Too Much of a Good Thing? Study Hints at Unexpected Downside to Corporate Philanthropy
Corporate philanthropy is on the rise. According to Giving USA, corporations gave $18.45 billion to charity in 2015. That number is still the lowest of the four primary giving streams Giving USA tracks—individual giving, foundation giving and charitable bequests are the other three—but it’s still an awful lot of money.
And it’s growing mighty fast. Its 3.9 percent increase over 2014 is greater than both individual giving (3.8 percent) and bequests (2.1 percent). What once was a niche funding stream is quickly becoming an ocean. (Or, at least, a very large sea).
We’ve devoted plenty of coverage to corporate philanthropy—what it means for the sector, ways nonprofits can get a slice of the pie, the goings-on at major corporate foundations, etc. And we’ve also warned of corporate philanthropy’s downsides, particularly the dangers of accepting donations from companies with spotty reputations.
But now, there might be another aspect to consider: quantity.
Yuliya Shymko, assistant professor at Vlerick Business School, and Thomas Roulet, faculty member at King’s College in London, looked at 449 cultural institutions—in this case theaters in Russia—over a seven-year span, and came away with two key findings, published in Harvard Business Review:
- Each additional corporate donor made a theater 10 percent less likely to receive a nomination for the Golden Mask award, Russia’s highest arts honor. (So, a theater with one corporate sponsor would have a 20 percent higher chance at an award nomination than a theater with three corporate sponsors.)
- Ongoing support from a corporation harmed a theater’s reputation more than support for an individual project. (For example, “‘Rosencrantz and Guildenstern Are Dead,’ Brought to You by ExxonMobil” would be less harmful than “Moscow Theater Company and British Petroleum: Celebrating 20 Years of Partnership.”)
A couple things to keep in mind here. One, this is a relatively small, highly specific sample—a couple hundred Russian theaters may not be indicative of a larger trend affecting, say, U.S. animal rights organizations. And two, using award nominations as a proxy for public support is, admittedly, a shaky way to apply the findings beyond the small nonprofit sub-sector in question.
But it’s something. And if you’re willing to buy that number of award nominations provides a rough approximation of public perception, the findings show that, yes, it’s possible that having too many corporate partners could lead to a significant drop in reputation and, in turn, a drop in donations from individuals.
Should you cut ties with all but one or two corporate donors? No, especially if those partnerships are working for you. Partnering with or accepting donations from corporations whose values align with those of your nonprofit is still the top priority. But it’s still worth keeping an eye on the numbers to be sure you don’t hit some critical mass.