PMA Consulting, LLC

Why Establish Public Funding? To Drive Corporate Funding, Duh!

Amidst significant shrinkage in public funding, local nonprofits are often downplaying their reliance on public funding and highlighting their past, present and future partnership with private funders. This strategy aimed at cultivating and soliciting private funding for programs the city and state can no longer fund is not unjustified.

Various individuals, foundations, congregations and corporations are often compelled to align with nonprofits that claim, “Private funding is essential to the ultimate survival of our organization.” Furthermore, private funders are often motivated to provide support to nonprofits in ways that public funders will not, including:

  • Focusing on emerging issues, new needs, and populations not yet recognized as special interests.
  • Pooling or matching resources with other funders.
  • Providing start-up or experimental funds.
  • Responding to unique needs and circumstances.
  • Delivering alternative forms of assistance, i.e., software/hardware donations, materials, expertise, etc.

These advantages might inspire some nonprofits to question the need to establish public funding altogether. Yet, in recent interviews, PMA sought to uncover donor requirements and interests and found that many local corporate partners will examine the public funding of a nonprofit when evaluating their own intent to fund that nonprofit.

While corporations are clearly drawn to nonprofits that lack the funding to fulfill a key, programmatic mission, they often look to the nonprofit’s capacity to secure and maintain public funding as a barometer of future organizational health and sustainability. Specifically, corporate funders value public funding as an indication that a nonprofit:

  • Focuses on programs impacting significant groups in society.
  • Responds positively to rigorous application processes and benchmarks.
  • Submits thoughtful and sustainable proposals, as opposed to reactive requests.
  • Aligns with legislative policy and philanthropic trends.
  • Is Accountable, Accountable, and Accountable!

PMA suggests that while every nonprofit must evaluate the viability of public funding (i.e., alignment with legislative policy and internal capacity to cultivate, solicit and steward public relationships), they must also consider the implications a lack of public funding may have on securing corporate funding. Additionally, consider the following motivations when refining the corporate strategy in your annual development plan:

  • Rational Self-Interest – Corporations support communities where their employees live and their customers shop.
  • Location – Corporations are primarily interested in helping the communities in which they operate.
  • Image and Citizenship – Corporations want to present a certain “image” and support organizations that engender that image.
  • Key Leadership Involvement – Corporations frequently support nonprofits in which their c-level executives are directly involved.
  • Employee Involvement – Some Corporations support nonprofits their employees are involved in.
  • ROI – Corporations are tying their gifts to a “return on investment,” e.g., visibility, credibility, or increased sales.
  • Entering A New Market – Corporations frequently support a local nonprofit or two as a way to introduce themselves to the community.
  • Corporate Public Policy – Some corporations support nonprofits that will enhance their ability to pass public policy.
  • Public Relations – Corporations often want to turn-around their image and will look for nonprofits that represent a specific constituency.
  • Bottom-Line Profits – Corporations are attracted to nonprofits with a constituency that can generate direct sales for them.