get excited about your work. Research, based on the techniques below, will help.

Before you send applications — research!

Who gives? It is no longer necessary to guess who might support you. Years of research have narrowed the list of potential donors down to a few hundred corporations which give most of the money. While others do give, these are the ones most likely to provide a large contribution.

Imagine's Caring Companies: The Imagine campaign lists 400 Caring Companies as of late 1993 that have pledged to give away 1% of pre-tax profits. These 400 Companies gave $192 million — 40% of all corporate gifts.⁴

The reason most groups should begin with these corporations was revealed in a study by the Institute of Donations and Public Affairs Research (Idpar). Caring Companies that provided donation figures for the Idpar study had an average donation amount of $976,000, while those that did not support Imagine gave an average of $79,000. The average donation was $400,000 for all of the 249 companies that reported how much they gave. Combined, they gave $99.7 million.

The companies that participated in the study and supported Imagine reported giving a total of $89.5 million. The corporate donations reported in this study represent approximately one quarter of the Canadian total.

Almost half of these companies are giving more despite the recession. Many companies increased their donations despite the recession between 1989 and 1991. Forty-five percent of the companies responding to the 1992 Idpar study (the most recent year for which data is available) increased their giving budgets, even though only 23% had an increase in profits and 65% said that their company profits had fallen. In fact, only 28% lowered the total dollar amount of their donations. Even more impressive, almost 54% increased the percentage of their pre-tax profits given to charity.

How much might a company give away all together? A good guideline for corporate giving is 1% of pre-tax profits, usually averaged over a three-year period. Over 57% of the 1992 Idpar companies considered that to be “just right”. Another 7% thought it was too low! About 19% consider that target somewhat too high. Only 4% considered it much too high.

Seven industries which accounted for 70% of all corporate contributions:

Source: Idpar

Contributions as a percentage of average 3-year pre-tax income

Source: Idpar

Crown corporations, Quebec businesses, private companies and manufacturing concerns

“Crown corporations were strong proponents of corporate largesse”, according to an Angus Reid Group poll. “Quebec businesses (96%)⁵, private companies (97%) and those involved in manufacturing (84%) were the most committed corporate benefactors while the majority of spokespersons from government-operated enterprises (61%) said their organizations are not charitable donors.”

The Corporate Giving Record

Corporate Canada consists of 600,000 incorporated enterprises. The vast majority, 87%, have assets of less than $1 million, and average profits of about $20,000.

They contribute 24% of corporate contributions; about $97.4 million. Most are owned by sole proprietors and include everything from the corner store to an incorporated professional working from home.

At the other end of the scale are the big companies, about 13% of all businesses. They contributed 76% of all corporate charitable donations, or approximately $308 million in 1990.

Corporate cash contributions account for slightly more than 20% ($405 million) of all non-religious giving by Canadians. The remainder (80%) comes from individual contributors and foundations.

— Martin P Connell
Chairman, Imagine
Toronto Star, 7 Mar 1992

What causes does business support?

“What causes should a company support to qualify as a good corporate citizen? The most important targets are education and medical research”, according to a survey of 762 Canadians undertaken by Goldfarb Consultants and reported in the Globe and Mail on November 9, 1993.

“Companies get more respect for donating computers to the local high schools, for example, than money to the arts. There are regional differences: Albertans rate arts donations lower and Quebeckers higher than people in other provinces. Charitable donations are more highly valued in Manitoba and Saskatchewan and the Atlantic provinces. But education gets a good rating everywhere.”

Major beneficiaries of corporate donors, 1991

Source: Idpar

Choose your allies carefully

Fundraising, like politics, can make for strange bedfellows. It is easy to have your credibility damaged by accepting support from the wrong partners. It is also easy to develop a puritanical list of restrictions that prevent any effective fundraising from the companies that donate money. Even advocacy groups that battle companies on certain issues may find common cause with them in other concerns. A careful, balanced approach is needed.

Start locally

Companies that are based in your community, big or small, are among your best prospects. They may feel an extra interest in projects that will help employees and local customers, and improve their image in the operating environment.

Concentrate on those that have active operations, such as offices or factories. It is not generally relevant that they sell products in your area — just like every other town, but if your community is an area of significant profit (or loss), this may help focus special attention.

McCain Foods Limited, for example, is a leading employers in New Brunswick. Their contributions are often long-term investments directed to local hospitals and health and social services in the communities where their employees live.

Local branches can give small to medium-size donations without consulting head office. They often have simpler procedures, too.

A local leader's endorsement may also carry weight at the highest levels when applying for larger grants.

Do their employees use your services?

A company is much more likely to help if their employees are among your residents/clients/patients/audience.

