Toxic philanthropy: When to refuse a donation
Julie Whelan Capell |
Refusing donations is not something we talk about a lot in nonprofit circles. But there are some situations when it might be the right thing to do.
– A corporation in town is known for its generous philanthropy … but also known for union-breaking and your organization promotes a living wage.
– A local business offers a percentage of the profits on a certain product or event … if your organization will promote the product/event and supply people power to assist with sales.
– A board member has a connection to a corporation and wants to facilitate a donation … but you are an environmental organization and the corporation is known for polluting.
If you’ve never encountered these types of dilemmas, you’re either just starting out in your nonprofit career, or maybe you’re not looking closely enough at where your donations are coming from. For many years I worked at youth-serving and substance abuse prevention nonprofits in Milwaukee–home of many of the biggest breweries in the United States–and can tell you from personal experience that even the biggest and best-run nonprofits sometimes struggle when faced with these types of donations.
Don’t even get me started on politicized donations. I recently heard of a political party wanting to donate to a nonprofit in exchange for favorable publicity! If the minefields surrounding this specific situation aren’t immediately obvious, I refer you to the National Council of Nonprofits, which has long held that “the public’s overall trust in the sector would diminish and thus limit the effectiveness of the nonprofit community if individual 501(c)(3) organizations came to be regarded as Democratic charities or Republican charities instead of the nonpartisan problem solvers that they are.”
Here are some of the other dangers involved in accepting “toxic philanthropy:”
1) We like to pretend that corporations are donating to us because they support our mission, or they are just being “good corporate citizens.” That may be partially true, but their primary purpose is not to help your cause. Corporations donate to charities in order to burnish their public image. And there is almost no better way to brighten up a tarnished corporate brand than cozying up to a nonprofit, most of which have super-shiny, uber-positive public images. Research shows that the public is likely to trust nonprofits more than other institutions such as for-profits or government organizations (O’Neill 2009). So every time your nonprofit accepts a corporate gift, you are also accepting a risk that by associating yourself with that corporation, you might lose some of the goodwill you have generated among your supporters and also the general public.
2) About those you-scratch-my-back-I’ll-scratch-yours schemes (A.K.A cause-related marketing), be aware they often come with such a huge time commitment that any benefit in dollars is significantly diminished, if not completely obliterated.
3) Remember that any donation over $5,000 will be listed on your organization’s IRS form 990, so keeping questionable donations on the down-low is not an option. Would you want to see an article trumpeting that your organization had accepted a donation from Corporation X on the front page of your local newspaper?
Things you can do to make sure your nonprofit is prepared when a toxic gift shows up at your door
1) Value your brand – Understand the real value of your nonprofit brand, put policies in place to protect it such as insisting partners use your name and logo correctly and give you a chance to see any publicity materials before they are sent out.
2) Value your time – Be sure to ask how much time it will take to work on the donation. When a company/corporation asks you to promote their product in exchange for a percentage of the profits, be sure to realistically estimate how much staff time will be needed. Staff time is one of the biggest expenses nonprofits have, and staff are one of our most valuable resources. Be sure you are using them wisely. Insisting that volunteers carry most of the load on cause-related marketing promotions can significantly increase the value of the final donation and provide purposeful engagement for volunteers.
3) Involve your board – Of course, any really big decisions about refusing donations should be vetted by your volunteer leadership. It will help all concerned to make the best decision if your organization already has gift acceptance and cause-related marking policies.
In truth, each of the cases cited above could be viewed as either situations to run away from or opportunities ripe for compromise. Your final decision will depend on factors unique to your nonprofit. If you need help creating gift acceptance or cause-related marketing policies, call MWA…we can help.