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PART I
UNDERSTANDING CORPORATE AND FOUNDATION FUNDRAISING
Corporate and foundation grants can be an important element of a nonprofitās comprehensive fundraising strategy. One of the advantages of including foundations and corporate giving programs in your fundraising plan is that they are primarily structured to make charitable contributions. Their reason for existing is to allocate funds to nonprofit organizations, and in many cases, they are bound by law to do so. Your job, then, is to discover corporations and foundations that share your interests and will want to invest in your programs. [See Part IV, Finding the Right Funders for ways to match your organization with a potential funder.]
A partnership with a nonprofit can help a corporation or foundation achieve its goals, such as increasing knowledge, providing programs for the disadvantaged, or economic development. These partnerships can be mutually beneficial when the interests of the nonprofit fit well with a funderās goals.
Once you understand the world of corporate and foundation fundraising, you are better able to assess the real potential for support from this constituency. A thorough knowledge of your organization (its philosophy, mission, and programs) is also vital to this assessment.
HOW CORPORATIONS AND FOUNDATIONS FIT INTO YOUR OVERALL FUNDRAISING STRATEGY
There are many ways a nonprofit can raise money to support its organizational and programmatic needs, including annual gifts, major gifts, corporate contributions, foundation grants, government grants or appropriations, planned gifts, special gifts, or membership drives. [Definitions for many of these terms can be found in the Glossary.] Including corporate and foundation prospects in your strategy will help diversify your funding base and add another dimension to your organization.
Corporations and foundations have many motivations for giving [covered later in this Part], yet they are generally very specific in their interests. This focus helps the funder prioritize the many requests that come their way. When a nonprofit is deciding whether to include corporate and foundation support in their fundraising strategy, this must be taken into consideration. While these types of support can provide needed funding, your organization must be prepared to addressāand advanceāthe specific interests of the funder.
Your fundraising strategy should include ways to leverage existing relationships. Some of your best individual donors, in fact, may help you open the door with a company or foundation. In turn, a solid relationship with a corporation may help you uncover an individual who will support your agency. Integrating corporations and foundations into your overall fundraising plan allows you to take advantage of these opportunities.
Although individual contributions account for roughly 75 percent of nonprofit funding, certain types of initiatives are more conducive to corporate and foundation support. These include, among other things, pilot or demonstration projects, seed grants, research, and sponsorships. [See Glossary.] Many corporations and foundations prefer time-limited projects that can be easily measured and demonstrably impact a particular issue. Knowing the opportunities as well as the limitations of corporate and foundation funding will help you decide if you want to approach these entities for support.
This book shows you how to approach funders and write proposals for specific initiatives [see Part III: Define the Project for the ways ideas are generated and projects defined], but how do you know if corporate and foundation funders should be part of your nonprofitās overall fundraising strategy? To determine this,
1. Identify and prioritize your funding needs.
You may have funding needs that resulted from strategic planning, or as part of a fundraising campaign plan. A campaign is a concentrated, comprehensive fundraising effort centered around a unifying theme. Your needs may be capital (for example, a building) or programmatic (art workshops for children), among others. List all your needs and decide which will receive the highest priority for funding. If you are a fundraiser in your organization (and not charged with determining the strategic direction), consult with the leadership. Prioritizing needs is an extremely useful process as it provides direction for fundraising efforts.
2. Take the list of prioritized needs and assess the probability (āfundabilityā) of corporate or foundation support for each.
This part details the motivations and general giving practices of corporations and foundations. Use it as a guide as you evaluate the list. For each priority, ask yourself, āWill a corporation or foundation be interested in funding this initiative? Will the funder benefit or will this project help them achieve their goals?ā You might also consult others who are experienced in fundraising to get their assessment of fundability. Be realistic when making your assessments.
3. From this assessment, develop a final list of initiatives that are potential recipients of corporate and foundation funding.
4. Share your assessment with others in your organization so that this information can be integrated into the overall fundraising plan.
It is important to note that not all project ideas or priorities arise from a thoughtful planning process within the nonprofit. A funder may be the one to present an opportunity for funding that gets the nonprofitās attention, causing the project to become a priority. For example, a foundation whose goal is to help the disabled may approach a nonprofit about developing a career exploration program to supplement existing programs for these individuals.
Seeking support from corporations and foundations can be an important part of your organizationās total fundraising effort.
