Saturday, August 11, 2012

Corporate Engagement With Nonprofits: The Good, Bad and Ugly

Corporate Engagement With Nonprofits: The Good, the Bad and the Ugly
Norman Olshansky: President
NFP Consulting Resources, Inc.

Nonprofits would not be able to serve their communities as well as they do without the involvement of volunteers and donors from the for-profit corporate community.  From those who feed the hungry to board members who provide strategic and fiduciary direction, volunteers from the for-profit corporate sector fill critical roles within nonprofits.

While most nonprofits look to corporations for financial support, those contributions only account for 5% of philanthropic support nationally.  Financial donations by corporations fell by more than 3 percent in 2011 from the prior year.  However, corporate partnerships and involvement are critical to the overall success of nonprofits.  Volunteer engagement continues to be the major benefit derived from nonprofit partnerships with for-profit businesses.

Engagement of for-profits with nonprofits can and should be a productive one for the individuals involved as well as for the corporations and nonprofit entities.

Whether the desire to get involved with a nonprofit is initiated by a corporation or individual, first and foremost, there needs to be an interest in, and hopefully, a commitment to the mission of the nonprofit.  However, there are many other reasons corporations, professionals, or other volunteers get involved with nonprofits.

1.     Nonprofits provide a great way to meet people, share experiences and learn from each other.  Many corporations encourage their employees to get involved with nonprofits as a way to network and establish contacts and relationships, which can benefit the individual and the company.  Depending on the goals for participation by the business, involvement with certain nonprofits may be more meaningful than with others, based upon their mission, geography, who are currently involved in their leadership, their size, scope, and/or community image.  A business that sells pet supplies may be more interested in partnering with a humane society than with an arts organization.  A tax and estate planning law firm may be more interested in partnering with a community foundation or organization that is active in areas of planned giving. 

2.     Often, involvement with a nonprofit is initiated based upon a pre-existing relationship with a friend or colleague who is already involved with the nonprofit.  Furthering that relationship can be a motivation that results in a willingness to get involved with the same nonprofit.

3.     Nonprofits provide a great opportunity for volunteers to socialize, get to know others and share mutual interests.  Volunteer activities are especially helpful as a way to help those who are not well connected or knowledgeable about a community to learn about and become more engaged.

4.     Involvement with nonprofits can also expand ones knowledge and skills in areas, which can be applied within the for-profit sector.  By working on committees or on projects with others who have extensive knowledge and skills, one can learn new approaches and tools that are applicable back in the workplace.  Nonprofits utilize volunteers in multiple roles, and areas of planning, development, operations and oversight, which have applicability to businesses such as marketing, finance, investing, budgeting, facility management, legal, public policy, economic development, sales, human resources, etc.  Volunteers not only contribute to the nonprofit’s body of knowledge but they often learn about and are exposed to new knowledge, resources and skills which can be applied back at their workplace.

5.     Involvement with nonprofits can also provide an opportunity for businesses to demonstrate positive corporate citizenship, thus adding to their own brand awareness and reputation.  Customers respect and admire companies that give back to the community and are involved in making the community a better place for all.

6.     Employees are appreciative of their employers who recognize the benefits of volunteer involvement and who encourage their employees to be engaged as volunteers in the community.  Employee engagement as volunteers with and through their employers can help to build company morale.

7.     Most important, a quality nonprofit engagement can be among the most personally rewarding and fulfilling experiences in one’s life.

Over my many years of work with nonprofits, I have come to appreciate and admire the many corporate partners and volunteers who have worked with and on behalf of nonprofits.   There are also corporate/nonprofit partnerships that raise ethical questions, and which can potentially hurt the reputations of both entities.

Case examples:
A.     The law firm that offered a major gift and pro bono legal services for a major nonprofit with the proviso that they would not accept event sponsorships or advertising in their publications from any other law firm.  While that approach may have been a smart business practice in the for-profit world, it put the nonprofit in a very difficult position.  In this case it was a nonprofit serving children.  If they agreed to those terms they would put themselves in a situation where other gifts from lawyers could be lost and fewer children could be served while protecting the interests of the initial firm.  Would such a precedent then result in only accepting gifts from one dentist, one car dealership, or one plumber?  While involvement with a nonprofit can help a business in many ways, the primary engagement with the nonprofit should not be solely for business development.

B.     Another more common example is the company that approaches a nonprofit with an opportunity to make a percentage off of all sales by that company during a set period of time from purchases made by customers who are connected to that nonprofit and have been given a coupon by the nonprofit provided by the company.  Should a nonprofit spend its time selling a product or business to its donors, members, clients and “friends”, if the products being sold have no bearing on the mission of the nonprofit?  Should staff and volunteer time be used to increase sales for that company?  If the nonprofit did not have to promote the project at all and the for-profit entity simply said that on a certain day X percent of all sales would be contributed to a specific nonprofit, the offer and involvement of the company becomes more of a philanthropic endeavor.

C.     A bank provides the major sponsorship for a fundraising event.  In appreciation of their philanthropy, the financial institution was to be given significant recognition for their gift by the nonprofit and an opportunity to have a visible and prominent role at the event.  The bank made a request to have an opportunity to follow up after the event with those attending the event and requested a list and contact information on all attendees from the nonprofit as part of their sponsorship agreement.   It would not be appropriate to share with them the contact information of attendees without the permission of the attendees.  In this case, the nonprofit came up with an alternative arrangement and allowed the Bank to conduct a door prize drawing. To enter, participants filled out a bank entry form and gave their contact information with the knowledge that the bank might follow up with them with more information about the company.  The door prize was provided by the bank and all aspects of the drawing were conducted by and identified as being a program of the bank.

I often share as a positive example of good corporate citizenship, the case of a national investment firm that encouraged its leadership to be involved with nonprofits. For them, relationships with people of high net worth were keys to their business success. They had representation as volunteers and board members on many of the nonprofits in a particular region of the country and ended up with the largest market share of nonprofit investments.  Yet, their performance as investment managers was not as good as the majority of their competitors. There was a reason they were able to be so successful despite their performance.  The nonprofits who utilized the firm had done their homework, had expert leadership on their investment committees and had significant reserves and endowments to invest.  The reason this firm still got the lion’s share of nonprofit business in that region was directly related to the quality of involvement and ethical engagement of the company volunteers within the community and nonprofit sector over many years.  The value of their corporate citizenship, leadership and assistance to nonprofits far outweighed the lack of return on the financial investments made with the bank by their nonprofit customers.  Good corporate citizenship became one of the biggest business assets of that particular investment firm in that region.

As with any endeavor, that involves many different participants, there are good and bad examples.  Fortunately, within the nonprofit sector, involvement with the for-profit community has overwhelmingly been a mutually rewarding partnership that has been of tremendous benefit to the community at large, the companies engaged and those served by nonprofit organizations.

Corporate involvement with nonprofits IS good business.

What are other examples you have seen of the good, bad and the ugly?
Corporate Engagement with Nonprofits


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