Local Businesses

Local businesses, such as a local print shop or an independently-owned grocer, support nonprofit organizations in three ways: cash grants, product donations, and in-kind donations. (In-kind donations can include products, services, or volunteer labor and can be used to leverage other grants, so their value is considerable.)

Start with local businesses before pursuing foundation funding. This will show other funders that you have the local community supporting your work. The application process for local businesses is also one of the easiest, and the potential for receiving support is also quite high.

Although corporations and businesses typically contribute just over 5% of all philanthropic dollars, much more is given through in-kind gifts, corporate sponsorships, and the personal donations of individual corporate leaders. This is particularly true for local businesses.

Consider asking for in-kind gifts of products or services first. Once you establish a good working relationship, you can start submitting requests for cash support. Be sure to manage those in-kind donations well, providing both community recognition and a summary report at the end of the year (regardless of the size of the donation).

If you believe it will be difficult to secure cash support from a local business but still want to diversify your income by adding corporate support, consider tapping into national organizations such as Good360, NAEIR, or TechSoup to secure donated products. This tactic will shore up and diversify your corporate support income. Always establish a value for any in-kind contributions, including products or services, and reflect this value in your grants program analysis and reports.

Local and regional businesses want to engage new partners, not just donate to a charity. Think actively, not passively! Ask yourself, “How can we truly partner with this business?”

A growing trend is for businesses to allocate their giving into what are called signature programs. To become a signature program, first find a connective link between your organization and the business. You can then build a case for support that demonstrates how adopting your effort as their signature program will strengthen their standing in the communities they serve. (It’s not a bad idea to include a few suggestions on possible marketing strategies.)

Keep in mind that local businesses respond favorably to support requests that are both core to the competency of the business and serve the geographies that matter to the business.

As with all finances around a nonprofit organization, there are rules established by the IRS to help guide what you can and cannot consider an in-kind contribution. Review what can be considered as in-kind by going to Publication 526: Charitable Contributions.

Ninety-five percent of business owners actively support a nonprofit organization, and 30% sit on one or more nonprofit boards. Consider bringing several business leaders onto your board in order to help leverage cash and in-kind donations in the future.

Consider asking local businesses for multi-year grants. A good business has a solid, long-term plan in place. If you can demonstrate that your organization operates at the same professional level, your chances of a multi-year grant go way up!

Identify potential business donors and build a substantial profile on each one. Determine what products and services they provide, how many employees they have, who makes up their market, if they are expanding, what clubs or associations their leadership belongs to, etc. The more you know, the better your ask.

Research is key to unlocking business support. Business owners more often react favorably to a request that reflects familiarity with their business and helps promote their products or services. Without researching each potential business donor, you will only get “accidental” support, and that is not a recipe for generating reliable revenue.

Before you approach the business, it is important to understand the company’s financial situation and the level of support they’ve given to other organizations. Be aware that a business that appears to be growing quickly may not have the cash flow to support a financial request and may prefer to provide products or services.

The initial step in identifying which businesses to approach for support is to make a list of the obvious candidates. Always begin with those businesses that are near and dear, including all of the businesses to which you pay money, such as the utility company, bank, Internet provider, tech or accounting services, etc.

There are some local businesses that are included in our databases as a corporate giving program—if they are large enough. Go to our Charitable Giving database for the U.S. or Canada. You can use the search-by-name field toward the bottom of the search page to locate specific businesses. You can also search for businesses by using the Type of Grantmaker filter to select “Corporate Giving Program.”

There are a number of approaches you will encounter when submitting requests to local businesses: a formal application process, an informal letter of request, a phone call or email, or a face-to-face meeting. It is important to find out what the recommended procedure is before submitting a request.

Measuring outcomes has become a widespread business practice. In your request, articulate how you will measure outcomes and how you will share that information with the business. It might also be helpful to include an example of how they could use this information in their marketing.

As part of your next application for cash support to a local business, consider mentioning the benefit their employees’ talents could bring to your organization. This creates a more powerful request and is also a way to strengthen your relationship with the business.

Local or regional newspapers, as well as statewide business journals, stay on top of business trends and often connect those trends to a specific business. If relevant, draw on quotes from a newspaper or journal when you customize a request for a specific business, as it demonstrates your knowledge of who they are and what they do.

Most local businesses give partially out of self-interest rather than just pure altruism, and it is important to remember this when devising ways to recognize their support. Consider generating a menu of marketing and outreach items (board approved) that you can weave into your grant requests to businesses.

If there is no obvious connection between your organization and the business, consider mentioning the products they sell or the services they provide to create that connective tissue in your request. For example, “Café France has provided our organization, and many other nonprofit organizations in the community, with a great place to meet and discuss the numerous issues facing our community. As we all know, food and drink provide the foundation for making wise decisions.”

Keeping the company’s perspective in mind as you craft your request is not always easy, but it is essential. A small company that appears to be rapidly growing may, on the surface, seem like a good business to hit up for a large cash donation. But it is likely that a company with a strong growth spurt is hurting for cash because they have to ramp everything up a few notches to meet demand. Your perspective may not match their reality.

Keeping promises is key to building an ongoing relationship with any business. For this reason, we recommend that you develop a Memo of Agreement (MOA) between the business and your organization that provides details about promises (from either party). Even if the agreement is straightforward—they give you $1,000 and you acknowledge them in the performance program—it deserves an MOA. Even the simplest agreement has details connected to it and clarifications to be noted. By creating this documentation, your organization has taken a giant leap forward in terms of credibility.

If you receive support from a local branch of a regional or national corporation, you can now leverage this relationship for an introduction to their main office, which will smooth the process of submitting an application to their corporate giving program.