The funding landscape for non-profit organisations (NPOs) is challenging and complex. Trialogue’s research has shown that most NPOs receive funds from companies, and most companies provide corporate social investment (CSI) funds to NPOs. As CSI evolves, what approaches can NPOs use to maximise their ability to raise funds from and partner with companies?
The importance of fundraising from companies
Trialogue’s research in 2023 showed that most NPO respondents (75%) received funding from South African companies and NPOs remained the most popular recipient of corporate funding, with 84% of companies directing an average of 63% of their spend to NPOs in 2023.
The fundraising approach that was most successful with companies was solicited proposals from NPOs, with 44% of companies reporting that it had resulted in funding. This approach was used by 95% of NPOs and generated the largest share of their income (47% on average).
Securing funds from companies requires spending time learning how to approach corporate donors effectively to form fruitful partnerships that yield great benefit for both parties.
What corporate donors want
In a 2021 Trialogue webinar ‘Fundraising from corporates’, Trialogue asked companies to answer a poll question on the three most important things they look for when partnering with NPOs.
The three top answers were:
- Proven impact
- Alignment with organisational focus
- Financial standing and existing corporate support
While there are clear commonalities, each company has specific requirements and objectives. The preferences of a target company make careful researching vital. Besides ensuring that your organisation aligns to the company’s business objectives, it is also important to understand that each company’s CSI strategy differs. Knowing the big picture and context of what a company wants to achieve can provide a significant advantage.
Tactics to boost success with corporate donors
- Diversify your fundraising sources. This helps address various operational requirements and reduce reliance on any single funder.
- Target companies thoughtfully. A ‘spray-and-pray’ approach seldom works effectively. A better approach is to research target companies carefully and tailor your interactions. Understand target companies’ CSI strategies, focus areas and business needs.
- Ensure you are compliant. Most companies need to know that the NPOs they donate to or partner with have all their compliance boxes ticked, including Section 18A status. Some require documents that verify BBBEE status, tax compliance, board documentation, financial statements, annual reports and reference letters. Some companies also perform site visits.
- Be specific about your financial and non-financial requirements. Although some companies focus on cash giving, many companies donate goods and services and have employee volunteering programmes in place. Identify your requirements and ensure these align with the corporate’s strategy. This can uncover opportunities to meet your requirements from more than one part of the business. It also offers benefits to the company and the opportunity to involve their staff in volunteering, for example.
- Offer business benefits. Take time to identify the benefits that partnering with your organisation offer the business, and make them clear. For example, some companies want reciprocity and recognition, such as their brand being featured. Others may have targets around specific social outcomes. And some may want to involve business stakeholders or employees in their CSI. Make the benefits to the company clear.
- Share your track record of financial stability. Reassure companies that you currently have or previously had good relationships with other funders as well as good budgeting skills and financial record-keeping.
- Demonstrate monitoring and evaluation. Be able to explain your theory of change and how your organisation approaches monitoring and evaluation. Show how you track and use outcomes data.
- Drive lead practice and thought leadership. Be prepared to demonstrate expertise in your sector and community and to show your contribution to lead practice.
- Be transparent and accountable. Trust is everything. Ensure you can commit to being open and transparent, and to sharing your successes, challenges and the lessons you are learning.
- Think about an exit strategy. While it is not easy to think about what happens when funding is withdrawn at this stage of your approach, it is reassuring that funders know you have a plan to continue to run your organisation, or ensure you will not abruptly leave a community that depends on your organisation.
Shifting power dynamics
The perceived power dynamic has an impact on development. A typically unhealthy dynamic is where the funder, donor, or company is seen as the party with resources and capital (and therefore holding more power), and the NPO finds itself in the position of being subservient to the funder. While the for-profit business may have certain access and resources, the NPO has development know-how, on-the-ground experience and often trust within a specific community.
Approaching a funding relationship as a partnership, where the NPO can show its value and expertise to the business, can shift the dynamic. While some companies still follow short-term grantmaking approaches in their CSI, many are moving towards strategic CSI, where their CSI initiatives are aligned to the business and offer clear business and developmental benefit. Understanding this from the perspective of a business can help you to know how to position yourself as an ideal strategic partner.
At the Trialogue Business in Society Conference 2022, Lorenzo Davids, CEO of the Development Impact Fund and The Justice Fund and former CEO of Community Chest South Africa, presented tips and ideas for NPOs looking to partner with companies.
Some were valuable alternatives from the more conventional advice. He emphasised that donors were inundated with proposals and lengthy meetings, and advocated for NPOs to focus on ten-minute meetings instead. He emphasised that donors all have three questions in mind when engaging with NPOs:
It is unlikely that your pitch will be successful without convincing answers to these questions.
He advised to never ask for money outright, but to impress donors with intelligence and your commitment to navigating complex outcomes that will have high economic and social impact.
An NPO leader needs to be on the pulse of their development area and be able to tell their story with data, conviction, intelligence and passion.
Websites, articles, directory listings and social media accounts can also form part of your pitch. That is why it is important to make sure that your message is clear, consistent, professional and engaging.
Source: The original version of this article was published in the Trialogue Business in Society Handbook 2023 (26th edition).
