1. Introduction
In a context where non-profit organisations (NPOs) are called to satisfy society needs not covered by the State or by businesses, there are serious challenges in financing the activity of the third sector (
Suri 2009). One of the factors that seems to contribute to the worsening of this situation is the disinvestment of one of the third sector’s main sources of financing: The State (
Ranci 2015). This fact implies a fundraising strategy in charities (
Wymer et al. 2006). Fundraising requires the implementation of marketing principles in a proactive and competitive approach (
AL-Tabbaa et al. 2014) in order to achieve a diversity of funding sources and consequently better sustainable performance of NPOs (
Ferreira et al. 2017). The success of NPOs is attributed to their ability to diversify funding sources in response to current economic and political environments (
Froelich 1999) and they should understand fundraising through donations as their main source of revenue (
Carroll and Stater 2008), under the penalty of compromising their independence and mission.
Fundraising may occur through a multiplicity of models, one of them being the establishment of partnerships with the business sector (
Wymer et al. 2006), which is increasingly committed to society through the development of corporate social responsibility (CSR) practices (
Shea 2010). NPOs are benefiting from this increasing corporate concern and have been diversifying their funding sources (
Baur and Schmitz 2012), especially with the business industry. In this sense, NPOs rarely maintain exclusivity with just one company as their sponsor (
Shumate et al. 2018). In the context of raising uncertainty and economic constraints that may inhibit corporations from offering donations to non-profit organisations and reduce the level of philanthropic contributions (
Dunn 2004), as well as the increasing competition for grants within the third sector, a diversified mix of funding sources has increasingly been considered a prudent strategy to reduce unpredictability, and also to show competency, to grow in economic value, and to be recognised as having managerial merit (
Shumate et al. 2018). Raising new donations is directly related to improvements in the financial performance and sustainability of NPOs (
Ferreira et al. 2017).
Considering the importance of fundraising for NPOs’ sustainability and the opportunities for the business sector to be a partner of charities through their formal CSR programmes, this paper aims to understand the propensity firms have to establish long-term partnerships with charities, considering that a supporter’s loyalty has an important effect in NPOs’ outcomes (
Wymer and Rundle-Thiele 2016). The existing literature identifies corporate motivations to donate to charities (
Dunn 2004;
Liang and Renneboog 2017;
Milner 1996;
Valor 2006), but little is known about the propensity for loyalty in long-term partnerships between businesses and charities (
Shumate et al. 2018).
1.1. Motivations to Donate
Non-profit organisations should develop adapted fundraising programmes to target individuals and companies (
Wymer et al. 2006). These two types of targets require different approaches by NPOs, due to the differences in the decision process and the formality of corporate philanthropy programmes (
Cantrell et al. 2008). However, the individual motivations to give also have an important influence on corporate sponsorships of the third sector, since managers with pro-social behaviours and close relationships with charities tend to develop more active CSR programmes and donations to NPOs (
Dunn 2004;
Milner 1996). For that reason, this section starts to explore individual motivations to donate and then the particular corporate motivations for non-profit endorsements are explored.
The religiosity of the donor is one key factor predicting the motivation to give (
Abreu et al. 2015), as well as the philanthropic sense of the person (
Valor 2006). Further, people tend to choose charities with the values they most admire (
Bennett 2003) and with geographical proximity. There is a tendency for donors to prefer local NPOs, because they feel that there is a greater sense of connection and control of the application of the money (
Sargeant and Woodliffe 2007). Donors want to be aware of the consequences and applicability of the donation and somehow people look for cause ratings before choosing the organisation they are going to give money to (
James 2018). The proof of previous donations from others also has an important influence. Although it might give an idea that others had already satisfied the charities’ needs, in fact, when a box shows previous donations, people tend to be more receptive to giving (
Jacob et al. 2018). In brief, the religious practice, number of children, educational level, ownership of house, paternal influence, and the urban pattern of the area of residence are variables that positively influence the amount donated (
Karlan and List 2007;
Kovic and Hänsli 2018). Demographic, psychographic, behavioural, and socioeconomic variables are segmentation criteria applied when regarding individual donations to NPOs (
Mainardes et al. 2016).
