Not-for-profits will typically target businesses first when trying to raise funds for an event or project. That may be advantageous if seeking a major sponsorship. However, I tell groups business donations are not the donations on which they need to depend or be seeking on a long-term basis. They may appear to be low-hanging fruit, but they can serve to distract their focus from the better, long-term option of asking individuals.
For decades, as a volunteer, I sat around tables where the conversation would arise surrounding the hosting of fundraisers and someone would say, “maybe we can ask the businesses in town if they would be willing to donate “X” to the project.” Then others would start to run with suggestions of who, when, where, and more. They would often make judgements based on the perceived generosity of one business verses another. As time went on and I had experience of being on the opposite “side,” in those businesses being asked, the realities of charitable giving provided a different perspective.
While groups continue to ask, one simply needs to review the charitable giving patterns presented annually by Giving USA, researched by the IUPUI Lilly Family School of Philanthropy. Businesses are not where the majority of giving takes place. It’s quite the opposite. In fact, in 2021 the report states that “giving by corporations comprised 4 percent of total giving in 2021.” Four percent, nor forty!
On the flip side, “giving by individuals comprised 67 percent of total giving in 2021.” One can add to that the “9 percent of all gifts made in 2021” given by bequests. Those stats tell us that ultimately, 76% of all giving originates with individuals. The other 19% of giving is “by foundations – which includes grants made by independent, community, and operating foundations.”
In consulting with organizations, I often share these numbers as further proof that they need to be building much stronger relationships with their individual donors. Larger not-for-profit organizations get it, and usually have the staff to accomplish it. In fact, staffing and frequency of ask are reasons why one will see religion (27%) and education (14%) at the top of the “contributions by type of recipient organization” graph within the Giving USA report.
Among smaller organizations, when volunteers are charged with doing the asking, they’ll most likely resort to what they know, and perceive as easier, “go ask a business.” If their organization had the foundation for development that’s needed, they could be handed a list of donors to approach who have shown a propensity to give and have a passion for the project.
Donations from businesses are generally perceived as low-hanging fruit but today’s businesses are becoming overwhelmed with such requests, particularly in smaller communities. One business owner told me it was “not uncommon to receive one or two requests per day” in his community. As a small business, the perception was they’d like to do more but obviously have their limits.
When I worked for a larger regional bank, such requests were funneled to a charitable giving committee. I was fortunate to have been asked to serve on that committee to represent the smaller markets in our footprint. Once again, the volume of requests was overwhelming as we met monthly to review them. While we had established our four main areas of focus for giving, few organizations took the time to research and make a compelling ask. Some would send a “to whom it may concern” request which unfortunately spoke volumes. Even in asking this business, though they could have made a much more passionate and connected request, they were still competing for a limited pool.
My perception is that most smaller organizations do not have the development structure in place to benefit from the giving by individuals that could prove to be much more fruitful. That’s understandable because it takes a commitment of time, talent, and resources to build the infrastructure needed. They go for what they perceive as the quick hit rather than something that will consume more time. Personally, I believe a major funder could transform some of these organizations by offering capacity building opportunities around development prowess.
Until that happens, organizations need to recognize that their greatest opportunities long-term, and for sustainability, is to begin to focus on individual giving in a new way. Develop strong relationships, understand the hot buttons of your donors, and take time to understand their motivations. Connect them, engage them, and ask them. You’ll be amazed at the low-hanging fruit that you’ll find in dealing directly with these individual donors.
David J. Fry, is Founder/CEO of Effective Advancement Strategies in Greensburg and author of Purpose in the Darkness, He consults with businesses and nonprofits throughout Indiana. He may be contacted at firstname.lastname@example.org