How Nonprofits Can Help Meet Growing Demands for Authentic Corporate Social Responsibility
Starting off another year with yet another pandemic surge is a grim déjà vu. It serves as a reminder of just how quickly our world can change, and, in the nonprofit world, it urges us to double down on innovative approaches to meeting needs. Technologically-driven fundraising methods are absolutely essential, and have been for some time now, but more and more the public is demanding a radical shift that puts businesses front and center to put their capital and their brand voices to work supporting authentic social impact.
A Great Retail Reset is occurring. Consumers are reimagining their relationships with brands, and those brands are looking to assert clear values that resonate with their customers and employees, in addition to their bottom lines. Among consumers, the most dramatic shift has been to look at the people behind the brands, and to seek out those brands with a human face that leverage their platforms to do good in the world. The youngest generations, in particular, have been most active in demanding corporate social responsibility, and as their buying power increases, brands are responding to those expectations.
Customer journeys are beginning sooner, with people forming impressions about brands based on stances they take on social issues or steps they’re taking to be more sustainable before they’ve even considered what those companies are selling. With customer acquisition costs skyrocketing of late, there’s no doubt that brands are eagerly looking to develop customer loyalty through their social impact strategies.
So what does this mean for nonprofits? Notably, this is an exciting new dynamic, but adaptations are required to make the most of it. For-profit companies represent much larger pools of capital than individuals and potentially much steadier donors. For an industry that’s long been faced with the challenge of donations coming seasonally — during the holidays, for instance — the opportunity to fuel new growth and greater, more consistent impact is enormous.
But for nonprofits to fully embrace the support that the private sector is looking to provide, they need to overcome traditional stumbling blocks to partner with brands. Nonprofits typically set donation minimums to ensure that forming a relationship with a brand will result in more dollars coming in than are spent navigating the state-by-state regulatory hurdles required to create that partnership. Brands too are faced with this predicament since they also have to shoulder a costly legal burden, so smaller businesses and smaller nonprofits who don’t have the financial resources to front these costs have been largely left out of the giving economy.
The Urban Institute’s latest "Nonprofit Trends and Impacts" report highlights this disparity clearly: Its research finds nonprofits with annual budgets less than $500,000 rely on individual donations for 30% of their revenue as compared with the large organizations for which that figure is only 18%. If small nonprofits are enabled to partner with private sector companies to raise funds, their dependence on seasonal individual donations can be attenuated.
Fortunately, technologies have begun to emerge that solve this problem. The best model that has emerged is a platform that pools brands’ donations in order to meet nonprofits’ donation minimums, enabling brands of any size to participate in giving. On the other side, the best of these platforms charge nonprofits little or nothing to develop partnerships with brands, putting the onus on the brands — whose financial incentive is already to engage in giving back — to foot the cost of the technology. This enables these platforms to be as broad as possible and minimize the frictions that block donations to nonprofits.
A virtuous cycle of giving is emerging, driven by the youngest consumers. Their power of choice to shop with brands that are actively creating positive social impact is enabling a cascade effect that puts more money to work solving society’s toughest challenges. With social, environmental and a host of other problems mounting, it’s time we all lean in on this dynamic and expand the giving economy.