Corporate donations may be distinguished between charitable and political donations. When corporate donations target political institutions, this regards agency theory (
Liang and Renneboog 2017) and improves social exchanges between firms and politicians, especially in an initial stage of cooperation (
Jia and Zhang 2018). The donations to charities still represent several challenges, due to uncertainty and information asymmetry of their outcomes to companies (
Stapleton et al. 2010). The existing literature presents the main motivations of managers to donate to charities and the corporate conditions that facilitate business sponsorships with the third sector. Those motivations are supported by the stakeholders–agency theory (
Cantrell et al. 2008) and pro-social behaviour theory (
Valor 2006). The former regards the establishment of partnerships in order to create financial value through positioning and awareness, whereas the latter represents a motivation to gather social value through philanthropy and the perception of the social mission of businesses in the community.
Corporate donations are commonly related to firm value and financial performance (
Liang and Renneboog 2017). Big companies with professional donation programmes and which are privately owned are more likely to donate (
Dunn 2004), especially to well-established and recognised non-profit organisations (
Milner 1996). CSR initiatives have increased third sector donations through cause marketing actions, especially with charities whose projects fit the positioning of the firm (
Bower and Grau 2009). In fact, the requests of fundraising made by charities to companies are increasingly being more scrutinised and subject to formal processes. The stakeholder’s theory supports and influences the manager’s decision process in these cases (
Cantrell et al. 2008). A factor of great importance in decision making is the way in which the organisation thanks and makes its recognition of each donor’s investment visible (
Sargeant et al. 2007). Business–third sector partnerships are also a way for companies to be a part of local communities (
Zatepilina-Monacell 2015). A partnership with a local charity offers greater confidence for companies than a donation to a national organisation. Additionally, the partnership may be better assessed, and a crisis may be better predicted. In fact, a negative reputation due to a crisis in the NPO also affects the business partner, and the same happens in the opposite way (
Lee and Rim 2017).
Corporate motivations to donate are also supported by the pro-social behavioural theory (
Valor 2006). When the manager of the corporation is a fundraiser for a charitable organisation, the company will be more likely to donate to third sector projects (
Dunn 2004). The literature supports that the existence of relationships of managers or workers of companies with NPOs are positively related with donations (
Milner 1996).
Considering the corporate social responsibility practices and the opportunities for partnerships with NPOs in this context (
Baur and Schmitz 2012), relationship marketing between NPOs and companies is revealed to be very important (
Pressgrove and McKeever 2016). Each organisation needs to know who their donors are and develop a relationship with them, according to their characteristics and expectations, in order to encourage loyalty and a long-term sponsorship (
Wymer and Rundle-Thiele 2016).
1.2. Loyalty in Corporate Sponsorship to NPOs
Corporate donations to charitable projects have a significant effect on corporate value. The benefits the corporation extracts from the donation and the differential from the sacrifice of giving have an impact on the behavioural intention to continue the funding of charitable projects (
Gipp et al. 2008). In addition to the challenges of attracting new funding sources, the most difficult task has been the retention of the existing corporate donations (
Karlan and Wood 2017).
The financial performance of the company is not the main motivation of business managers for non-profit sponsorship, but the philanthropic and altruism sense (
Valor 2006). However, their perception of philanthropy leads them to diversify their donations in order to benefit more people. Companies usually diversify their donations through different institutions, diversifying their social action, the public, and recognition. Somehow, non-profit institutions have to diversify their partnerships with several businesses (
Shumate et al. 2018). As a consequence, the implementation of sustainable projects by charities with punctual donations represents a high risk and the real impact of a punctual support is residual (
Muda 2018). Since the financial aid tends to be punctual, becoming companies’ social partners in a loyal approach remains a challenge for NPOs (
Ditlev-Simonsen 2017). Although they diversify their donations, companies are seeking long-term partnerships with local NPOs rather than one-time sponsorships (
Zatepilina-Monacell 2015), an intention–behaviour gap that should be better understood and represents an opportunity requiring an integrated communication strategy to attract those long-term corporate donations (
Henley 2001).
