Less than a decade ago, before the dramatic and sadly increasing disparity between "the haves" and "the have-nots" (now an issue in the presidential campaign), luxury brands typically dispersed their giving to a wide range of nonprofits: culture, education, health and a range of social service organizations all doing good in many creative and altruistic ways. The luxury brands that gave, a generous percentage of their marketing budgets did little to promote (many thought “tout”) their good corporate citizenship.
It was enough for those in the know, the influencers on both the giving and receiving sides of the equation, to understand that by doing good, corporations did well. Among the benefits: knowing and serving the needs of the community, enhanced reputation, pride of their employees in their company's leadership and many high-level board connections that were a byproduct of their involvement.
Americans with incomes of more than $1 million donate more than $50 billion a year. Yet, distressingly, a McKinsey survey that looked at philanthropic giving said U.S. charities wasted more than $100 billion on fundraising and administrative costs: more money raised going to these two categories than to actually doing good.
How things change! The increasingly critical eye of media, the transparency that ensues, the instantaneous, lightning speed of word-of-web, luxury brands' corporate citizenship and philanthropic giving is in the spotlight as never before. Leading luxury brands are demanding of nonprofits a level of accountability, entrepreneurship, creativity, qualitative and quantitative measures of success as never before.
Here are some of the notable trends that constitute a sea change in the way the smartest luxury brands are re-engineering their strategies and key implications for nonprofits.
• From Many to Few: Instead of spreading a limited budget among an array of excellent causes, many luxury brands are consolidating their corporate giving and involvements to one or two select causes. This gives the brand the ability to have greater impact and The Cause reason to be more deeply and creatively involved with the brand in providing value for dollars and services given.
• From Begging-Bowl to Business-Partner, ROI Mindset: Leading luxury brands are expecting much more from non-profits: an ongoing relationship, a bottom-line accountability and accounting for how dollars are spent and the impact of that spending; a heightened level of creativity and deeper level of partnership in marketing and broadening awareness of the relationship between the company and the non-profit. The old approach of donate, fill the begging bowl, and trust is no longer enough.
• Aligning the Brand With Causes that have a more literal connection to the brand’s business, vision and mission.
Increasingly, nonprofits will need to:
• Shift from a nonprofit mindset to a corporate mindset by better understanding the business goals of sponsors and, specifically, how to support them; meticulously articulating tangible benefits and qualitative/quantitative measures of success.
• Adopt a collaborative, consultant mentality by creatively serving as strategic marketing partners to build greater awareness for their patrons and their causes.
• Make the transition from a fund raiser mindset to a sales mindset by articulating return on investment and return on objectives measures.
• Embrace a social investment mindset; that is, employ gifted capital with an expectation of both economic and social returns.
• Hire more senior level executives from the private sector rather than focusing exclusively on executives with nonprofit-only experience.
• Cultivate a culture of financial awareness and fiscal responsibility at every level of the organization.
• Broaden the definitions of what constitutes service, communications and collaboration with funding organizations/partners.
• Be more attuned to best marketing and selling practices of competing nonprofits.
• Stand up and demand to be treated as equal partners in creating solutions. Win the respect of patrons by thinking out of the box.
• Be certain funding organizations fully understand and appreciate the true costs of your enterprise.
In this bold new world of evolving corporate citizenship, as luxury brands in their giving become more demanding of a private sector approach and the most strategically nimble nonprofits more adroit in responding, everyone, especially the communities served, will win.