Handling the Ethical Dilemmas that Corporate Partners Can Bring to a Charity

IN THE TRENCHES

By Rebecca Gardyn

Each year, for more than 40 years, the Reader’s Digest Foundation dutifully handed over a check for $40,000 to the Boys & Girls Clubs of America. No strings. No quid pro quo. No questions asked. So when 1993’s check never showed up, Kurt Aschermann, chief marketing officer for Boys & Girls Clubs, decided to find out why.

That was a decade ago, but Mr. Aschermann remembers it like it was yesterday — because, he says, that was when he realized that the world of corporate giving was changing. He called the foundation and was told that he would have to talk to the company’s marketing department before it could authorize the check’s release. “Basically what they meant was, ‘We’ve been giving you this money for a long time, and now it is time to talk about what value-added we can get back from this deal,’” says Mr. Aschermann.

Around the same time, he says, another of the organization’s corporate sponsors, the Coca-Cola Company, began looking for more from its relationship as well, asking for exclusive rights to sell soda at all Boys & Girls Clubs. “It became very clear that the world was changing,” Mr. Aschermann says. “And if we were going to start approaching corporations like business partners rather than donors — which was clearly becoming the more lucrative opportunity — I knew we had to start making some hard decisions about what we would and would not do for corporate money.”

In a time when corporate donations are increasingly difficult to secure, some nonprofit organizations are finding that building business partnerships with their contributors can both fill their charities’ coffers and lead to greater publicity for their groups’ missions. Like good marriages, though, nonprofit-corporate relationships need to be negotiated with honesty and mutual respect in order to stand a chance of survival. It can be tempting to marry for money, but charities that rush into a commitment without setting up boundaries between themselves and their new partner risk finding themselves in integrity-compromising positions after the honeymoon is over.

Not every nonprofit group considers corporate sponsorships a good match for its mission. But for those that want to take the plunge, here are some pointers:

Lay down the law. Before anything else, says Mr. Aschermann, set down strict ground rules. After Reader’s Digest and Coca-Cola suggested changes in their relationships with the organization, he says, he consulted with his staff and board and came up with several guiding principles — the “deal breakers” that would determine the charity’s willingness to negotiate further with any potential corporate sponsor. The Boys & Girls Clubs’ rules included a refusal to endorse products or provide exclusivity, and a refusal to sell sponsors’ products to its members or ask its members to sell those products.

The charity also developed the Corporate Opportunities Group, an in-house promotions department solely dedicated to managing corporate sponsorships, making sure that both parties’ goals are being met, and ensuring that the integrity of the organization’s mission is kept intact. Though the organization has had to turn away large sponsorship sums from corporations that would not abide by their stipulations, it has still managed to woo about 30 corporate partners, which brought it more than $14-million last year — while, Mr. Aschermann says, staying true to its mission.

Know the charity’s worth. Corporate-sponsorship dollars are very different from donations or grants, and the companies that provide those dollars view them as investments. Donations and grants are given out of a sense of altruism — and if the gifts come with strings attached, they usually relate to the money’s specific use in furthering the charity’s mission. Sponsorships, however, are marketing deals. All too often, nonprofit organizations fail to see the difference, says Leslie L. Bires, who oversees sponsorship activities for Bank of America’s Global Corporate and Investment Bank from the company’s San Francisco office. “Sponsorships, unlike grants and charitable contributions, require tangible brand-promotion benefits, alongside intangible ‘feel-good’ benefits,” says Ms. Bires. As such, keep in mind that corporations are looking for something from their association with a particular charity that they are unable to buy elsewhere.

With that in mind, it’s important to consider the advantages for both the charity and the potential sponsor. A little research into the company and its business goals may reveal what it could gain from being associated with a particular organization.

Before approaching Target Corporation, for instance, Jill Linwood, director of grants and sponsorships at the Asian Art Museum of San Francisco, says that her staff members spent months thinking about why the department-store chain would want to join forces with their museum. Recognizing that their organization could offer Target wide visibility among an upscale audience, they pitched the company the idea of “Target Tuesdays” — free admission to the museum on the first Tuesday of the month. The event will begin in April, with door prizes — items from the department store that begin with the letter “T,” like teapots and toasters — to be given out to museum visitors.

Ms. Linwood sees the partnership as a good fit for both parties. “This sponsorship supports their strong brand, gives logo visibility, and complements their fun, irreverent ads,” she says. In return, she says, the museum has the potential to increase its audience by the exposure it gets to Target’s customers and employees.

Find the right match. A sponsor’s ability to throw money at a charity doesn’t necessarily make it the “right” partner. Look for companies with values similiar to those of the organization, businesses that are willing to take the time to understand the group’s mission, says Carrie Suhr, director of corporate development and strategy at Kaboom, a nonprofit organization in Washington that builds playgrounds in needy neighborhoods.

Kaboom works with such companies as Ben & Jerry’s, Computer Associates, and Home Depot because these corporations share the charity’s view that community investment, employee teamwork, and philanthropy are important business strategies, says Ms. Suhr, “not just something to do at the end of the day if the resources are still there.”

