How Nonprofits Can Replace Shrinking Government Funding With Corporate Partnerships

In today’s environment of contracting funding, nonprofits would do well to explore a new kind of conversation with corporate supporters. Foundations and corporations will soon see a new flood of requests for funding. If these conversations remain the usual transactional exchanges — such as sponsorships and grants — nonprofits can expect a lot of rejection. Foundations would have to triple their funding to fill the anticipated gap left by government clawbacks and cuts. There simply aren’t enough charitable dollars to go around.

The Case for Rethinking Corporate Partnerships as Funding Shrinks

Company marketing budgets and business budgets represent another potential source of revenue. To tap into these conversations, nonprofits need to put on their business hats and leave their beneficiary mindset at home. They also need to do a different kind of research to prepare. Nonprofits must understand what assets they have that are relevant to companies’ bottom lines — and know what those assets are worth from an investor perspective in order to negotiate proportional value. 

While leading corporate engagement for the American Cancer Society, a large U.S. bank offered $150,000 annually to license our name and logo on a credit card. By researching what that partnership was worth to the bank, we turned it into a $15 million, five-year deal.

Why Alignment Matters Most

Many factors contribute to powerful partnerships between companies and nonprofits, but alignment is perhaps the most important. There are different kinds of alignment beyond mission focus that must be considered. These can include demographic or psychographic markets, similar leadership perspectives or compatible business models. 

The strongest kind of alignment stems from significant relevance between partners’ business objectives or operations. This alignment is also the best indicator that a relationship can develop into a high-value partnership. Without it, the relationship often rests on softer, lower-priority alignments that are predictive of less value and longevity. A tie based solely on goodwill can ebb and flow with changes in leadership or company profitability — or external disruptions like pandemics and political shifts. 

Most nonprofits limit their line of sight regarding alignment to the area of mission, and they approach companies largely from a beneficiary position. These conversations are generally transactional in nature, involving exchanges of value such as single- or multiyear sponsorships or grants. Nonprofits must, of course, be aligned where their missions are concerned — but if they want sustainable, high-value relationships, they need to offer more value to the company. 

At the American Cancer Society, we would never align with a tobacco company because it directly contradicts the mission to save lives from cancer — tobacco use is the leading cause of cancer death and causes about one-third of U.S. cancer deaths, according to the Centers for Disease Control and Prevention. In fact, any ingestible or topical product that had a high correlation with cancer risk would also fail the test of mission alignment.

Alignment is also critical to the corporation. If a partnership is misaligned, it can pay a high price from consumer backlash. For example, a ketchup company once wanted to partner with the American Cancer Society after the release of independent research correlating lower cancer risk with tomato consumption. It proposed the tagline, “Until there is a cure, there is ketchup.” The fun of it faded quickly when we considered the kinds of foods ketchup is normally used on — hot dogs, French fries and red meat. These are not the best regular choices for a healthy diet. In essence, the concept was inconsistent with the nonprofit’s position on nutrition. That inconsistency could have led to public confusion and damaged trust for both the nonprofit and the corporation. And trust impacts sales.

How to Identify Ethical, Win-Win Corporate Partnerships

Once a nonprofit has narrowed its scope of possible partners from a mission perspective, it must look at business fit. This is a complex conversation requiring trust and vulnerability from all parties. Mutual understanding of business-related strengths and pain points can lead to ideas for value measured by bottom-line impact. 

For example, when Feeding America aligned with Sam's Club in 2006, the value exchange was designed to reduce food waste and redirect surplus or unsold food, benefiting both the retailer and food-insecure communities. Sam’s Club received a significant tax break for giving away the food and saved substantial employee time previously devoted to handling expired food. Meanwhile, Feeding America grew into a $5 billion powerhouse. 

Finding ethical, win-win business alignment is well worth the upfront time and effort such partnerships require. The idea of proportional business value back to a nonprofit is not common right now, but it can be a natural and powerful part of a new conversation with companies. 

Other types of business alignment from a company perspective can include pricing strategy, product or service awareness, customer affinity, regulation, new product development and market entry or expansion. These issues exist for nonprofits as well — but the language describing them is often different. Speaking the same language can be a tricky part of the secret sauce in finding partner alignment. Developing corporate funding strategies that create mutual business value will position nonprofits to thrive even as traditional funding sources decline.

The preceding content was provided by a contributor unaffiliated with NonProfit PRO. The views expressed within may not directly reflect the thoughts or opinions of the staff of NonProfit PRO.