By Diane Knoepke, Vice President, Alford Group
Over just the past few months, we have been the beneficiaries of an absolute embarrassment of riches in terms of high-powered convenings and insight-filled reports related to corporate/social sector collaboration and investment. I dare say we are seeing an unprecedented level of research and conversation about the role of companies in driving social sector outcomes and vice versa. While digesting it all can feel like sipping from a firehose, I’m finding that so many of my partnership conversations right now are coming back to three themes, all of which are supported and driven by these great insights coming from all corners of the corporate social innovation and philanthropic worlds.
#1 Heightened consumer expectations, and how companies are responding
Sixty percent (60%) of Americans now expect companies to play a greater role in society, particularly given the new administration. Tina-Marie Adams, Midwest Managing Director of APCO Worldwide, shared this data point at last month’s Social Innovation Summit, drawn from research her firm had recently completed. This is further borne out by data from Cone Communications’ 2017 CSR Study, which found that “millennials are putting their faith in companies to ignite change,” with 71% of millennials hopeful that business will take the lead (compared to U.S. average of 63%).
Many companies are responding to these heightened expectations by stepping into expanded public roles as issue leaders, problem-solvers, and pot-stirrers (see Reebok’s recent viral tweet).
Many of them are jumping into, if not starting, conversations they may have shied away from a decade, or even a year, ago. And others who have been trailblazers are finding greater traction as their audiences have greater appetite for companies playing these leadership roles. At this year’s Engage for Good Conference, Allstate received the Golden Halo Award in part for its Purple Purse program that focuses on ending financial abuse and domestic violence. This program not only raises and gives funds, it raises awareness and gives new tools in support of the national conversation (see their most recent video for one of many examples). The Allstate Foundation has been running the Purple Purse program since 2005, yet it feels more timely and fresher than ever before as the platform connects the dots between the zeitgeist, consumer expectations, Allstate’s own expertise, and modern storytelling.
Indeed, these corporate responses are in many ways mirroring the trends we are seeing in increased acti-giving (activism giving, sometimes known as “rage donations”) by consumers in 2017. As individuals increasingly see their social sector contributions as directly protecting or advancing their own interests or values, they are looking for corporate partners to be engaged, including and beyond those issues that directly relate to their businesses.
While the customer may be king, companies are also reacting to how their employees feel about the company’s investments in the social sector. Expectations that employers will put their money where their mouth is (and their mouth where their money is) are also prompting many companies to make changes. Since employees, especially Millennials, want to have an impact on the world through their careers, employers are responding by making new and expanded investments of funds to the social sector, donating firm skills and expertise to causes, and providing employees the opportunity to volunteer and contribute their own time in order create the impact they are looking for. All of these efforts (among others) are ways that companies today are better meeting the expectations of their employees, as well as their customers.
#2 The economics of corporate/social sector partnerships
If companies are bucking the status quo to respond to customer and employee expectations, can we quantify the changes in overall corporate investment in social sector initiatives and partnerships? It’s a necessarily complicated question.
We are not yet seeing dramatic increases in philanthropic giving by corporations. The recently released Giving USA 2017 report showed modest but steady growth in gifts by corporations in 2016 with a 2.3% inflation-adjusted increase over 2015. This finding is aligned with economic indicators, including growth in U.S. GDP and corporate pre-tax profits, which typically positively affect corporate giving. Thus we will not be surprised to see more rapid growth in philanthropic giving by corporations next year, especially if economic factors continue to be supportive to that trend.
With that said, we expect much of the growth in corporate investment to continue to come in other areas not captured (or not fully captured) by the philanthropic statistics. We expect the continuing trend toward companies increasingly using their core business budgets—marketing, innovation, research, employee engagement, etc.—on social sector partnerships and initiatives will accelerate as their consumers, customers and employees are clearer and more demonstrative about their expectations of companies.
In some cases, companies are growing their social sector partnerships even when signs might point to the opposite outcome. For example, according to the recent Engage for Good Charity Checkout Champions 2017 report, funds raised through charity checkout programs remain strong despite a changing retail landscape. Bricks and mortar stores are “responsible for the lion’s share of checkout fundraising dollars,” which is not surprising given the particularities of online shopping behavior and the risks of interrupting their purchases with an additional step or ask, even if it is totally optional. (It is of course much easier and more common to abandon a virtual cart than it is to abandon a physical one.) As retailers continue to creatively advance their point-of-sale fundraising efforts, they are also looking hard at how mobile payment technology will evolve their plans for not-too-distant future campaigns.
#3 The gap between transactional and transformational partnerships is widening
We continue to see a great number of relatively small corporate payments to nonprofit organizations in support of events, corporate teams, volunteerism, matching, workplace giving, and the like. Often these monies come from local corporate budgets to recognize employee board service, demonstrate community citizenship, or supplement network-building. Many of these small transactions add up to significant dollars for nonprofits and, if managed efficiently, can represent a good return on fundraising efforts. They are often unpredictable, however, in terms of whether companies will come back year after year because it is often difficult to demonstrate the value to the corporate supporter.
We also continue to see many large corporate partnerships and platforms featuring one or more nonprofit organizations, including many moonshots or “big bets” coming from philanthropic, innovation, and marketing budgets. These are often custom-built, multi-year, multi-platform partnerships that aim to meet both big social goals as well as advance one or more of the corporation’s interests. For example, Subaru’s attempt to make America’s national parks zero landfill aims to advance significant environmental progress while also building customer loyalty and further credibility for its sustainability initiatives. At the Social Innovation Summit, Rose Kirk, Verizon’s Chief CSR Officer and President of the Verizon Foundation spoke about the company’s deep involvement in learning initiatives to make sure everyone has access to and is part of the digital economy.
While each company and nonprofit has its own definition of what constitutes a small or large investment or partnership, we are seeing fewer and fewer great successes in the middle ground. Companies are increasingly either making a big bet (core business) or giving what they have to spare (non-core concerns). Corporate leaders do not want to go part way with a big bet or put the squeeze on the core business just to give more for an ancillary purpose. The good news is the same is true of many nonprofits, as the partnerships in the middle ground are often the hardest to maintain at an efficient level that keeps the value exchange equitable between partners.
So while moonshots are not right for everyone, and neither are smaller transactions, we suggest an extra bit of care when you find yourself building partnerships in the middle ground. Make sure your parameters, expectations, and objectives are crystal clear so you avoid finding yourself in a lopsided partnership, especially if the partnership feels more significant to one partner than it does the other.