This year, Twin Cities Pride may look less corporate, but it’s not for the reasons some have wanted.

Twin Cities Pride made headlines this year when it dropped Target as a corporate sponsor in response to the retail giant rolling back DEI efforts.

That left the nonprofit, which organizes the annual downtown Minneapolis Pride parade and festivities taking place this weekend, with a $50,000 gap to fill. After years of the event becoming more and more corporate, with big-business sponsors and booths, it also raised questions about how this year will look different.

Corporate support of Twin Cities Pride is indeed reduced. Small businesses, meanwhile, have stepped up.

Soon after dropping Target in January, the group set up a fundraising page. It stands at $108,077, well past its $50,000 goal. Executive director Andi Otto told the Minnesota Star Tribune donations from local businesses have grown this year, from $25,000 last year to $93,000. He noted a “steep decline” in corporate funding: $1.3 million last year versus $683,000 this year.

For June events, the group overall raised more than $1.3 million. Individual donations are up by about $150,000, according to spokesperson Kevin Hurd. Grants and foundations have been “instrumental” in making up for sponsorship shortfalls.

“There are significant logistics-related costs that go into the Pride festival, from park permits to safety expenses,” Otto said in an email, “which is why funding is so important. These dollars are vital because they also help fund our year-round programming.”

Many major companies remain sponsors, including Fortune 500s like UnitedHealth Group, U.S. Bancorp, 3M, and Best Buy.

But corporate retreat is a nationwide trend. According to a recent Gravity Research survey of 49 business executives, almost 40% of respondents planned to reduce Pride-related engagement this year. Since President Trump pressured businesses to back off DEI initiatives, corporations appear less interested in consumer-facing Pride support.

This gets into a thorny business question: What social role do—or should—companies play?

When businesses took a stand, it used to be for causes practically everyone supported, says George John, a marketing professor at the University of Minnesota’s Carlson School of Management.

“About 15 to 20, years ago, there was this academic literature that blossomed which basically made the argument that branding and brand values are more powerful when they are—and I want to use this word very carefully—authentic,” John says.

Authenticity once meant, simply, that a business did something well and did it for a long time. Gradually, that definition widened to include corporate social responsibility, John explains. Brand image exceeded the product to encompass larger issues. A business may tout fair-trade practices, for example, “making sure vendors are getting paid a decent price for coffee coming from Nicaragua—things like that.”

Espousing values would translate to authenticity, and that would be good for business. Customers whose values align with a company’s may prove more loyal and engaged.

When those values are culturally agreed-upon—for example: clean air, recycling, support for United Way—the term for them is “vertically differentiated,” John says. He says that, a decade or so ago, companies began to advertise “horizontally differentiated” values, too. In these cases, businesses stake ground on issues with at least two notable “sides.”

Traditional business wisdom is “not to fly the horizontally differentiated flag anywhere,” John says. Instead, a company might signal to buyers, “‘We provide the best products we can at the best prices we can, and as long as your money is green, everyone’s welcome.’”

The line between vertical and horizontal began to blur, “and a lot of CEOs and companies felt that being transparent about ‘my personal values,’ or ‘my company’s personal values,’ would always be beneficial,” John says.

More activism-oriented companies may also have interest in social, cultural, or political influence, beyond bottom-line concerns.

In 2023, Target reported a “volatile” retail environment. Threats were affecting store staff in reaction to the company’s Pride merchandise, which the retailer has sold around June for at least a decade. Target responded by removing some Pride products. The company stated it was “continuing commitment to the LGBTQIA+ community and standing with them.” A boycott from right-wing activists seemed to hurt its bottom line.

The next year, in 2024, the company announced it would offer Pride items in “select stores, based on historical sales performance.” Target had begun selling its Pride collection in all physical stores in 2021.

The retailer’s retreat from DEI, plus its softening on Pride, has incited more, reverse backlash, with the company accused of shirking its values. A planned 40-day boycott started in March.

It seems to have had an impact. In February, the retailer’s foot traffic reportedly dropped 9% year-over-year, as measured by Placer.ai, which uses AI to analyze location data. That metric has steadily improved, although it’s still down (-1.6% in May). (Walmart saw a dip in foot traffic, too—5.7% in February—as the Target competitor is among other retailers that have also faced boycotting for DEI rollbacks.)

Smaller or more niche companies may enter the “horizontal” space without worrying about business, John says. Mass-market corporations like Target and Walmart evidently risk boycotts and threats. “No large company can afford to alienate a large section of the population,” he says. “That’s just reality.”

Meanwhile, it’s not clear Target has won over initial detractors. “There’s no good way out of it, once you’re in it.”