A few weeks ago, I presented at the 2024 AFP NC Philanthropy Conference with a talk titled Why Was It Declined? Navigating the New Realities of Corporate Social Responsibility. It not only marked my return to engagement with AFP-related events but also revisited Next Stage’s Profit & Purpose series of community research.
My presentation outlined what Next Stage has learned over the years about what drives private-sector companies to allocate resources to nonprofits. I’ve presented this talk in some form or another for the better part of a decade, peeling the onion with each passing year to get at the heart of the matter.
The session appeared on the learning track Rebels, Renegades & Pioneers — apropos for thought leadership from our social innovation company. And, as usual, this talk raised some eyebrows.
The talk’s primary message is that many companies — not just publicly traded corporations — have increased their internal expectations for creating positive community impact as a result of pressure via socially responsible investing. It’s a trendline that’s only increasing (despite the headlines), and this trend is positioned to be one of the most important paradigm shifts in the philanthropy landscape over the next decade. These expectations will influence how organizations can address inequity, economic and social mobility, and a host of other societal ills for years to come.
This shift suggests a new marketplace for investment where nonprofits can build lasting relationships with companies centered on service delivery instead of byproducts, like cause marketing or employee engagement.
The primary barrier? The common nonprofit perception that “corporate philanthropy” is merely a reward for a job well done.
Is Philanthropy Selfless or Selfish?
Self-interest has always been at the heart of philanthropy, whether we like to acknowledge it or not. And yet it’s verifiably the truth.
An essential book on the topic — Donor-Centered Fundraising by Penelope Burk, the founder of Cygnus Applied Research — uses data-supported research to back up the assertion that donors give selfishly. They give because it feels good to give, and organizations that help donors feel good about their contributions retain them and grow their giving.
“Warm glow altruism,” as Burk describes it, is a function of the donor positioning themselves as the protagonist on a journey. It’s the good they want to do that drives their story forward.
And while nonprofits tend to readily celebrate a donor’s generosity, they often make the misstep of centering those celebrations around their own story, their own programming, and their own efforts. But when organizations talk primarily about themselves, they risk alienating such donors. A donor may wonder, “How do I fit into this narrative?” And importantly, if they don’t see their starring role in the ultimate impact of their contribution, they’ll be less inclined to donate again in the future.
Adopting a Business Development Mindset
With this focus on self-interest as a backdrop, nonprofit development professionals would be well-served to shift to seeing themselves as vendors to companies — ones that deliver a service that meets a need. The term “fundraising” emphasizes the dollar raised rather than the value produced in an exchange. Nonprofit fundraisers who view their role as building win-win partnerships that add value for both parties (donor and recipient) are far more likely to be successful.
In this way, the development department in most nonprofits could be rebranded as a form of business development. The nonprofit’s services serve as a platform for value exchange. The key is to understand better what the customer’s (in this case, the donor’s) needs are and then build an alignment.
This is not only true for the relationship between nonprofits and the private sector. It’s a concept that can be applied to financial support from foundations, individual major gifts, and the annual fund. What’s more, it’s likely how most nonprofits already view funding from the government (where grant compliance makes clear the role data plays in demonstrating value exchange).
As a former development professional who now leads business development for my own private-sector company, I can speak from experience — it’s the needs of the customer (again, the donor) that matter. Here’s how you can better position yourself for these discussions:
- Do your research. Donor research tends to focus on identifying capacity and affinity for a mission based on support for similar causes. Understanding what might be driving specific interest in your nonprofit requires reframing the cultivation process, exploring how values, relationships, and external factors influence decision-making.
- Talk less (
SmileListen more). Showing interest in your prospect should be about more than just small talk before launching into a pitch. Demonstrate a desire to learn. Ask for a tour of the company’s headquarters. Inquire about the philanthropy foundation’s namesake. Show a desire to build a partnership rather than engage in a purely transactional relationship. - Focus on the value. Nonprofits tend to over-deliver on content when presenting to institutions, burying the lede in ways that can frustrate prospective donors. A one-page summary that draws attention to the value exchange can help clarify expectations for all parties. If you think of your solicitation less as a request for support and more as a memo of understanding, you’re starting to get the picture.
Embracing a New Nonprofit-Donor Dynamic
It’s time for nonprofits to embrace a business development mindset when engaging with those who provide them financial support — especially corporate partners. Fundraising should no longer be viewed as asking for contributions as a reward. Instead, fundraising should be positioned as a way to create value-driven partnerships with mutual benefits. By understanding the self-interest of donors and aligning your services with their goals, nonprofits can establish long-term, sustainable philanthropic relationships.
As the landscape of philanthropy continues to evolve, nonprofits who prioritize understanding their donors’ needs and focus on value exchange will be better positioned for success in the increasingly competitive marketplace for social impact.
If you disagree, I’ll probably be presenting on the topic at a philanthropy conference in the future. Stay after and chat for a while — I’d welcome your feedback.
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Next Stage CEO Josh Jacobson launched Next Stage as a social enterprise in 2014, bridging his professional experiences as a nonprofit practitioner with his consulting expertise. He has led Next Stage’s work with 200+ clients, including nonprofits, private-sector companies, municipalities, faith institutions, philanthropies and community-based organizations. Josh’s skills in strategic positioning and tactical design help clients achieve their goals. He guides Next Stage’s work in strategic planning and collaboration management and is a major contributor to the company’s thought leadership efforts.