Advertising and marketing researchers have defined and analysed loyalty in different ways, including a distinct focus on dedication to repeat behaviours, which would be of most interest to NPOs, namely in donations. Research on this topic says that loyalty is crucial in the third sector through a relationship marketing strategy (
Pressgrove and McKeever 2016). It is six times more expensive to get a new donor than to maintain a relationship with an existing one, and the benefits can sharply improve efficiency, service delivery, and financial gain (
Sargeant et al. 2007). Over the years, the concepts of satisfaction, value, and quality have all been taken as the key criteria for loyalty. However, each has proven to be an insufficient indicator of future behaviour. In NPOs, the image of credibility and trust are recognised as important in the formation of loyalty by donors (
Banks and Raciti 2014), and the organisation mission and the people served by the cause are the main reasons behind a donor’s loyalty (
Wymer and Rundle-Thiele 2016).
Relationship marketing, and particularly the engagement of charities with donors, are key points to potentiate loyal sponsors (
Bennett 2013). Considering managers’ decision process, their pro-social behaviour, and stakeholder–agency priorities, NPOs should actively show the value they represent to satisfy firms’ needs and develop a relationship connection with companies. Charities should evidence the benefits of the donation for companies (
Cantrell et al. 2008), because the perception of the effectiveness of the donation increases the propensity to give again (
Karlan and Wood 2017).
The motivations to donate seem to be connected to an impulse response to specific events and are not consistent over time (
Habibpour et al. 2018). This fact strengthens the challenge of long-term partnerships for charities’ sustainability (
Muda 2018). Activating the concept of love towards the beneficiaries of the charities may increase the potential donation (
Guéguen et al. 2013). That sense of love may be reinforced by a storytelling influence on emotions (
Merchant et al. 2010). The engagement may lead to a consistent cooperation, and promote intentions to give through a permanent donation (
Ditlev-Simonsen 2017).
The proactivity of organisations in order to nurture the relationship with donors is a key in the retention process. For example, priority benefits for loyal donors positively affect donors’ satisfaction and loyalty, representing upgrades in the donations’ amounts (
Boenigk and Scherhag 2014).
Sargeant and Woodliffe (
2007) point to a number of factors that influence this decision-making by donors: quality of service—how the organisation performs its work influences the donor’s sense of loyalty to the organisation and, consequently, its motivation to commit to giving; risk—when donors realise that the cancellation of their donation has a damaging direct impact on the lives of beneficiaries, they tend not to cancel their support; identification with beliefs—the more the donor identifies with the mission and how the organisation seeks to respond to the needs, the greater the level of commitment to it; learning—donors who receive information and realise the importance of their work tend to be more faithful; trust—in addition to the organisation communicating what it does, it is necessary for donors to take this information as credible; personal liaison—linking a donor to an organisation through a known person tends to be a factor of credibility and trust; multiple involvement—people who, in addition to being donors, have volunteered or participated in other forms of service to the organisation tend to be more faithful in their financial contributions. These topics are in line with the evidence found previously by other authors (
Wymer and Rundle-Thiele 2016).
2. Methods
This paper aims to discuss the motivations and propensity of companies to develop loyal partnerships with NPOs through the practice of long-term donations, as well as to identify their perceptions about the marketing practices that NPOs should develop in order to obtain loyalty in business sponsorships. The lack of existing literature about the loyalty of companies in NPO sponsorships implies an exploratory research to extract emergent information about the propensity for that loyalty. Further, the literature also shows that companies would like to have loyal sponsorship programs with NPOs (
Zatepilina-Monacell 2015), although it does not happen very often (
Ditlev-Simonsen 2017;
Karlan and Wood 2017;
Muda 2018). In order to explain what we call an intention–behaviour gap, this study aims to deeply understand the conditions companies consider that are necessary to develop donations, their obstacles, and favourable conditions to long-term sponsorships to the same NPO.
The research was developed through a qualitative approach, using semistructured interviews to twenty companies with social responsibility programmes, in the north of Portugal. The selection of the companies followed the criteria of having ever donated to a specific chosen Portuguese small and regional NPO that helps people with physical disabilities. This institution was selected for convenience, due to the easy access to a list of corporate donators and financial reports specifying those donations. However, the selected NPO is also a good example of a regional institution with an established local fundraising strategy, based on punctual donations and lack of long-term sponsorships.
