from: SAM STERNBERG samsam@vm1.yorku.ca subject: BUSINESS FUNDING FOR FREE-NETS Free-Nets, especially at their start up, will probably have most of their financial and material contributions coming from institutions and businesses. This brief paper provides an overview of the potential and the techniques involved in seeking support from businesses. This material is targeted to freenets in large urban areas which are trying to work with commercial businesses in building support. Smaller nets will need to work harder but they can apply most of these ideas. I will cover four topics. WHY BUSINESSES GIVE SUPPORT? WHAT TYPE OF SUPPORT IS AVAILABLE? SPECIAL ASPECTS OF FUNDING FREE-NETS ADMINISTRATIVE ISSUES WHY BUSINESSES GIVE SUPPORT? When planning a corporate funding campaign, there is one basic fact that must be recognized. THEY DON'T HAVE TO GIVE Companies have no legal obligation to support non profit activities. Every contribution represents money that would otherwise have gone to pay taxes, to pay shareholders, or to reinvestment in future growth. Charitable support is generally seen as an "investment". WHAT'S IN IT FOR THEM? Corporate gifts are rarely altruistic. Companies are looking for a primary benefit to their community of customers, employees, and shareholders, and only secondarily to the society at large. Given this very business-like attitude its easy to understand that the following are the main reasons companies give. I list them here in the order they are most often mentioned, not in the order that matters most to freenets seeking support. THE BOTTOM LINE ON SUPPORT A: SUPPORTING SERVICES THAT BENEFIT EMPLOYEES AND THEIR FAMILIES. This is the reason for support of childcare and alcoholism services, and it partially motivates united way contributions. Freenets serve employees and families by improving their access to community services [like the availability of womens' shelters] or emergency child care services, community information of all types, and to direct personal help in the form of moderated information services. Our services also benefit many of the organizations that employees and their families may turn to. B: SUPPORTING SERVICES THAT EDUCATE EMPLOYEES & RAISE THEIR SKILL LEVELS. While this is usually the motivation for supporting higher education; Freenets can point out two related benefits. First, that we are teaching our members a set of computer related skills that are of growing importance to business. Freenet members are learning RESEARCH SKILLS, ONLINE COMMUNICATION SKILLS, AND IMPROVING THEIR KNOWLEDGE Of A WIDE VARIETY OF INFORMATION RESOURCES, SOME OF WHICH ARE VERY USEFUL TO BUSINESS. Second, freenets are SIMPLIFYING ACCESS to information that can be of direct benefit to business. We are after all simplifying ACCESS TO LIBRARY CATALOGUES FULL OF BUSINESS INFORMATION. Along with a host of government data of interest to businesses. This potential can include licensing information, tax data, regulatory and legislative information, even general business law materials. C: PROVIDING PUBLIC RECOGNITION AND PRESTIGE TO THE COMPANY Most gifts to cultural institutions and the arts are justified this way. Freenets have a special advantage here. Any business support can be acknowledged on line and in the case of support for phone lines, over and over again. Contributing to the success of a major community service does contribute to the good will of the general community towards specific businesses. And freenet are very much cultural institutions - of a very new kind. D: IMPROVING THE MARKET FOR A COMPANY'S PRODUCTS This is the main motivation for corporate support for special events and sporting activities. Its no accident the beer and cigarette companies love to sponsor outdoor summer events. In the early stages of fundraising - this may be the single most important reason that can presented to firms in asking for their support. The case for the value to them must be made in a very professional way. The fundraisers first task is to understand just what your free-net has to offer your business community in the way of a marketing opportunity. Freenets offer access to 3 distinct market segments. POTENTIAL FIRST TIME BUYERS - people who access the freenet from libraries and other public sites. CURRENT COMPUTER OWNERS WHO WILL BE UPGRADING - almost every current owner will be upgrading. DECISION MAKERS WHO WILL INFLUENCE THE PURCHASES OF THEIR FIRM - In the early stage of fundraising, you should focus on this last catagory; when going after your major equipment needs. Freenets seeking donations of equipment are in a very strong position to offer a real marketing opportunity to potential donors. This is true automaticly. Our members will include a large number of people who will be purchasing systems for businesses in the future. We will also attract business staff responsible for wide area communications within larger companies. Systems equipment that works well for