Lots of charities find the idea of working with a for-profit company to boost revenue appealing — whether it’s a cash-registercampaign, a sponsorship, or some other collaboration.
But such agreements require care. They can go sour, and when they do, it’s usually very public and notvery pretty.
To avoid potential pitfalls, your organization must ensure that written agreements safeguard both sides.
“That’s the world in which we live,” said Peter Morton, vice president of corporate development for Autism Speaks, which has partnered with several companies over the years on fundraising campaigns. “I think everyone needs to protect themselves. Even though I know all of our partners have our best interests in mind, you just never know what’s going to happen in business.”
The Chronicle asked officials at several nonprofits that have garnered corporate partnerships over the years how they draft their written deals with companies and how they ensure expectations are understood. Here’s what they had to say.
1. Know what the company wants before you enter an agreement. Before getting into the details of an agreement or contract, it’s important to know what the company is looking to get out of a partnership, said Karen Goldfeder, vice president of business development at DoSomething.org, which connects young people with volunteering opportunities. That could be many things, such as exposure to a new market or publicity for doing a good deed.
“We always start with ‘What does winning look like for you? What are you hoping to get out of this?’” Ms. Goldfeder said. She added that a corporation might not be a good fit for a nonprofit if the company’s goals are too lofty or are not aligned with the mission of the charity. DoSomething.org, which has worked with such companies as H&M, 3M, and Coca-Cola, gleans roughly 65 percent of its revenue from corporate sponsorships, Ms. Goldfeder said. The companies make an up-front contribution to the nonprofit, then co-brand a campaign that gets youth involved in charitable activities.
Nonprofits also need to temper their expectations and remember that companies are out to make money, Ms. Goldfeder said. Even though it seems like companies have a lot of money to give to a nonprofit or a cause, that’s not always the case.
“You have to know that they’re looking at how they can get a return on their own investment,” said Ms. Goldfeder. “That’s a lot of what my team considers.”
2. Spell out the nuts and bolts. When your organization is ready to start a partnership, it should draft a legal agreement with the corporation that contains at least a rough framework for how the partnership will work. The document should also include protections for the nonprofit, such as spelling out how a company can use the nonprofit’s logo and for how long.
Autism Speaks’ corporate contracts contain rules regarding the use of trademarks and intellectual property, how the company will raise funds for the nonprofit, the length of the agreement, the payment terms of the donations, and, sometimes, how the charity will use the money, Mr. Morton said. The nonprofit’s ongoing partnerships include cash-register campaigns with companies like department store T.J. Maxx and burger chain White Castle.
“The agreements “outline the elements of the partnership,” Mr. Morton said. “A lot of it is the language that you’d see in any business contract.”
Ms. Goldfeder said her organization’s agreements include much of the same information, and might also include other details, such as how each partner will use social media to promote the arrangement and how a public announcement will be made. Often responsibilities are put into a list format that is essentially a sketch of what the partnership will look like, she said.
“That’s really at the core of the contract — representing the how, when, and what of the campaign,” Ms. Goldfeder said.
3. Have a lawyer review agreements. A lawyer for your organization should draw up the contract or agreement, or, if a company approaches the organization with a proposed contract, an attorney should review it, said Jennifer Stockard, president of One Warm Coat, a charity with a staff of two that has partnered with companies like Eddie Bauer and Brooks Brothers. The clothing companies make monetary donations to the nonprofit before running coat drives; the donated coats benefit needy families and individuals.
There are numerous state laws to consider when working with businesses to raise money, Ms. Stockard said. For instance, some states require that a nonprofit’s name be included in all advertisements, or that certain information about how the money is raised be noted.
Sometimes, companies that bring a contract to a nonprofit do not have experience with these statutes, Ms. Stockard said, which makes legal representation very valuable. One Warm Coat uses law firm Copilevitz & Canter to help draft its contracts and review agreements, she said.
Still, many of the contracts are straightforward, and legal costs are often low.
“A lot of it has been done before,” she said. “It’s not always reinventing the wheel.”
Nonprofits can sometimes find lawyers to help pro bono, said Mr. Morton, noting that his nonprofit has worked with a firm that has donated legal services for the past year or so to make sure his organization’s agreements are up to date.
4. Have leaders sign off. When an agreement is close to being reached, high-level officials within the nonprofit should review it to make sure they know the organization’s obligations.
The process of finalizing a contract can be fluid, with companies making edits to agreements, Mr. Morton said. When there are changes to an agreement, Autism Speaks has its lawyers review them. Leaders within the nonprofit — all the way up to the chief executive — see the final edits, he said.
“It’s to make sure everyone is aware of what we’re doing and make sure that the agreement is most appropriate for everybody involved,” Mr. Morton said.
5. Continue communicating during the campaign. Just as important as drawing up an agreement is making sure that your organization communicates during a campaign and after it ends.
After contracts are signed, DoSomething.org moves quickly into implementation, Ms. Goldfeder said, with the leader of the campaign sharing the timeline of activities, the timeline of messaging, and other materials. The nonprofit also makes weekly calls to the companies to update them on how the campaign is progressing.
“The moment that we start working on the campaign everyone knows what’s happening and when, and who’s responsible for what,” Ms. Goldfeder said. “There’s really a clear map for everything.”
One Warm Coat has open communication with its partners too, and Ms. Stockard sometimes asks how the nonprofit can better serve the company. Because her organization is small, she said, it can’t offer a lot of social-media coverage, but it often shares photos and stories of those who benefit from the coat drives, which companies can use to promote the partnership.
