Mergers and partnerships are critical for survival in the charity sector

With growing competition for attention and funding and demands for better governance and financial management, charities and NGOs should consider partnerships with others in their own sector.

Sadly, the recent Kids Company debacle has yet again drawn our attention away from the achievements of the charity sector to its shortcomings. It makes us spectators to some very public, legal and media skirmishes between charities and their detractors on allegations of poor governance, questionable fundraising techniques, activism at odds with donors’ expectations, dated processes and poor emulation of the corporate sector ( for example, in areas of woolly marketing and senior executive compensation).

About two years ago, I suggested in a previous blog that the sector was far too crowded, too reliant on transactional relationships with the corporate sector, competing for a finite resource; and that charities and NGOs had to be much more strategic in building partnerships. I have not changed my views. The sector remains crowded and fragmented. The dominant model is still that of running the charity as a fundraising business, where resource is spent on yet doing more fundraising.

Unlike a business, charities cannot draw on capital markets or debt facilities. They rely on discretionary expenditure of variously motivated, often fickle, individual and institutional donors for their cash flow. This can lead to the high pressured ‘sales’ techniques on the street, over the phone or by mail, which we have now come to dislike.

Tens of thousands of charities(note 1) are competing for funding from the same sources, overlapping on work and causes.  Proliferation and fragmentation when combined with lack of skilled resources, woolly strategies, financial shortages, ineffective or inefficient management processes will put many charities under severe pressure to improve – or leave the sector.

There are solutions. Mergers and different types of partnership structures , for instance.

In the corporate world I operated in, consolidation was a natural market response to proliferation in a particular sector:  mergers and acquisitions (M&A) were a familiar occurrence. As indeed were partnerships, consortia and alliances to support everything from market entry and development to business growth.

There are already precedents for successful mergers in the charity sector. Cancer Research UK and Age UK (note 2) are good examples. There are also legal instruments such as the Charities Act of 2006 )note 3) to make mergers possible.

So why don’t we see more of these in the charity sector?

There could be several reasons, both procedural and behavioral. Unlike the corporate sector, there appears to be no mechanism in the charity sector for mergers. Whereas legal and financial advisers and M&A specialists abound in the corporate sector, there are likely to be very few, if any, working with trustees or managers of charities and NGOs.

In theory, as charities tend to be typically much smaller and less complex organizational and financial structures than companies, you would expect the merger process to be relatively straightforward. In practice, however, behavioral and/or ideological resistance is likely to occur, emphasizing the loss rather than the gain. Fear of losing or upsetting donors and beneficiaries, loss of agility and flexibility, loss of assets, loss of touch with local needs and conditions, loss of influence and voice in local communities, dilution of ‘brand’, loss of jobs or status, as well as lack of capacity for implementing ‘sophisticated’ financial or indeed collaborative models could all be factors. The traditional structure of control, cultural inertia and personal passions vested in charities by their founders (charismatic founders especially may resist merging with others for fear of losing their own private fiefdom) and staff tend to favor the status quo. To some, a merger may in fact be a ‘no-no’ if it implies aggressive and predatory behavior on the part of a larger, or more dominant organization.

Mergers are not the only option – same-sector partnerships are a valid solution

As with most structures, mergers are not without risks. If done badly, they can destroy value. They may not suit every type of charitable cause or service. The resulting organization might remain too large and unwieldy.
There is an alternative: remain as you are but collaborate with other organizations with similar missions, services and values and build new partnership institutions. Multi-stakeholders partnerships between the corporate, public and civil society sectors are commonplace. What I am advocating here is creating partnerships, alliances and coalitions within the same sector.

Charities have several options. They can start off with forming context-specific coalitions and alliances around major campaigns or programmes, and once they have built knowledge, experience and capacity – and confidence – , they can transition into a more formal merger with a particular organization or a formal coalition. If they have a revenue generating component from sale of merchandising or services, they can partner with others operating a similar model and transition into a social business or enterprise; they can even consider ‘acquisition’ of other organizations to fulfill their model.

A partnership within the same sector organization can follow the same building, governance and management processes as in the Partnering Cycle (note 4) . All partners are given an equity of involvement and decision-making responsibility within an independent formal structure operating locally or globally ; partners have an agreed common aim but are mandated and empowered to address a particular service or group of beneficiaries or territory and complete tasks on behalf of the partnership to which they are ultimately responsible and so on.

