Those hoping to solve the problem of arts funding through private sector sponsorship suffered a further blow in November: Sherlock Holmes thinks it impossible. Actor Benedict Cumberbatch, who played the character in the recent BBC series, joined a growing list of public figures warning against relying on philanthropy and corporate sponsorship to plug the gap left by public funding. “It is naive to think there are untapped amounts of money waiting to be hoovered up,” he told reporters.

To an extent, he is undoubtedly right. Look at Arts and Business’ recent report on the scope for increasing private sector support for the arts and the scale of the challenge becomes clear. Public money currently accounts for 53 per cent of the arts income; private investment an average of just 15 per cent. And less than a quarter of that is from businesses.

As the report made clear, the size of the difference means private investment cannot hope to fill the gap. And when its comes to corporate support, that’s true outside the arts as well. Similar scales apply: corporate money makes up perhaps just three per cent of charities’ income; public money 36 per cent. At the ESRC Research Centre for Charitable Giving and Philanthropy at Cass Business School co-director Cathy Pharoah says that while the figures suggest a steady rise over recent years (at least until the recession hit), much of that is probably down to an increase in in-kind gifts.

When it comes to cash, she suspects the figure is fairly consistent.“I don’t think there is any real evidence of an increase in cash giving,” she says. “I’d like to hope companies would give more and they certainly could, but history suggests we’re unlikely to see it.” In fact, the recession and muted recovery has probably made things worse.

For a start, look at a list of the top ten corporate givers in 2005-6 and five were financial services firms. More widely, in the midst of the downturn last March, a YouGovStone survey for CSR and fundraising experts The Social Investment Consultancy suggested business donations to good causes would fall by a third as a result of the recession.

Whether that’s happened is arguable, but by last December Baker Tilly found in a study of 175 charities that corporate giving had fallen for 39 per cent. Consultants and charities also report a swing away from financial support from companies and a preference for engagement through volunteering instead.

As ACEVO’s head of corporate partnerships Richard McKelvey puts it: “A lot of corporates have band use of the ‘P’ word. Anything that’s seen as philanthropic may not be considered as particularly aligned to the mission of the business.”

Better, if not bigger
For all that, though, there’s considerable optimism that, while it won’t fill the hole, businesses’ support could be increased, and the coming months will see a range of programmes to that end. McKelvey, for instance, is behind ACEVO’s sustainable business forum, a network of companies and third sector groups looking at how to develop better and more sustainable partnerships; Arts and Business is committed to driving up private support, starting with its Big Arts Give on December 6 and The Big Society Network (BSN), co-founded by the government adviser Nat Wei, has partnered with Cadbury and Asda for a number of projects to take place in coming months.

The supermarket, for instance, will sponsor Your Square Mile, a volunteering scheme the Government hopes will become the largest co-operative in Britain. “There are definitely signs that the message around the Big Society has resonated with businesses,” says the Network’s director Steve Moore. “If my charity was looking at revenues over the next 12 or 18 months I would
certainly be looking at businesses offsetting some of the losses.”

It might require some new thinking from charities, however. At Business in the Community (BITC), community impact director Catherine Sermon says its recent consultation found considerable nervousness among businesses about the burden spending cuts might put on them. “If a charity believes that business will just replace statutory funding then they are probably going to be disappointed,” she says. “There is serious concern in businesses of being asked to fill a financial vacuum.”

However, at the same time, BITC figures show 78 per cent of its members want to scale up their support in terms of local community engagement, and a similar proportion say they want to help encourage other businesses to do more as well. “They do recognise that the need is greater, and they recognise that they can do more,” says Sermon.

However, the real change as a result of the recession is that companies are thinking more strategically about their corporate partnerships, says Think Consulting Solutions director Fiona Duncan. Her recent research on corporate partnerships shows them looking at how their engagement can align with their business to bring benefits to the company, its employees and society.

“It is no longer as simple as them picking charities they like and making gifts to them,” she says. The big message, she says, is that it is no longer about cash: “it is about businesses getting benefits and charities changing behaviours and achieving mission through working with companies”.

Examples of new approaches abound: Marks and Spencer's Plan A is one of Duncan’s favourites; O2’s Think Big project (see box out) is another; or in London, KPMG are working with social entrepreneurs to develop pitching skills to win business or Pret a Manger’s leftover meal deliveries to homeless shelters. As Jake Hayman, chief executive of The Social Investment Consultancy explains, such schemes don’t just provide longer-term branding benefits to the company, they make more efficient use of the business’s skills or market positioning. As he puts it: “The best programmes are where the value to the community outweighs the cost to the corporation.”

Business for both sides
Whether charities are well placed to spot these synergies and propose mutually beneficial partnerships is open to question, though. There’s no doubt some are already doing so. Global Action Plan has gone further than most. It gets more than 40 per cent of its income from corporates, having doubled the proportion in the last five years.

