Essential words and phrases for partnerships with SMEs – that all charities should know.
For fundraisers understanding supporters is key to encouraging donations and nurturing ongoing relationships. Including when speaking with businesses.
So we have put together a glossary of must-know terms and legal lingo, to enable fundraisers to connect with their business supporters and make the most of partnerships with SMEs.
My goodness, there is a lot of jargon out there! So to keep things digestible, we’ve broken the list of phrases and words into two parts. Part 2 is linked at the bottom of this blog.
- ESG? CSR? What does it all mean?!
Before ESG there was CSR, or Corporate social responsibility, which was focused on how companies respond to social issues.
ESG or Environmental, Social and Governance, is a more comprehensive set of standards measuring a business's impact on society, the environment, and the business's ethical behaviour as well as diversity and inclusion. This includes stakeholder well-being and how transparent and accountable the business is for all it's activities such as manufacturing and treatment of staff.
ESG goes beyond just grand actions and makes companies drill down on their day-to-day activities.
It aligns with consumers who believe businesses should be transparent in their purpose and consistent in their brand communications, and prioritise issues that directly affect them and their customers.
- Sales fundraising
A friendlier, more fitting term for the now outdated ‘cause-related marketing’. Sales fundraising is a form of charitable giving whereby a business – small or large – raises money for a charity and donates a portion of its sales of a product or service. For example, £1 from the sale of a t-shirt or 10% from monthly invoices.
A form of unrestricted income, it also helps raise vital awareness of the charity and its work, and would typically sit within a community or corporate fundraising team’s income stream.
A business supporter who is not in a corporate partnership with a charity, but is raising funds for charity through a sales fundraising campaign. Less complex than traditional corporate partnerships, yet they still provide considerable ROI through donations, supporter loyalty, donor retention and brand awareness.
For many UK charities, lower value, sustainable supporterships can perfectly complement higher value, commercial partnerships.
- Commercial Participation Agreement
According to charity law; when a business is fundraising for charity through their sales, they are known as ‘commercial participators’ and they must have a legal agreement in place with each charity they want to support before starting their fundraising campaign.
This is known as a Commercial Participation Agreement or a CPA, which sets out some basic terms for both parties to agree to. It must include the charity’s name, how funds will be raised, how much is expected to be raised and when the campaign will end.
- Commercial Participation Statement
After a business and charity have put a Commercial Participation Agreement in place, as part of the Commercial Participation Terms and in line with charity law, the business must include a Commercial Participation Statement at any point of sale. For example, this could be on the business’ website, informing the customer about the specifics of their fundraising campaign. It provides transparency and can help to build interest, raise awareness and make the customer excited to get involved.
- Commercial Participator
Any business that wishes to make a charitable donation through its sales is a commercial participator. For it to be legal, the business needs to create a Commercial Participator Agreement (see above) with each charity they wish to fundraise for through their sales.
- Gift Aid for sole traders
If a charity's business supporter is a sole trader or is part of a partnership (rather than a registered company), and they are registered as a UK taxpayer and meet the necessary criteria, they can opt to add Gift Aid to their donation to you. Eligible businesses will have the opportunity to complete a Gift Aid declaration when they create their Commercial Participation Agreement. So for every £1 raised by the business, charities can claim 25p more via Gift Aid.
- Due diligence
An official and essential process for a charity when checking the credibility of a donor. Due diligence helps charities minimise potential risks and feel assured before making any commitments. Fundraisers should gather and assess information about the business, which is essential for safeguarding a charity and its assets. But remember that due diligence should always be proportionate to the level of support the donor is offering.
- Unrestricted income
Any income a charity receives that has no restrictions on how it can be used. This applies to any funds generated by a business through a supportership and sales fundraising campaign, because the business donor sets no specific conditions on how the funds must be spent.
Click here to read Part 2 - key business terms and phrases for sales fundraising.