Although corporate giving makes a relatively small portion of all philanthropic gifts, ignoring nearly $18 billion in donations per year can be a costly mistake for nonprofit organizations. While fundraisers spend much of their time visiting with individual donors to find out who they are and what they value, less attention seems to be given to the motivations of corporate donors. More and more, companies today are making investments and gifts to organizations that can create shared value.
Shared value is an idea put forth by Michael Porter and Mark Kramer in 2011, representing an evolution from what is traditionally thought of as corporate social responsibility (CSR). Although these CSR-type gifts may provide some economic incentive, such as tax benefits, they are rarely made with profit maximization in mind.
Shared value goes beyond simply doing good and seeks to create economic value for the company and social impact simultaneously. Shared value investments can unlock new markets, create efficiencies and lower costs in a company’s value chain. Where charitable giving may be tangent to a company’s mission, shared value is integrated into core business operations.
This has a number of implications for how nonprofits interact with corporations. Each of the partners bring something of value to the equation. Companies have capital and an increasing interest in doing social good. Nonprofits have the ability to address and solve social problems, but often lack the capital to do so on a larger scale.
The new focus on shared value will require partnerships that go beyond simply recognizing corporate donors at an event or in the annual report. There will be increasing, deeper collaboration between nonprofits and corporations to solve social issues. When nonprofits see the opportunity for these partnerships, it is important that they demonstrate not just the impact they have, but also the measurable value it can provide for the company.
Two other trends to watch regarding shared value: First, corporations will increasingly look to fund organizations and projects that are sustainable and scalable. Donations or investments will increasingly be viewed as seed capital, not gifts that need to be made year after year. Second, shared value investments will continue to shift toward international developing markets, as companies seek to increase their awareness with future customers. This report from Coca-Cola, an early adopter of shared value, provides numerous examples of their initiatives and nonprofit partnerships.
This only scratches the surface of shared value, but we encourage you to visit the Shared Value Initiative to learn more about this shift in the nonprofit and corporate relationship.
85 percent of companies are measuring and tracking the societal outcomes and/or impact of their investments and are starting to use the data to adjust their core programs (CECP Giving in Numbers: 2015 Edition).
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