Social service and health groups must protect confidentiality, of course. This is less of an issue for an arts, sports or education organization.

It can be easy to find out where your clients work if you have a facility that people pass through, such an art gallery, performance space, fitness area, classroom, or such. Ask people to drop their business cards in a bowl or box to win a prize (donated of course).

If that is not possible, a survey may work. Write or phone clients and supporters to explain that corporate connections can be helpful. Ask them to tell you where they or their family members work.

Which companies are more likely to give to groups concerned with disability issues? Companies in the health business, such as pharmaceuticals are generous to groups that they see as allies in the battle to improve access to high tech health care. Of course, some groups are not willing to accept support from the drug companies whom they see as the enemy.

Insurance companies like preventive health programs, since healthy people are less likely to need insurance premiums paid out. They will like public education programs, especially ones on preventing injuries. They will also like rehabilitation and research projects (and those who advocate more and better ones) that reduce the time people are disabled. Finally, they may support independent living projects that increase self-reliance and reduce dependence on long-term insurance payouts.

Companies that manufacture products that people consider health hazards (such as alcohol and tobacco) are also interested in health projects. They look for organizations that will reduce the actual ill-effects of their products, or study the connections. They also look for projects that associate their companies with the image of healthy, sophisticated or fun people. These include sports and the arts. Again, ethical differences must be considered before applying for a grant.

Projects that improve the health of employees are also highly favoured, especially by companies with large labour forces. Companies with sedentary employees have funded fitness, and anti-alcohol and drug-abuse programs, (both treatment and education). Companies with employees in dangerous jobs fund accident prevention programs, provided these are not seen as anti-business.

What to Research and How To Get The Inside Story

Contact the companies you have selected and get the facts about them before you submit an application.

This kind of research is essential, because companies are increasingly complaining that many of the grant requests they get are inappropriate and waste everyone's time.

“All of the 600-plus donation requests we receive are reviewed, and all are welcome, but two thirds don't fit our guidelines”, says Mr JD (Jim) Rennie of Gulf Canada Resources Limited. Their corporate donations booklet spells out their priorities quite clearly. In their case, request for under $1,000 from communities outside Calgary are handled directly by field offices. Their annual report shows that “in 1992 Gulf invested $600,000 in Canadian communities; approximately 45% to health and welfare, almost 20% to education, and the balance to civic, cultural, environmental and other causes. Internationally… for example, community support is provided in Russia through a social development fund that is financed by the KomiArcticOil joint venture.”

At Nestlé Canada Inc, corporate affairs specialist Wendy Parke reports getting 3,000 applications a year, but notes that there is “incredible duplication from different levels of the same organizations, ie, district, national, regional and other.”

A large portion of grant requests are also rejected at Gendis Inc, in Winnipeg, which distributes Sony products nationally. Mr G Allan MacKenzie, the President and Chief Operating Officer says “they represent schemes, dreams and just plain nonsense.” However Gendis does fund 70% of the applications they receive.

The story is the same for applications received by Canadian Pacific Charitable Foundation. Of the one thousand applications they get each year “many are very poor quality”, according to Hollie L Zuorro, donations officer. “They don't state their name, address, charitable number, purpose, goals and objectives, accomplishments or reason for fundraising. They do not define their clients or service area. And they do not explain their local, regional or national affiliations.”

What advice would Canadian Pacific give grassroots groups to help them get funding? “Have a realistic view of the community needs and discuss this openly in the request. We are getting too much duplication of service. Form alliances and partnerships with like groups.”

How do you get the information you need? The best thing to do is call. If you can't phone, inquire by letter. Here are specific questions to ask:

Who is the contact?

Don't assume that it is the President (though it might be). If there is a program that is staff-run, the decisions do get delegated and it is very unlikely that you will get funding without the support of staff, unless there are unusual circumstances.

Don't assume that it is the Public Relations Department (though it might be). They are skilled at saying `no' politely, but may not know the avenues that lead to `yes'.

Don't assume that it is the Marketing or Advertising Department (though it might be). Frequently they will evaluate a request only in terms of the return to the company, and compare your proposal to an equal amount of money spent on magazine ads.

Ask the switchboard operator or receptionist to tell you who handles the company's donations. If s/he doesn't know, ask to speak to the president's secretary. Be prepared to have your call transferred before you expect it and suddenly find yourself talking to the donations officer.

Who handles corporate donations?

Very small staffs, between one and three people typically, administer corporate donations, according to a study done by the University of Toronto Career Centre in 1990. At Imperial Oil, for example, one of the largest corporate donors, three people in the Toronto office looked after about half of the donations. However, they do it half time, while spending the other 50% of their days on public affairs.

