Corporate grants: Clean enough?

by Thomas Boyd 

{Centered}: June 2013 (Vol. 6, No. 6)‏ - The Grantmanship Center

Corporations have been making charitable donations since the late 19th century. In those early years, most giving was to projects that would provide "direct benefit" to the company or its employees. Gradually, corporations began to expand their philanthropies to include organizations doing good work for the society as a whole. This evolution triggered heated debates within corporations about whether or not they could give away shareholders' money. One such debate resulted in a landmark court case: In A.P. Smith Mfg. Co. v Barlow (1953), the New Jersey Supreme Court ruled that "corporate gift-giving increases the goodwill of the corporation, and public policy should be to encourage corporations to provide to charities in the same manner as individuals are encouraged to give."  

Since the A.P. Smith decision, which settled the legality of corporategiving, the debate has shifted to whether or not a nonprofit doing "good work" ought to take the money. Many in the nonprofit world are ready to indict corporations for most of society's troubles. Corporations, they say, are the "bad guys." And yet:  

• Electronic Arts, the giant video game publisher, has been voted the worst company in America by The Consumerist. But EA has been out front in its support of LGBT themes and content and has taken heat for its progressive stance from the Christian right.

• The Hershey Company was named one of the eight worst companies to work for by the online publication viewmixed. But in November 2012, Hershey was named one of America's top 50 most civic-minded firms in The Civic 50 survey. 

• The Southern Company was rated the nation's "most irresponsible utility" by Green America in 2011. But over the past few years, Southern has donated more than $1.4 million for projects to restore wetlands, carry out coastal preservation, and clean streams. 

It's not easy to make durable, inflexible judgments about the right-or-wrong of corporate giving. "Bad guys" often do good things with their money. And corporate "good guys," despite their reputations, sometimes dirty their hands - as in Ben & Jerry's dubious use of the term "all-natural," and the Humane Society of the United States's revelations about egg-farming conditions at environmental-award-winning Kreider Farms. When a grantseeking nonprofit is evaluating a potential relationship with a corporate donor, black-and-white thinking isn't much help. Instead, here are some questions the nonprofit can ask:  

• Is the company's basic business in harmony with our values? There's probably not much debate about charitable gifts from Sturm, Ruger & Co. or Smith & Wesson, and the NRA got there ahead of you anyhow. If massive military contracting is antithetical to your values, you won't be turning to Lockheed Martin or Northrup Grumman. These are obvious examples, but they put the issue in focus. Grantseekers need to look closely at the alignment between a corporation's core businesses and the values that animate and drive the nonprofit. 

• The second question holds a mirror up to the nonprofit. Is our plan for using the money consistent with our mission and programs, or are we just hunting for big bucks? Sometimes a corporation's "bold new funding initiative" seduces a nonprofit into putting on a mask and pretending to be what it is not, to do what it does not actually do. An agency dedicated to youth programming, for example, probably should think twice about chasing a grant for senior services. 

• The third question is one of degree. If a company has been guilty of environmental, employee, or market abuses, is it getting better? Are improvements being made? Avon Products, recognizing its impact on forests, its carbon footprint, and the effect of palm oil plantations on species habitat, has taken steps to reduce its energy demands, increase recycling, and support sustainable practices where it can. That's not everything, but it's a worthwhile beginning. If your nonprofit is troubled by a potential corporate donor's history in an important area of social responsibility, take the initiative. Ask a lot of questions. 

• Finally, is a corporate gift likely to enhance or impede your nonprofit's standing in the eyes of important stakeholders?  Will some individual donors be turned off? Will your agency's clients be supportive or offended? Some smart nonprofits use a development working group--including senior staff, a board member, a client or two--to hammer out questions like these and make sure the gift is not a problem disguised as a check. If taking the money might cause a rift or a struggle within the organization, maybe you'd better pass. 

Corporations exist to maximize shareholder equity. The best of them (and sometimes even the worst of them!) see the importance of strengthening their communities. Nonprofits should resist the supplicant's bended knee and the knee-jerk anti-corporate stance; they have a $15 billion opportunity to make vital and energetic partnerships with companies where the fit is right and the work is worthy.

All grants, including government and foundation grants, come with complications, and nonprofits are vulnerable to subtle influences that can undermine their missions. A stakeholders' group can provide ballast, if you have good people on it, if they deliberate honestly, and if you listen to them. But nonprofits can and should protect their independence by diversifying their funding sources.  

Thomas Boyd's 40-year career in nonprofit management and development includes roles as a nonprofit executive, a corporate giving officer, and a consultant trainer for The Grantsmanship Center.