It’s not even fundraising: instead it provides training and consultancy to businesses on how to achieve the environmental targets within their CSR programmes, working on a fee basis with the likes of Sky, EDF, O2 and the Royal Bank of Scotland. “Environmental charities have tended to have quite a fractious relationship with the corporate sector, focusing on lobbying,” says the charity’s chief executive Trewin Westrick. “It has taken us time to realise that if we can get a company like Sky on board with our agenda their reach and inference is enormous and we can actually better hit charitable targets with that sort of relationship.”

Such innovative thinking isn’t always so in evidence, however. Back at BITC, Sermon says there is anecdotal evidence of an increase in the quantity of requests to businesses from charities but also a decline in their quality: a sign, perhaps, of desperation rather than thoughtful planning.

New research for ACEVO by London Business School suggests the same. Asked about the barriers to forming and maintaining successful partnerships with
charities, the biggest barrier identified by companies was the mindset of the charity: they too rarely focus on the value they could add to the business and too often solely on seeking a committed source of financial or other form of support.

However, it’s not just charities that could up their game. As Hayman says, part of the problem with tracking corporate giving is that it’s poorly measured, but just as there are examples where the benefit to the community outweighs the cost to the company, there are also plenty of examples where the price put on the gift by the business far outweighs the true value.

“If 100 lawyers paint a park bench, you can say that each is costing the firm £200 an hour, but the community isn’t seeing that value, even if the firm’s celebrating it,” he says. “We need to look at the value to the community not the
cost to the corporate, and far too many businesses are still dodging that question.” It cannot just be up to charities to think how businesses’ gifts of products or services can best be used.

Furthermore, it is also probably right to insist on pressing for greater financial support. Curt Weeden is president of South Carolina-based consultancy Business & Nonprofit Strategies, and author of Smart Giving is Good Business, to be published February 2011. He says it’s inevitable companies will favour gifts in kind over cash donations.

In the US and for US affiliates that’s because of the tax system, which allows companies to use the fair market value (rather than the actual cost) of the gift for deductibility purposes. Elsewhere the advantages in terms of branding usual make the case. So the biggest corporate donor last year was Pfizer Corporation, which reported donations of over $2 billion. Of that, 97.6 per cent was products.

Charities could and should, therefore, be more creative and strategic in seeking out companies whose products and services could support them (as indeed some are – BitC points to Bristol charities Priority Youth Housing and Wayahead,
which merged last year with pro-bono support from several professional services firms).

However, Weeden also says charities should continue to push companies to “up the ante” when it comes to cash gifts, which have been sliding since the late1980s in terms of pre-tax net income. Twenty-five years ago companies would allocate between 1.8 to 2.2 per cent of pre-tax profits; today that’s under one per cent. “It has dropped more than half,” he complains. In his book he suggests a movement to see businesses to commit to a minimum one per cent. Given that some oil companies give only a third of that, it would open up $8 billion more in cash for non-profits in the States alone.

However, for this to happen charities still need to give businesses a reason to give. As Weeden puts it: “You need to go to the company with a business perspective not a begging bowl.” Companies are not set up for philanthropy, he concedes, but if charities can show them it makes sense to give not just for society but for the business too, then the decision is that much easier – if not elementary.

Peter Davy is a freelance journalist


Case Study: O2: Think Big
O2 unveiled its Think Big initiative earlier this year: a scheme supporting initiatives devised by young people to improve their communities. As Helen Parker, community investment Manager at O2, explains it’s the culmination of a progression that’s seen the company move from a tradition approach to engagement with the voluntary sector with a charity of the year some five years ago to a more complex arrangement.

The current scheme offers £300 grants, training and support to those aged between 13 and 25 for projects helping their local communities After the initial grant, applicants have the chance to apply for £2,500 to scale up their project. It builds on the success of the companies similar It’s Your Community project founded in 2007.

Such schemes are no cheaper for the corporation: it’s putting £5 million into Think Big over three years. However, it has much greater visibility for the company in terms of its brand. “With Its Your Community we did nearly 3,000 projects in two-and-a-half years,” says Parker. “We were very visible in a lot of communities across the UK and that gave us a lot of opportunities to have dialogue with people and to build our brand reputation.”

The focus on youth and connections fitted well with the brand, too, and it
also gives the company the opportunity to work with a wider range of groups,
having formed a coalition of 35 youth groups to help it with the plan. Such thinking, Parker reckons, will only become more common if the economy remains tough and companies focus on costs. As she puts it: “People have to be a lot smarter in how they approach corporates and create programmes working together that are really going to help those businesses, as well as achieve the
charity’s goal.”

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