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mixing business and charity seems like all the rage done well it can be an effective way to both further your mission and raise financial support done poorly well it can really mess you up in today's video we're going to explore how to do it right [Music] i'm greg mcrae founder and ceo of foundation group and welcome to our 501c3 university channel out of the gate i want to say that this video is not about nonprofits which have a wholly owned for-profit subsidiary nor am i going to discuss having a legal ownership stake in another company we're going to keep this conversation right now focused on partnering with existing businesses of which the nonprofit doesn't have any direct ownership stake or control now we'll look into charities owning for-profit businesses in another video today we want to look at two specific areas of focus money and mission so here we go let's start with the one most people think of first anyway which is partnering for money now there are a number of ways that a charity can connect with businesses in order to scale up its fundraising now the first monetary possibility for partnering with business involves donations and sponsorships now most non-profits ask people for money but not that many think to ask businesses which that can be a rich vein of support to mine now asking businesses in your community to donate well is certainly one way to do it but it's not always the best way businesses are they're not people and usually there are multiple personalities involved in the decision making process about giving you money so those persons may or may not care about the same causes also businesses are busy trying to sell their goods and services so it's doubtful your organization is going to be a priority for them so if all you're proposing is that they give your non-profit some money well maybe that's not the best way a better way is sponsorships sponsorships can provide the necessary incentive to get businesses to donate to your organization businesses need exposure and the exposure that comes from sponsorships can result in significant community goodwill for that company now sponsorships can take various forms including temporary sponsorships and maybe even semi-permanent ones for some organizations it could be visibility for sponsoring a fundraising event if you've got a private school it could be naming rights for a period of time for the football field or scoreboard we've all seen these examples in real life but often people don't really stop to consider trying it themselves there are endless ways to encourage creativity with businesses to sponsor your organization in exchange for public acknowledgement the question is often asked how is this any different from advertising and that's a fair question done improperly it might be the selling of advertising which really that's something you don't want to do ad sales potentially create taxable unrelated business income it's another topic entirely and that complicates matters unnecessarily now there are several keys to this one don't call it advertising just strike that language from your vocabulary two acknowledge the support but keep calls to action and superlatives to a minimum things like buy now and he's the best dentist in town don't do that three don't use a sponsor's typical ad copy maybe beyond their slogan or tagline it's better to simply acknowledge their generous support and recommend that your constituents patronize their businesses now revenue sharing is another creative way for non-profits to partner with business you'll occasionally see a local restaurant agree to partner with the charity for a percentage of sales event for example a local pizzeria will donate 10 percent of proceeds to a charity for everyone that comes in on a particular night some retailers like grocery store chains and others they've got charity share programs as permanent fixtures of their service think about amazon smiles as a perfect example of this the point is the opportunities are there but you're going to have to make them happen shifting gears a bit let's take a look at partnering with business for missional reasons not for fundraising now what i mean here is a business that actually helps a charity accomplish its mission by action not just cash but this is a bit more unusual but it does happen obviously this is going to involve the more charity-minded business owners out there an example of this might be a group of company employees who volunteer their time to serve food for participants of a homeless shelter or maybe it's a local cpa firm whose staff goes into a school and helps kids learn personal finance the possibilities here are as numerous as your imagination the key to making it a possibility is just getting creative it may be that your non-profit's purpose maybe it's not well suited to outside involvement and that's fine but i think way too many organizations never consider opportunities like this that are right under their noses plus getting other entities involved in your activities then just creates a whole new group of brand ambassadors sharing the good news of what your nonprofit is up to i gotta talk about the problem of conflict of interest whether a company is getting paid for a product or service provided to your nonprofit or it's simply receiving public accolade for donating money it's getting a benefit now those type of examples are perfectly fine but watch out for conflict of interest in unfair private benefit conflict of interest can occur when the business being promoted belongs to an insider of the nonprofit now there's no blanket prohibition on doing that just make sure decisions are fairly made and make sense for the charity private benefit can occur when such arrangements are made primarily for the benefit of the insider at the expense of the nonprofit in other words jason the insider is manipulating influence for the purpose of benefiting himself to the detriment and harm of the nonprofit that's not okay and can result in penalties from the irs called intermediate sanctions you don't want any part of that mixing business and charity can really work to the benefit of your nonprofit understanding what's possible and how to avoid problems makes it something worth pursuing what it ultimately looks like for your organization may be quite unique but by thinking creatively and maximizing the value of working together businesses and charities can accomplish much well that's it for this discussion if you liked this video please hit the like button we're so appreciative of you for doing that subscribe if you haven't already and hit the little bell icon to be notified of new content when we post it thanks for watching and we'll see you next time [Music] you