But to uncover the “right” partners, nonprofit groups must do some digging. Delve into potential partners’ previous sponsorships of nonprofit groups: Find out what others think of working with them, get to know all the products and services they produce, and be sure an association with them would not have the potential to harm a charity. “We think it’s smart to take things slow — to date a sponsor before taking the plunge,” says Ms. Suhr. “We ask them to tell us what motivates them, what other types of charities they support, and what has worked well with them in past relationships.”

Jonathan Roseman, director of communications and external affairs at Home Depot, in Atlanta, says that the similarities between his company and Kaboom have helped nurture their six-year relationship. “There is a healthy mutual respect for each other’s missions that I think is responsible for our success,” he says. “I sometimes see companies trying to spin a nonprofit’s mission to suit their own marketing needs, when what they really should do is find a nonprofit that already delivers that mission.”

Protect the charity’s identity. As a charity strives to fulfill its sponsors needs, it should remember that an association with a well-respected charity is gold to many marketers, so protect it diligently, says Sarah E. Paul, a partner at Holland & Knight, a law firm in New York. “In all cases, charities should maintain control of their intellectual property,” says Ms. Paul, who specializes in nonprofit clients. “Make sure that you have the right to approve each and every use of your organization’s name, logo, and identifying descriptive phrases, and inspect all press releases.” If a charity provides a link to a sponsor’s Web site, the site should be monitored to ensure that it does not contain content that might reflect negatively upon the organization.

Obviously, she adds, get everything in writing. Often the corporate sponsor will provide a sample contract, but Ms. Paul recommends that charities develop their own personalized model corporate-sponsorship agreement to use as a starting point for each deal, since sponsors’ agreements are likely to be written to their advantage.

In the contract, she says, also be sure to lay down the circumstances under which the charity may end the agreement. “We’ve had clients so happy to be associated with a particular corporation that they wanted to lock the corporation into a multiyear deal,” she says. That’s fine, but nonprofit groups should always give themselves an out. She suggests retaining the right to bail in the event that the sponsor fails to perform a material term of the contract, such as making a required payment or product donation, or if the sponsor files for bankruptcy, or engages in an activity that might harm the charity’s reputation.

Don’t sell out. On the one hand, a charity wants to help its sponsor get exposure to its constituency. On the other, that exposure can’t create the perception that the charity has traded its integrity for a few extra bucks — a perception that may be fueled, for example, by tacky, inappropriate banners. To help maintain her group’s reputation, Sara Fousekis, director of corporate development at the Berkeley [Calif.] Repertory Theatre, says she not only sends potential sponsors detailed guidelines for promotional materials, but invites company representatives to tour the theater and see a performance. “Once a sponsor witnesses firsthand who you are as an institution,” she says, “you have a better chance of ensuring that signs or banners are well integrated in the space and, therefore, well received by your audience.”

Sometimes, a corporation will ask a charity to literally sell out its constituents. The most common request that potential corporate sponsors make of her group, says Ms. Fousekis, is to provide access to the theater’s list of subscribers. This request is always denied to protect the privacy of its members. The theater has, however, found ways to compromise without compromising its ideals. For instance, a newspaper that sponsors the group recently asked to send a special discounted subscription offer to ticket holders. Rather than handing over the mailing list, Ms. Fousekis says, the theater integrated the offer into its own subscriber newsletter. The sponsor got the exposure it wanted, while the charity was able to control the amount and terms of the effort to market directly to its supporters.

Designate a deal maker. When wooing or making plans with a sponsor, a charity should pick one person from its ranks to lead the negotiations. The leader should be given full authority to make decisions on behalf of the organization, recommends Gerald Bartlett, president of GB3 Group, a communications and marketing consultant in San Jose, Calif., that serves nonprofit clients.

“There can be no back-seat driving or second-guessing from the board, the executive director, or anyone else, ” Mr. Bartlett says. “No company wants to hear: ‘Well, these terms sound good, but I’ll have to go back to my board and run all this past them.’” Such fits and starts are deal killers, he says, and will leave a bad taste in the mouths of corporate representatives.

He also recommends that nonprofit leaders insist on meeting from the start with most highly ranked executive possible at the corporation who will be directly involved in the sponsorship deal, one who has the power to make all decisions. “Being firm on this point signals that you are a skilled and savvy sponsorship negotiator,” Mr. Bartlett says. “It also saves you valuable time later when you find out that the person you have been dealing with is a support-level staffer who is having ‘exploratory discussions’ with several nonprofits.”

Stay confident. Mr. Aschermann says that the best piece of advice he ever received regarding negotiating corporate sponsorships was: Never let the for-profit guys think they’re better than you. “The for-profit world doesn’t think you work for a living,” he says. “They think you are less efficient and less effective than they are. Don’t ever let them think that way. Be prepared, know your business, and most importantly, always always stick to your guns.”

Has your charity embarked on a partnership with a corporate sponsor? Share your experiences in the Fund Raisers online forum.