There are precedents in same-sector collaborative alliances and partnerships within the non-profits field. The Start Network is a good example. A consortium of 24 leading NGOs working in the humanitarian aid system, the network extends to nearly 7,000 partner agencies, comprising over a million staff working in 200 countries and territories. It sums up its imperative thus: ” in order to meet the needs of crisis-affected people in a future of great uncertainty and complexity, we believe that the humanitarian sector must change. The Start Network members collaborate because the change that is demanded cannot be achieved by any single organization acting alone. We promote a way of working that enables international and local humanitarian actors to coexist. The vision is of a self-organizing system where the agencies best placed to respond to a crisis are empowered to do so. To realize this vision, we are working to catalyze a humanitarian sector that is more diverse, decentralized and collaborative”.

This consortium has several elements which support the case for consolidation through collaboration. For instance, it recognizes the need for radical change in a dynamic, complex and competitive landscape; it leverages the power of economies of scale and collaboration to deliver more effectively for the benefit of the communities which it serves and it suggests how individuality can be kept and leveraged within a big group.

The latter point is worth stressing. It tackles the fear many charities have that a merger or alliance with others – especially with bigger more established or high profile organizations – will dilute their individuality. If handled sensitively, this may not be so. An example – in 2006, ChildLine’s trustees decided that the best response to dealing with the growing challenge of raising money in a crowded sector  was to join forces with the NSPCC. Nearly a decade on, ChildLine’s brand has remained intact and its work has thrived under the NSPCC umbrella.

The approach in the humanitarian sector as evidenced by the Start Network can be replicated in other charity and development areas. Well-formed strategic partnerships between charities and NGOs with similar missions and target beneficiaries can combine their power, resources, influence and impact:

  • Flexibility – charities can retain their social virtues, strong sense of local ownership, freedom of operation and self-determination while reaping the rewards of scale and collaboration;
  • Diversification – charities can improve the range and quality of their existing services, and expand their  ‘portfolio’ to create new benefits for their beneficiaries;
  • Economies of scale – charities can be more efficient through consolidating, streamlining and sharing financial and back-office support functions, systems and structures; as well as manpower ( for instance, building more field versus back office capacity) and physical assets;
  • Operational agility and efficiency – charities can share tasks, define clear goals to optimize their collective and individual interests and impacts, allocate appropriate resources to achieve quicker response time, permit the sharing of crucial data and consortium bids for larger public contracts or major donor funding;
  • Capacity building – charities can pool their knowledge and expertise; learn from each other; create new collaborative paradigms, bring in innovation and move away from conventional models and silo /protectionist thinking and ‘power bases’ ; and encourage new forms of leaderships; greater freedom of operation, between partners;
  • Influence and reach – charities can combine their influencing power, pool their ‘marketing’ and advocacy for more systemic impact on policy making and public debate , be more outward facing, (focused less on internal issues) and hence more effective in mobilizing and retaining public, government and private sector support for their shared causes and beneficiaries.

Charities typically go to the private sector for both financial and in-kind support in terms of employee volunteers for their community projects, marketing, IT, HR or other functional support. To this list of what companies can bring to the table, I would also add their expertise in M&A. I cannot see why advisers who are capable of getting giant boardroom egos to work with each other cannot persuade the managers of small charities and NGOs to join forces to serve a community.

Similarly, many charities and NGOs may already be in multi-stakeholder partnerships – there is no reason why they cannot apply the same knowledge to create same-sector partnerships with other charities or NGOs. Furthermore, they may also have mandated internal or independent external partnership brokers to support partnerships. If not, then a competent and experienced partnership broker with a clearly defined mandate can help instigate the partnering process. Good partnership brokers have the requisite skills to facilitate partnerships … those coming in from the corporate sector may indeed have delivered or know people who have delivered successful mergers.

Charities and NGOs do not need to wait until they are in a serious financial or personnel crisis to consider partnerships or mergers as a response. It is better not to be forced into change but to plan and control it. The reality of the marketplace is such that trustees and managers have to consider how they can fulfill their charitable purposes in an over-crowded marketplace with thousands of players vying for attention and funding, fragmented by geography and type of service and under increasing pressure to reform. They may find they can no longer defend a case for a closed, protectionist and isolationist way of thinking when external pressures demand an open, innovative collaborative mind-set.

 

Note 1: UK Charities Commission: around 180,000 charities with a combined income of nearly £65 billion at the end of September 2014.