Historical Perspective
The origins of corporate and foundation giving provide us with insights that help us as we seek to understand these entities. In fact, many of the earliest foundations still exist today! Economic, governmental, and societal factors have shaped the current form of corporate giving in America:
Corporate philanthropy began in the late nineteenth century when railroad companies supported the YMCA, ultimately helping to provide safe housing for railroad workers. Until World War I, most early philanthropy was the result of a few prominent millionaires like Andrew Carnegie and John D. Rockefeller. The passage of the 1935 Revenue Act allowed corporations to deduct charitable contributions from their federal income taxes, providing an incentive for corporate giving and eventually leading to more accurate reporting of philanthropic activities.
World War II brought a dramatic rise in philanthropy (high income and high taxes), coupled with an increasing need for support for social welfare causes in the U.S. and abroad. It was during this period that the business world began to be a powerful force in American philanthropy. Corporations realized that investments in human capital not only helped individuals in the community but ultimately would benefit business.
By the early sixties, nearly half of the states in the U.S. had legally authorized corporate philanthropy. Most U.S. companies had by this time established their own in-house foundations. The federal government continued to encourage corporate gifts through deduction provisions in the tax laws.
The Reagan era brought major social service cutbacks and new tax laws that encouraged greater corporate social responsibility. Corporations were allowed to deduct up to 10 percent of their taxable income for charity.
The Exxon Valdez oil spill of 1989 challenged Americaās traditional model of philanthropy. Strategic alliances became the basis for the new model of corporate giving. AT&T became the first company to implement the new corporate philanthropy model, linking foundation initiatives to business functions.
The economic boom of the nineties created new wealth (largely due to the high-tech industry), and a new breed of donor emerged. [See Part II: The New Philanthropy.] Throughout the brief history of foundations, government (legislative and regulatory), economic, and societal changes similarly have influenced their behavior. Private foundations began to be established in the early twentieth century through the wealth created in the steel and oil industries. Philanthropists like Andrew Carnegie and John D. Rockefeller sought ways to systematize their charitable givingāto create endowments that would address social illsāand foundations provided the structure to accomplish this. There was a tremendous growth in both assets and the number of foundations after 1940 due to economic prosperity (the income of both individuals and corporations was increasing, and high tax rates encouraged giving), international focus (America had developed a more international perspective after the war), taxes (an increase in the federal inheritance tax was a huge incentive for the wealthy to establish foundations), and power (foundations were a way for wealthy families to continue to exert their influence).
The number of foundations continued to grow until the Tax Reform Act of 1969, when a new set of rules changed the industry. This act established excise taxes on income earned by private foundation investments, required specific grant payouts, and set standards regarding public reporting. Subsequent amendments to this act, as well as tax incentives, contributed to an increase in the number of foundations. While the seventies and eighties were unremarkable in terms of growth, over the past twenty years, the number of foundations has more than doubled.
Corporate and foundation philanthropy has changed over time but never as rapidly as in recent years. Foundations and corporations are being forced to reevaluate their giving structures and priorities, and notions of social responsibility have also changed. āWorking for the public goodā now often means targeting specific issues where funders can make a difference. Donors want more interaction with the issues they address as well as more accountability from grantees. As we become more and more global in perspective, philanthropy is also more far-reaching. We want to impact our local communities but also feel a responsibility for other parts of the world.
Despite recent dramatic changes in giving practices, the early philanthropists were in many respects very similar to the new philanthropists in their approach. They gave money, but they also gave their time and expertise to causes they believed in. āEngagedā philanthropy applied as much to railroad baron Leland Stanford as it does today to software billionaire Bill Gates.
WHY CORPORATIONS AND FOUNDATIONS GIVE
Corporations and foundations provide funding to nonprofits for a variety of reasons, some altruistic and some not. In general, pure philanthropy is rare. Today, most funders have a clear agenda in mind and are seeking partners to help them achieve those agendas. Your project must align with these goals or you will not be considered for funding.
Some foundations that believe in your organizationās mission and capabilities, however, may ask your executive director to articulate your highest-priority project, and if you make a good case for support, they will provide funding. Even these funders have parameters within which you must fall.
Typically, foundations and corporations are interested in project support versus endowment or general operating support. This is due to several things:
- Endowment (a permanent fund that generate...