free-nets are the best possible advertisement the competitive computer company can find. Reaching the freenet membership is far more effective -COST EFFECTIVE - than a $50,000 .oo newspaper add. And it works year in and year out. Once the first company donates to you; you can tell the next company you are going to about the brilliant marketing decision company #1 just made. E: SUPPORTING THE PERSONAL INTERESTS OF SENIOR MANAGEMENT Private companies tend to have their contributions and even advertising budgets under the control of owners or very senior management. The vast majority of gifts to "high culture" are made at the request of senior management. Its our very good fortune that many of these people are technically aware. Many are interested in promoting a technically sophisticated Canada. When approaching private companies, we should always be emphasising the personal vision of management in regard to Canada as a technologically advanced society. Its generally true that a request for support by a V.P. for Technical Services has a very high probability of being met, unless the company's financial straight are desperately bad. F: SUPPORTING GROUPS IN WHICH EMPLOYEES ARE INVOLVED The vast majority of businesses do not have either staffing or a formal process to control contributions. Instead they let the interests of their employees govern most of their contributions. We are all in the business of recruiting volunteers. Efforts to recruit volunteers from the business community will rarely be wasted. Some Larger companies actually match employee contributions with a similar gift. The most straightforward way of getting business volunteers, is to make presentations to business related associations. Of particular value are presentation before the many associations of computer professionals. It is occasionally possible to be adopted as a project by one or more of these associations and computer clubs. A poll of your supporters will usually lead directly to several such groups with whom they are affiliated. G: RESPONDING TO PEER PRESSURE Many companies don't know who is "real" or worthwhile. Its reassuring to the management to be told that the big guys have checked you out and decided to support you. Once a local corporate leader has contributed, its much easier to get others to give. If the company officers will make even casual calls to their peers on your behalf, your prospects are all the better. H: CORPORATE CITIZENSHIP - MAINTAINING GOOD COMMUNITY RELATIONS This is the least effective direct appeal but it figures in most decisions. So don't forget that you really are creating or running a major new community service. Since most freenets are not only available from home and office computers, but also from assorted public sites; its invaluable to know how many patrons your affiliated libraries and agencies are seeing each year. This number should be prominently displayed in your materials and mentioned at fundraising meetings. It creates "goodwill" for companies when they are seen as directly benefiting the community by supporting the freenet movement. Free-nets provide an excellent opportunity to be seen doing good. Of course these same numbers are also worth mentioning to companies that service first time buyers when looking for their support. Training firms, computer insurers, small system sellers, etc., should all be approached to cover phone line costs. And they should all be reminded of the number of potential new customers who can see them mentioned when connecting to your free-net. A NOTE ON CORPORATE RESPONSIBILITY AND IRRESPONSIBILITY Lest this seem to be offering a white wash of the many problems created or contributed to by bad business practices; I have no interest in seeing free-net sell their soul to business. I expect part of every dollar raised to go toward providing better public access to data about polluters, fraudulent schemes, self interested legislative efforts, etc. I just don't believe business is all bad or all good. As a community information resource we have a responsibility to display all the faces of business. The flip side of all of this is something know in the corporate world as CAUSE RELATED MARKETING. This now represents about 15% of most larger companies contributions budget. Business publications have bluntly described its purposes as "enhancing corporate image, thwarting criticism, pacifying customers and easing market entry." Every freenet's directors while have to deal with the ethical dilemmas involved. My personal view is that we have an obligation to ask for this money and see that it is used to create a fully informed public. But, we have to avoid being abused by the worst of these offers. An example of abuse by a cause related marketing scheme is this gem. In 1987, just prior to thanksgiving, American Express spent $50,000.00 on an ad offering to donate 10 cents to New York MEALS ON WHEELS for every meal ordered with their card over the