Nonprofit organizations typically target businesses first when trying to raise money for an event or project. This can be advantageous if you are looking for a major sponsorship. However, I tell groups that corporate donations are not the donations they should depend on or seek long-term. They may seem like low hanging fruits, but they can distract from the best long-term option of asking individuals.
For decades, as a volunteer, I sat around tables where the conversation arose around organizing fundraisers and someone said, “maybe we could ask the businesses in town if they would be willing to give “X” to the project. Then others would start running with suggestions of who, when, where, and more. They would often make judgments based on the perceived generosity of one company over another. Over time, and I’ve had the experience of being on the “opposite side,” in these companies interviewed, the realities of charitable giving provided a different perspective.
charity donation
As the groups continue to ask questions, one need only look at the charitable giving models presented each year by Give to the United States, studied by the IUPUI Lilly Family School of Philanthropy. Businesses are not where the majority of donations take place. It’s quite the opposite. In fact, in 2021, the report states that “corporate donations accounted for 4% of total donations in 2021.” Four percent, not forty!
On the other hand, “donations from individuals accounted for 67% of total donations in 2021”. We can add to this the “9% of all donations made in 2021” given by bequest. These statistics tell us that ultimately 76% of all donations come from individuals. The remaining 19% of donations come “from foundations — which includes grants from independent, community, and operating foundations.”
Consequences
Consulting organizations, I often share these numbers as further proof that they need to build much stronger relationships with their individual donors. Large nonprofits get it and usually have the staff to accomplish it. In fact, staffing and frequency of requests are reasons why religion (27%) and education (14%) will be seen at the top of the “contributions by type of recipient organization” chart in the Give to the United States report.
Among smaller organizations, when volunteers are tasked with making the request, they will most likely resort to what they know and perceive to be easier, “go ask a company”. If their organization had the necessary development groundwork, they could be given a list of donors to approach who have shown a willingness to give and who have a passion for the project.
Corporate donations are generally seen as low hanging fruits, but today’s businesses are overwhelmed with such requests, especially in smaller communities. One business owner told me that it was “not uncommon to get one or two requests a day” in his community. As a small business, the perception was that they would like to do more, but obviously had their limits.
When I worked for a large regional bank, these requests were routed to a charitable giving committee. I was fortunate to have been asked to serve on this committee to represent the smaller markets in our footprint. Again, the volume of applications was overwhelming as we met monthly to review them. Although we’ve established our four main areas of interest for donations, few organizations have taken the time to research and make a compelling request. Some sent a “to whom it may concern” request which unfortunately said a lot. Even asking this company, although they could have made a much more passionate and connected request, they were still competing for a limited pool.
My perception is that most small organizations do not have the development structure in place to benefit from individual donations which could prove much more fruitful. This is understandable as it takes a commitment of time, talent and resources to build the necessary infrastructure. They opt for what they perceive as a quick hit rather than something that will take longer. Personally, I think a major funder could transform some of these organizations by providing capacity building opportunities around development prowess.
Until that happens, organizations need to recognize that their greatest long-term opportunity, and for sustainability, is to start focusing on individual giving in a new way. Build strong relationships, understand your donor pain points, and take the time to understand their motivations. Connect them, engage them and ask them. You will be amazed at the handy fruits you will find by dealing directly with these individual donors.
David J. Fry, is founder/CEO of Effective Advancement Strategies in Greensburg and author of Purpose in darkness, He consults with businesses and nonprofits throughout Indiana. He can be contacted at strategies@etczone.com