The interviews took an average of twenty minutes and were carried out during the month of August 2016, at each company’s headquarters. All the interviews were carried out in person and recorded. This process allowed accurate responses, interaction with people, and reflected responses. The interviewees were eighteen males and two females between forty and sixty-five years old. Four have a higher education and an average of 429 euros donated to charities in 2015.
Based on the literature review, a set of dimensions were considered, which allowed the elaboration of an interview script. The interview gathered information for the following categories of analysis: Needs (
Cantrell et al. 2008), perceptions (
Merchant et al. 2010), expectations (
Liang and Renneboog 2017), problems (
Pressgrove and McKeever 2016), obstacles (
AL-Tabbaa et al. 2014), and themes (
Bennett 2003). In this way, the interviews started with questions with the purpose of understanding the motivations to donate and preferences when selecting the partner NPO. Additionally, the script included questions about the managers’ perceptions about the outcomes of the partnerships, the public awareness, and financial benefits for the company. The perception about the social value of the donation was also questioned for the ones who were being supported by the charity and the comparison of those perceived outcomes with previous expectations, both economic and social. The interviewees were asked about the problems they face in the relationship with non-profit partners and the obstacles to carry on with continuous donations, as well as the types of preferred charities to donate. The interviews were fully transcribed and coded according to the mentioned categories of analysis.
In parallel, a document analysis was conducted to complement the information obtained by the interviews. The document analysis focused on financial reports of the selected NPO of the case study, which specified the amount of donations of each interviewed company, regularity of donations, projects supported, and activities that companies had been involved in. This technique allowed for an interpretive, reflexive, and critical analysis of the corporate perspective about long-term donations to NPOs, based on their past experience. The document analysis allowed accuracy and appropriateness of the questions asked in each company, considering that the researchers had the historical information about the partnerships with the specific NPO. That information allowed us to have a starting point for the semistructured interview in order to understand the corporate perspective about their managerial decisions regarding long-term partnerships, both in the case of the selected NPO, as well as with other charities.
3. Results
After analysing the information obtained through the in-depth interviews, the authors found that the companies present as their main motivations to donate, altruism, the importance of their donation to the sustainability of the NPO, and the well-being of the people the institutions attend to, which is in line with previous literature (
Wymer and Rundle-Thiele 2016): “
We are aware that we have to help society and that it is also part of our responsibility, both individual and as a company, to create a better world” (Interviewee 6); “
Because I want to help and I feel an inner peace when I do it, so if I can, then I help” (Interviewee 20).
Donors with a high level of voluntarism were those who make larger donations and give to several NPOs, as stated before by other authors (
Dunn 2004;
Milner 1996). Interviewee 8 states that he has “
experience of being manager of a charity and for that reason became more sensible to causes”. Interviewees 11 and 15 mentioned cases of “
relatives who needed the support of NGOs”, what gave them “
higher social conscious with the third sector mission”. This result is in line with previous literature, which mentions the importance of personal values as a central motivation to donate (
Bennett 2003). All the interviewees answered that the cause is an important asset in the selection of the charity to donate to, as well as the family history of the donor. Actually, this study highlighted the importance of the family history of donors, which is connected to the themes of charities they choose to donate to. As previously stated in the literature, donors choose charities according to their beliefs, concerns, and personal relations (
Sargeant and Woodliffe 2007). Interviewees emphasise that they after they had assisted their relatives with a social issue, they started to make donations to NPOs working with that same social theme. For this reason, it is critical that NPOs target their markets by focusing on the people and companies most likely to donate to their cause. The interviewees also referred to, as a criterion to consider when choosing the NPO to donate to, physical proximity. These results reinforce the assumptions of the existing literature (
Sargeant and Woodliffe 2007;
Zatepilina-Monacell 2015). Fifteen interviewees out of 20 reported that they preferred to donate to local NPOs: “
If we have a community closer needing support, we help more quickly, we know their stories and it is easier to follow the interventions and results of action” (Interviewee 7); “
I make donations more quickly to closer institutions, because I can see their performance closely” (Interviewee 5); “
Companies have social obligation to help the geographical area in which they are inserted, because we are part of the evolution and the growth and we take on the local resources” (Interviewee 4).
