Dear Kim:

I work as the Development and Marketing Manager for a small education nonprofit, and we are frequently asked by businesses to join marketing efforts. For example, an insurance agent wants to give us a finder’s fee if we refer clients to him, a jewelry store wants to give us a percentage of sales by customers who mention our name, and an art sale wants to give us a percentage of sales for use of our mailing list. Of course, to market the business offers, our nonprofit is supposed to include the business offers in our newsletter, send out a special mailing, and encourage our donors and friends to support these businesses through word of mouth. We don’t incur any direct costs as a result of these efforts, other than staff time, but I am more concerned about whether we are doing the right thing by promoting certain businesses for what is probably not a lot of money for us in the end. Will we alienate our other business donors in the same field? Should we be using our mailing lis!
t in this way? Is it appropriate to spend our time and energy building sales for other businesses even if we do get a percentage? Is there a situation when it does work to partner with a business?

—Wary of Dubious Fundraising Offers


Dear Dubious:

You are right to be wary. Your job is to build the donor base for your nonprofit. Businesses who want to help your nonprofit should be encouraged to do so, and they can be thanked in your newsletter and on your website. You have the gift, and they have the results of good will as people patronize them because they gave you money. It is clean and clear.

Getting into arrangements like the ones you describe are problematic for a number of reasons. You say there are “no direct costs except staff time,” but in a small organization, staff time is the biggest direct cost. What would you be doing with your time if you weren’t promoting someone else’s insurance agency? Further, people who might have given you money directly think instead, “Oh, I’ll buy a piece of jewelry and some money will go to this organization.” You get less than you would have had they just given you a gift. Your current donors may get tired of having their names given to businesses for advertising, and some may stop giving you money for that reason. And finally, as you point out, you are eventually going to have so many of these little partnerships going on that you will have to say no to new ones, thus possibly incurring some hard feelings.

There are times when it works to partner with a business, but it needs to be thought through and often needs to be time-limited. For example, a popular grocery store may give your organization 5% of sales on a certain day, once. You then advertise that arrangement. You have your money, and they have increased sales on that day. A gift shop may say that a percent of sales of a certain line of gift items will be donated to your organization. They put up a sign to that effect in their store and you tell people about this in your newsletter or website. People wanting this item go to that store to get it, and shoppers deciding between one item and another may choose the one that benefits your organization. Businesses are also always welcome to buy ads in your adbook for an event.

Your board of directors needs to help you develop a policy about these kinds of partnerships; in general, fundraising efforts need to give preference to efforts that result in outright gifts to your programs, not money contingent on the success of someone else’s business endeavor.

— Kim Klein