holiday. New Yorkers would have had to order half a million meals just to match the ad budget. WHAT TYPES OF SUPPORT ARE AVAILABLE? A: CASH B: SERVICES - LEGAL - ACCOUNTING - MARKETING Most major firms donate some services. Law firms are often required to do so. C: EQUIPMENT - GIFTS & LOANS If you can't get equipment donated - try getting it loaned. If local resources are poor try getting a preferential price. Freenets by their nature are not on the cutting edge of computer technology. Your success rate will be highest if you know the product lines and consistently ask for last years models. That help remove dead inventory and convert it real advertising and goodwill development. D: ADVERTISING Ask companies to work you into their print adds and handout materials. E: CONTACTS WITH OTHER COMPANIES As mentioned previously no one has better connections in the business community than an active business person. F: FURNITURE Most medium and large firms have a storage area for currently unused stuff. Ask around - why spend money on furnishings. G: SPACE Investigate the possibility of space with the companies having the largest involvement in your freenet. They can be approached with space requests for meetings and special events, even for offices. H: STAFF & VOLUNTEERS Many larger companies support their employees voluntarism and may be able to help you do internal recruiting. Phone companies, banks, major retailers, and major industries are good places to ask about this. A few companies have even assigned staff to work with non profits on a part time basis. I: MATCHING EMPLOYEE CONTRIBUTIONS J: COMPANY MEMBERSHIPS IN "FRIENDS OF FREE-NET" SPECIAL ASPECTS OF FUNDING FREE-NETS SHARING THE EXCITEMENT Freenets are an exciting concept. Most health care and international aid organizations appeal to people's pity. We are in the wonderful position of appealing to people's optimism. Make sure that those representing you are visibly enthusiastic. Enthusiasm is infectious. Choose well spoken and well informed representatives. Make sure that they understand business conventions and dress. DIRECTLY SUPPORTING THE NEEDS OF THE BUSINESS Every freenet will have a somewhat different policy on business relations and commercial activities on the net. The more you can demonstrate that your free-net meets the needs of the business community, the easier it is to fundraise. I have written a paper describing what I believe are the major advantages businesses may get from the existence of freenets in their area. Its written for business people who are not telecommunications literate. If you would like a copy; contact me at: samsam@vm1.yorku.ca Sam Sternberg Toronto Free-net Committee [ ASK FOR THE BUS.DOC - ITS NOT A TORONTO FREE-NET DOCUMENT - AND IT ABSOLUTELY DOESN'T REPRESENT BOARD POLICY -ITS A PERSONAL PERSPECTIVE ] Fell free to modify it in keeping with your policies and use it as piece for distribution. Businesses, that understand the direct benefits they will get from operating freenets, will have a much higher propensity to support your efforts. EVERY COMPANY HAS COMPUTER ENTHUSIASTS WORKING FOR THEM Free-Nets are in an enviable position when it comes to corporate funding. Every company of any Never tell staff that your prepared to go over their heads if they don't co-operate. Or threaten the company with negative publicity. That kind of reaction is just infantile. When fundraising, you will be asked if company "x" has contributed. Be absolutely honest. If you asked but didn't get anything say so. And mention that you hope to improve your level of volunteers from the company and ask again next year. Never disparage a potential donor. The person your talking to may just know and like people in the firm under discussion. E: BE REASONABLE Accept refusal graciously. If your analysis of a company's motivation to support you show that you aren't a primary candidate for them; start small and build their involvement. Perhaps starting by making a request for an IN-KIND gift. Or assistance in recruiting employee volunteers. F: BE PREPARED Have a financial statement or business plan Have proof of your not for profit status Provide a list of Board of Directors and their background List all your current donors and supporting Institutions Produce an annual report or progress reports. G: ACKNOWLEDGE EVERY CONTACT IN WRITING. Its important to thank every company you made a request to, especially when they REFUSE YOUR REQUEST. Nothing does more to improve your chances on a second request than someone remembering the Free-Net as that very professional group which said thanks for taking the time and we understand the demands on you funds didn't permit a gift this time around. H: FUNDRAISING WILL BE A PERMANENT ACTIVITY OF THE FREE-NET Do it right. Right from the start. Corporate funding can be especially rewarding because companies often make gifts year after year. No other source, except your members, can be so reliable.