Corporate Return on Philanthropy

Close up of a money puzzleHow Money Shapes Nonprofit Culture 

To simplify, we collect things, people, and experiences, into broad categories. We find oatmeal in the cereal aisle. We vilify used car sales people. We lump nonprofits together.

 But every cereal, sales person, and nonprofit is different. With nonprofits, it’s helpful to sub-categorize them into sectors: education, religion, environment, social service, and the arts. It’s even more helpful to look at them in terms of their key income stream. Key income streams create massive impacts on a nonprofit culture.  

What does that mean for your return on philanthropy? Understanding a nonprofit’s culture will help you to build partnerships that provide returns sooner. Here are three different income streams, and a sprinkling of their pros and cons. 

Nonprofits who earn vast mission earned revenue earn income by selling products and services for a fee. Success depends on understanding market forces, getting and keeping customers, and serving customers well. Performing arts organizations, for example, sell a lot of seats. Pro: These nonprofits readily understand selling a service or product and are comfortable selling to you. Con: They like creating packages to market to many businesses rather than to generate custom relationships.     

In contrast, nonprofits that focus on donations seek individual gifts; everything from twenty dollars to bequests. Pro: These entities excel at marketing elusive value. The best grow communities around that value which you can join to extend your connections. Con: They assume everyone is making a donation. If you invest business dollars to generate a return on philanthropy, make your expectations crystal clear before you give.  

Different cultural nuances exist in heavily government funded nonprofits. To receive the bulk of their funding, they meet extensive requirements and enhance the reputation of the legislators who fund them. Pro: They excel at deadlines and low-risk experiences. You will find them thoughtful and careful. Con: The entry ramp to these partnerships can be long and winding.

To use this information, question your potential partners about how they receive revenue. Their answers will give you insight into their culture and a tool to earn better returns on your philanthropy.  Is your philanthropy reaching its true philanthropic potential?  Learn more at www.kedconsult.com.  

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