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Closed for Business: The Billions Nonprofits Are Missing Out On

Closed for Business: The Billions Nonprofits Are Missing Out OnNonprofits are missing the boat on fundraising with businesses. Last time I checked the average nonprofit raised just five percent of their revenues from businesses. Compare that number to the 72 percent nonprofits raise from individuals.

Nonprofits would be eager to target businesses more if they knew just how much potential they had - and why businesses just might be the untapped future of giving.

Let me explain.

Nonprofits have been looking in the wrong place. Up to this point, nonprofits have been fighting for the scraps from the company foundation - the tiniest slice of the philanthropic pie.

On average, companies donate less than .80 percent of pre-tax profits to charity. For example, despite a nearly $1 billion advertising budget, McDonald’s donates just $33 million to charities. And that includes donations to its own nonprofit, Ronald McDonald House Charities (RMHC).

The future isn’t bright for traditional corporate giving. Faced with tough competition at home and abroad and slimmer profit margins, companies are looking to cut expenses and boost investments. Companies see traditional charitable giving as a drain. Writing checks to nonprofits simply doesn’t contribute enough back to the bottom-line.

But businesses need nonprofits - a lot. “What social problem is your company trying to solve?” Nowadays it’s a question every business has to answer, especially if they hope to woo America’s largest generation, Millennials.

Millennials - men and women ages 18 to 35 - may be the most socially conscious generation in American history. They expect companies - and nonprofits - to meet their high standards with responsible and impactful programs.

Millennials are natural do-gooders, but they’re not alone. A global survey by Edelman showed that 87% of people of all ages believe businesses should place at least equal weight on profit and purpose.

Baby Boomers, Gen Xers and even Gen Z - the generation born after 2000) are not far behind Millennials in their commitment to supporting causes and driving social change.

The bottom-line is that businesses need the help of nonprofits to accomplish their social good objectives. But nonprofits need a better avenue for support from businesses than the company checkbook. The solution is win-win partnerships from which both partners can profit.

A better way of raising money with businesses. To raise more money from businesses and to help them achieve their objectives, nonprofits need to tap the power of two groups that businesses have unequaled access to: consumers and employees.

As Charles Best, founder of Donorschoose.org, has said: "The key to cause marketing [i.e. win-win partnerships] is the brand enabling the consumer to be a philanthropist." The money needed to address social problems isn't in the company. It’s in the people to which businesses can give you access.

Take the example of the home improvement chain Lowe’s, which has 2,000 stores, 245,000 employees and 15 million customer interactions every week. Together, Lowe’s and the Muscular Dystrophy Association have raised $50 million with checkout programs that engage customers and employees.

These programs are just as successful locally as they are nationally. When Shake Shack was a small chain of restaurants dotting the east coast, they raised $300,000 annually for No Kid Hungry.

There is no one tactic for success. Your choice of fundraiser will vary by company and opportunity.

The first step for nonprofits is to look beyond the company checkbook and see the incredible opportunity that exists with employees and customers. With 30 million companies in the United States, nonprofits are losing out on billions. Sadly, the cost to society is much higher.

Closed for Business: The Billions Nonprofits Are Missing Out On Joe Waters

The preceding post is by Joe Waters. Joe shows do-gooders, nonprofits and businesses how to create win-win partnerships that raise money and change the world. Joe writes the web's leading cause marketing blog, Selfishgiving.com, and is co-host of CauseTalk Radio. His most recent book is Fundraising with Businesses: 40 New (and Improved) Strategies for Nonprofits.

Topics: Nonprofit Programs
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