Corporate Giving:

When Reducing Nonprofit Support is Necessary, What is the Best Approach?

Reducing your support of nonprofits is unfortunate, however sometimes necessary. If a for-profit company is experiencing unprecedented declines in sales due the economy or other reasons, it is understandable to re-examine its philanthropic support while looking for ways to preserve cash.

If your company’s strategy regarding giving to nonprofits has not been clearly articulated, it is important to do so before making any changes in giving. This is important because the first decision in revising your giving program must be to decide if the changes are temporary in response to immediate financial pressures or if they are permanent and represent a change in your giving strategy.

So, how can a for-profit find the silver lining while reducing their support for nonprofits?

1. Be prompt with decision-making.

Don’t delay decisions; nonprofits need time to assemble responses. Make decisions now on the basis of what you know now.

2. Demonstrate explicit communication.

Be clear about whether your reduced support is a temporary or a permanent change in your giving program. Nonprofits survive based on optimism, so they are inclined to treat your reduction as temporary. A misunderstanding on this point could prove fatal to a nonprofit.

3. Enhance flexibility in the timing and usefulness of your giving.

Be mindful of the implications on nonprofit fiscal year results. Providing your support before their fiscal year is over has substantially more value than providing it after. Another option is to make the gift you can support unrestricted. That way, the nonprofit can keep your support even if they decide their best response to reduced giving must be to suspend the program you have been supporting.

For more information on corporate giving and ways to soften the effects of reduced nonprofit support, reference the Crisis Opportunities chapter on pages 151-155 of More Than Just Money.

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