Note 2: Imperial Cancer Research Fund & the Cancer Research Campaign merged in 2002 to form Cancer Research UK, Britain’s fifth-largest charity, with an annual income of £665 million. Age Concern England & Help the Aged merged in 2009 to form Age UK was similarly successful.

Note 3: Charities Act of 2006 & Charities Commission – offer information to charities that wish to merge and to their trustees; give even the smallest charities the ability to hand their resources to another charity without having to do so via The Charity Commission’s procedures; operate a charity mergers register, under which donations to a merged charity are transferred automatically to the new charity.

Note 4: The Partnering Toolbook An essential guide to cross-sector partnering. R Tennyson, The Partnering Initiative, International Business Leaders Forum, 2007

 

Taking cross-sector collaboration beyond the sound bite

We need more collaboration between business and the civic society is a popular sound bite at high profile global gatherings. The 2015 World Economic Forum was no exception.

 

It is commendable that cross-sector collaboration (partnerships) features on important agendas and is recognized as a vitally important mechanism in building a sustainable and resilient world. However, it is important that business, civic and political leaders follow through on their statements and help create and nurture the environment in which collaboration can thrive. There is a vital need to build capacity for collaboration across the sectors. The leaders can commit to investment in organizations, programmes and individuals focused on delivering innovation, efficiency and excellence in multi-stakeholder collaboration. Collaboration cannot afford to slip further into the hackneyed sound bite territory that mushrooms around any good idea. Over-simplification of collaboration or the constant repetition of the ‘collaboration’ buzzword without substance and weight behind it will sap its potency to inspire action. It also does not follow that people know what successful collaboration looks like or how to deliver it well.

Collaboration is neither simple, nor easy.

Cross-sector partnerships often fall far short of expectations and many fail. A combination of deficits in partnering skills, capacity, processes, governance and infrastructures can undermine the most well-intentioned partnership. Outdated attitudes and beliefs which fail to keep up with the dynamics and demands of a multi-polar world and ‘myths’ that keep collaboration paradigms tethered to conventional thinking also hold back progress.

A common ‘myth’ is that collaboration is simple and just takes common sense. In reality, global experience shows that collaboration is quite complex. It takes a range of skills, patience, impatience, persistence, vision, rigor, courage, tenacity and imagination in those involved. For this reason, collaboration takes effort and professionalism both to establish and to nurture to productive maturity. It requires special kind of leadership and intermediation.

Partnering requires a radical change of mind-set (individual and organizational) and behavior together with a willingness to think and act in new ways, where leadership is undoubtedly and possibly the critical success factor. Conventional thinking assumes that a partnership needs a directive leader. In reality, evidence shows that collaboration requires new models of leadership and leaders with markedly different attributes to those we find in traditional, single sector environments.

Traditional models of leadership located in single sector paradigms (making cross-sector work difficult) are rooted in specific cultural traditions (making international work difficult); and can be hierarchical and directive in nature (making shared decision-making and shared accountability difficult). The kind of leadership that is needed to deliver collaboration is very different. In fact, intermediaries or partnership brokers  who take a behind-the-scenes leadership function, can be seen as embodying the kind of non-directive, facilitative leadership (‘servant leadership’) that is more suited to the challenges we face as a society. Partnership brokers support and strengthen partnerships by their understanding and skilled management of the collaboration process.

Conventional thinking suggests that collaboration requires compromise and being prepared to lose control; that agreement and consensus is essential. On the contrary, collaboration, at its best, involves sharing control and re-defining and/or re-building each sector’s key roles and responsibilities. Alignment that is built on a relish of diversity is more important than agreement and consensus.

We can also find some myths around the purpose of a partnership. Rooted in traditional development paradigms, many people believe that it is there to deliver a programme or project – that the partners just need to agree some common objectives, secure resources and put a few sound project management processes in place. Successful projects are seen as the most important outcome. In reality, partners have multiple expectations, need complementary objectives and have to be willing to understand and respect each other’s expectations. Good project management skills and other operational mechanisms are a given. Success actually depends on establishing strong working relationships between key individuals often from radically different working cultures, with different vested interests, needs and experiences. Changed mindsets, more ‘fit for purpose’ systems and innovation may be as, if not more, important than project outcomes.

Where  partnership brokers are deployed, the conventional view is that they must be detached and neutral. In reality, they are transparent about their world view and basis for working and are willing to change their views if necessary. They can get inside different perspectives, explore and exploit sectoral differences to expand the possibilities and provide practical, productive and tactful interventions.