The companies do not point out the visibility or recognition that the donation can bring to the company as a motivation to give. As previously noticed (
Valor 2006), altruism prevails and can positively influence the tendency of the donor to be regular, although they are conscious of how this improves their reputation: “
It is clear that donating has two aspects, to help the institution that asks for it, as well as increasing visibility to the company that donates. Of course the community appreciates the company that helps. People will find the administrator a good and more supportive person and then, on time to choose, the company chosen is the one that cares about social issues. Donating gives us recognition, improves our image in the community, gives us a reflex of corporate social responsibility” (Interviewee 20). Companies have reported that by supporting an NPO, they can gain a reputation, strengthen employee engagement, and improve relationships with the community, suppliers, and partners. Only 3 interviewees pointed out the positive financial return to the company, but all admit an intangible positive result the businesses get in awareness and positioning. This result emphasises that the local community is a lever to raise reputation and networking, contrasting with the answers about the solely altruistic motivation to donate (
Sargeant et al. 2007;
Zatepilina-Monacell 2015).
Donors informed us that they need to know the reason for the donation request and all the interviewees mentioned the credibility of the charity as important in the decision. For example, they wanted to know if the purpose of the fundraising is for the current action of the institution or for the development of a specific project. The interviewees said that they support the NPOs when they perceived the needs as important and the institution had credibility. “
If I do not trust, I do not help” (Interviewee 7). This trust factor is also in line with previous literature (
Banks and Raciti 2014). This means for charities that knowing the philanthropic objectives of the company is crucial so that the institution defines a proposal that meets them in order to get a win-win relationship.
The explained motivations to donate are in line with previous literature. Additionally, the interviewees consider those motivations the same as those that may influence long-term donations. Companies understand that they should repeat their donation for a long-term perspective, when the NPO cannot guarantee its sustainability. Regarding their loyalty to the NPO, of the 20 donors, only 7 make regular donations every year or twice a year to the same institution. For the regular donors, the ones who make a donation at least once a year, altruism is the fundamental motivation, and the first goal is to help others. In this context, it was concluded that the value of altruism is much greater than selfishness or the economic return the donation might bring in marketing positioning. These results show that the pro-social behaviour theory has a higher influence on corporate donations than the stakeholder–agency theory.
Those regular donors are the respondents who pointed out earlier that the reason for the donation was to help and the perception of the importance of the donation to the charity institution. They are aware that if they discontinued their donation, the institution would not be sustainable. When confronted with the motives that would most often lead them to donate regularly to a cause, they stated that they would be likely/very likely to donate to an appealing cause, differentiating enough from other charities, where there might be a link to emphasise the personality of the corporate brand through the stories of people in need and the social impact that the cause has on society. These answers reinforce the importance of emotions in the fundraising discourse (
Bennett 2013), including storytelling about people in need (
Merchant et al. 2010). Managers want to know the names of the people they are supporting, their stories, their suffering, and the benefits in real lives their donations really have: “
Every time I visit the NPO I feel that all the donations we give are not enough. Feeling the smile and happiness of the beneficiaries, I perceive the importance of our donation” (Interviewee 20).
Corporate donors expect a recognition and appreciation that NPOs make of the financial support they receive. Of the 20 respondents, 3 donors reported appreciating the recognition by the NPO to the company. We have realised that it is crucial to demonstrate the results to the donor and all the benefits obtained with the contribution of the company. Feedback is fundamental to getting donor loyalty, because the company likes to know the results of the investment and the interviewees confirm how they appreciate that practice. In brief, this means that a relationship marketing approach should be strategic in NPOs, as already emphasised by the literature (
Pressgrove and McKeever 2016). At the moment, “
all the charities usually write an acknowledge letter” (Interviewee 2), but that is considered not enough. Corporate managers feel that they would need to be more conscious of the problem, follow the beneficiaries of the NPO, and be aware of the activities of the organisation. Out of 20, only 2 did not know exactly the initiatives the charities promote, but all of them recognised that it would be important to have a closer communication relationship to increase business engagement with the NPO. That fact could even be useful for the companies’ social responsibility communication—“
Usually we are just a funding source, and not a real partner” (Interviewee 1). This result shows a lack of relationship marketing approach, as suggested in the literature (
Ditlev-Simonsen 2017).