The Imperial Oil Charitable Foundation gets more than 10,000 requests for funding each year. That works out to about one every 10 minutes of every working day. They fund about 800, distributing about $5.2 million in 1993. This is about half of the $10.5 million they donated across Canada in 1990.

Where companies used to reserve this function for senior executives about to retire, they now focus on younger, female candidates. Companies tend to promote from within to these positions and there is usually very slow turnover.

Generally speaking, staff with this responsibility are employed in Human Resources, Public Relations or Public Affairs departments. The actual administration of funds is a very small part of what they do.

What is the correct name of the company?

Check the spelling. Ask if it ends in `Ltd' or `Inc'. Do they add `of Canada' or another formulation? Is there a hyphen, or an apostrophe or another peculiarity?

How do key people spell their names? What are their proper titles? One executive reports volumes of mail are sent to his predecessor, who died seven years ago. Assume that all information found in a book or directory (including this one) may be out-of-date by the time you see it.

Telephone to check this again at the last minute, just before mailing, because there are frequent changes, even in corporate names. Find this information from a secretary, not an executive who may feel you are wasting valuable time.

Do they have guidelines or an application form?

The largest donors will send you a booklet or brochure with extensive information on what they do and do not support and how to apply. The Royal Bank, for example, publishes a multi-page book listing every nonprofit group that received more than $500 from them. Useful material is available from Shell, Imperial Oil, Gulf Canada Resources, the John Labatt Foundation and many others.

Many companies use internal guidelines but do not like to hand them out. They fear that nonprofits will try to gear the application to fit, making it hard to eliminate inappropriate applications. A few will give guidelines on the phone or in person, but not in written material.

What is their special interest area or focus?

Most companies do have them. If they are only interested in the arts, and you don't have an arts project, you may as well forget it unless you have another strong advantage.

Canada Post Corporation, for example, recognizes the value of literacy to individuals and society. Over 50% of their donation budget goes to literacy.

Levi Strauss & Co (Canada) are very interested in employment-related issues on quality of life.

Some companies may only fund projects; others only give to capital campaigns; still others make only non-recurring gifts. Banks often give a percentage of your budget. Some companies may prefer only national projects; others only local.

What is the average grant size? If you're going for $500 and their average grant is $8,000, you're wasting a golden opportunity. There is also no point in asking for far more than they usually give. Mention the amount you hope they will give. It is tempting to omit this for fear of making a mistake. However, naming an amount is better.

What is the range of gift size? If the average grant is $8,000, they might give anywhere from $500 to $50,000. When do they give large grants?

What is the preferred method of approach? Will they allow you to make a personal presentation or do they accept only written applications? Are there particular pieces of information they want?

What timing is required? Do they give almost all their funds at the beginning of the fiscal year (usually April or May) and need your application in March? Or do they need applications in January, in order to process them on time? Others divide the budget in four, and give each quarter. A few give year round on an on-going basis.

If in doubt, apply in fall or early winter. Businesses that budget their donations often commit their money months before the fiscal year begins. Ask early. Better yet, ask a full year ahead.

Is non-financial assistance available, even if you don't qualify for cash grants? This might include products, surplus equipment or materials, loaned employees, printing or other aid.

Does the company encourage employees to volunteer? Over half the companies responding to the 1992 Idpar study have specific policies in place.

Royal Insurance, for example, invited its staff to a demonstration by the downtown Toronto Meals-on-Wheels organization. Approximately 80 of the staff volunteered to deliver the Meals-on-Wheels during their lunch hour, and the company continually encourages this type of volunteer activity.

The John Labatt Foundation went a step further with its People in Action Program, which helps charities hire students for summer projects that “benefit Canada's disadvantaged and the environment”. In the summer of 1992, the program created 140 jobs with organizations like the Canadian Association for Community Living, Ducks Unlimited, the Canadian Mental Health Association, Pollution Probe and the Canadian National Institute for the Blind, to name a few. Foundation funding for People in Action is matched by the Government of Canada.”

Will they give a list of grantees, even a partial one? Most do not, but might name one or two recipients.

You can also get this information indirectly, by asking other nonprofits to tell you who they have received contributions from; by watching the media; even by reading charities' annual reports, concert programs and plaques on the walls of nonprofit buildings. If you know who the company has given money to, you can talk to grantees and find out about any idiosyncrasies and special approaches.

You may be surprised at how willingly fundraisers from other groups share information. Exchanging the names of donors from whom you have received support might seem scary: what if another group submits a better grant application and you're cut out? In fact, co-operation between like-minded groups is the best way for all to come out stronger. You may occasionally lose, but you will probably gain more often.

Do they have separate corporate and employee contributions programs? Often there is one funded by the corporate profits, and another supported by the employees' own contributions. Both may give to you. Additional support may also come from unions and individuals.