Based on the interviewees’ perceptions, we found that the actual corporate motivations to donate are the same as those for long-term donations, and the intention–behaviour gap identified regarding loyalty in partnerships comes from, in corporate interviewees’ perception, the lack of a relationship marketing approach. Interviewees say that they would need to be part of the success, be shown the social outcomes of the charity mission, and be more connected with the beneficiaries. All the managers said that they want to be more than the source of funding and desire to be part of the success. The strategy of donation should be part of the positioning of the company, leading to a closer relationship with fewer charities. Companies mention they could be stronger partners of specific projects that might reinforce their corporate positioning. However, the lack of relationship marketing by NPOs leads them to diversify their donations: “We have several requests and we are sensitive with causes, so we try to diversify in order to satisfy different needs” (Interviewee 12).
Based on these study results, interviewed managers were also asked to provide some recommendations for non-profit management in order to overcome the problems and obstacles faced to become a loyal donator. They highlighted that practitioners in the institutions should focus all success on the donor’s contribution and this should be shown. Feedback is fundamental to getting donor loyalty, because companies like to know the results of their investment and the interviewees confirm how much they appreciate it. Donors have reported that they like to be told the reason for the donation request. It is fundamental to devote time and effort to the proposal, studying the business, because the companies stressed that they are asked daily to support different projects. It is important to keep in mind that, currently, companies are more selective. They look at donations as an investment, seeking a win-win relationship and innovation and want to participate in the strategy; basically, they want to be partners. Just asking for money is not enough. In this sense, it is fundamental to organise a request plan, with a strategy and objectives, evaluating the results and fine-tuning the strategy and presenting counterparts. The history of the NPO and the reason for the request must be demonstrated in a captivating and appealing, rigorous, and transparent way, in order to attract attention, involvement, and donor loyalty. For that purpose, it is essential to have someone responsible for fundraising, someone with training to involve the whole institution, from employees to users. It is necessary to have a team specifically dedicated to fundraising. It should be a permanent and professional job, which requires training and knowledge. NPOs should recruit enthusiastic employees to attract enthusiastic donors, committed to raising funds and forming dedicated teams.
In brief, this study reinforces the need of a marketing approach in fundraising, including perspectives of relationship marketing (
Sargeant et al. 2007). This paper concluded that companies have the propensity to donate charities in a regular frequency and a partnership engagement may be explored to create long-term sponsorships. Considering the amount of charities developing fundraising strategies, a relationship marketing approach has to be driven by charities in order to gather loyalty and the partnership with a specific social project becomes an important asset of company positioning, instead of the simple action of donating to social causes.
4. Conclusions
It was concluded that the value of personal altruism in corporate donations is high. Donors with a high level of altruism, in addition to being regular donors, are those who have propensity to make larger donations and tend to give to various NPOs. The interviewees said that they support the NPOs that they perceive are facing more financial needs, and those charities with a social cause they identify with and that they perceive to have more credibility.
Other factors this study identified are the importance that donors attribute to the recognition and appreciation of the NPOs for the financial support they receive. We have also noted the importance of the family history of the donors. This study allows, in theoretical terms, to identify the motivations of the corporate donors, which is valuable information to promote the loyalty of the donors to the NPOs. NPOs’ managers should perceive the motivations of entrepreneurs so that charities may define the fundraising marketing strategies according to the characteristics of potential donors. It is important to keep in mind that, currently, companies look for a win-win relationship and this means they want to be partners. That is why just asking for money is not enough. In this sense, it is fundamental to organise a request plan, with a strategy and objectives, evaluating the results, and create a relationship approach based on engagement and storytelling. The history of the NPO and the reason for the request must be demonstrated in a captivating and appealing, rigorous, and transparent way, in order to attract attention, involvement, and donor loyalty. For that purpose, it is essential to have someone responsible for fundraising, with specific training for that job. The interviewees also referred to the credibility and the physical proximity of the NPO as an important criterion to choose the institution.
Companies understand that they should keep their donation when the NPOs do not guarantee its sustainability. However, the perceived idea that all the social causes have the same value makes corporate managers answer to a multiplicity of different requests, instead of choosing a particular project to make a long-term sponsorship. This paper shows that NPOs should develop a marketing relationship plan in order to better engage companies with emotional appeals, storytelling, and corporate involvement, by following the projects’ achievements and outcomes.