These and other emerging ‘truths’ about collaboration need to be recognized and explored at all high profile, influential gatherings. It will shift the current dialogue from ‘we must do more collaboration’ (the saying) to ‘we must invest in building more capacity for collaboration and allocate more assets to delivering more effective partnerships’ (the doing). There is a need to support organizations such as the Partnership Brokering Association, the international professional body for those managing and developing collaboration processes and committed to promoting the understanding of, and building capacity for, partnership brokering as fundamental to achieving its vision of a more equitable and sustainable world.

Raising the level of discussion on global agendas around how to achieve innovation, efficiency and excellence in multi-stakeholder collaboration will also encourage the gathered leaders to reflect on their own capacity to understand, do and support collaboration. Can they themselves be good role models for effective cross-sector collaboration?

Done well, collaboration has the potential not only to offer options for mitigation and adaptation but also to bring in invention and innovation. Without it, the future of the planet is bleak indeed with the most vulnerable groups being affected the hardest and soonest. It does, however, need global leaders to drop the sound bite and pick up action.

Business partnerships with women for social and economic change

How can business help turn millions of poorest women into profit generators for themselves, their community and business? By partnering with them, enabling access to education, technology, finance. By helping remove discriminatory social barriers.

 

 

A recent report by the OECD Development Centre  concludes that countries which give opportunities to girls and women tend to do better economically, while those that discriminate against women and girls do less well and carry a high development cost.

The Centre’s Social Institutions and Gender Index (SIGI), which measures discrimination against women in social institutions across 160 countries, provides evidence that unequal inheritance rights, “son bias”, early marriage, violence against women, unequal land and property rights, lack of access to financial services or a political voice perpetuate gender inequality and hold back progress towards social transformation that benefits both genders. Here is how the report describes the situation of girls in the lower-ranked countries:

“Discrimination against the girl child, such as early marriage, limits her education, increases her chances of adolescent pregnancy, and restricts her decision-making authority within the family and her ability to make informed choices about her income or her family’s well-being. Future development goals, targets and interventions must take into account how discriminatory social institutions interlock and overlap throughout a woman’s life and thus compound women’s and girls’ inability to break the cycle of inequality”

So what can business as a sector do? It can help women fulfil their social potential: it can use its skills, assets and influence to support civil society to establish women’s rights within the family, freedom from violence, access to social resources, as well as civil and political rights. Business can help women fulfil their potential as contributors to economic growth: it can help women get equal access to ICT technology, finance, vocational training and education. More importantly it can go into partnerships with them which create some mutually relevant and beneficial assets.

Access to ICT technology, finance, expertise and knowledge means women have the opportunity to compete like for like with others in the marketplace. But it is not just about equal rights and a level playing field. It is also about the value women bring in creating social and economic stability. Educated, income-earning women connected to the world through ICT can be powerful catalysts for development because they tend to invest more of their income in the families’ health, education and social development over a period of time. They can create economic and social virtuous circles.

Take the example of a rose grower in Kenya where I grew up. Until recently; she sold her roses to a buyer at the farm gate, oblivious of where her roses went and what they were priced at in the shop. Then she buys a smart mobile phone and she is in control. For instance, she knows the wholesale prices for roses being traded in Amsterdam; she has faster access to her packaging and other suppliers, improving both her inventory management and her purchasing; she arranges her own transportation, negotiating a better deal with the air freight company. She adjusts her prices upwards accordingly. Soon she is earning more than she did before. She enlarges her farm, hires more workers, teams up with other farmers to open a school in the village, she contributes to a health outreach programme and a clinic in the village – soon there is a thriving business which not only improves her and her family’s livelihood and life but also of others in the village. She has created an economic and social virtuous circle.

Not a new idea but it does need a different business mind-set

The emphasis on economic empowerment of women is not new. Way back in 1996, my colleagues and I were involved in the Grameen Bank micro-entrepreneurship initiative, looking into how we could develop affordable village payphones around which women could create a business. Since then, there have been several other notable initiatives helping women get access to finance, vocational training and education or to set up micro-enterprises. The Women Zone on the Business Fights Poverty has some good examples.

There is a compelling case for business to create local partnerships with women, especially if initiatives are developed jointly with the women for mutual benefit and make the most of the assets and complementarities of each side.

However, for this to work, most businesses will need to adjust their mind-sets and perceptions. They will need to support and facilitate rather than dominate in the way they behave. They will need to listen actively and not assume that they have all the answers. In fact, some of the best solutions may come from the women on the ground themselves; from women who understand and have been dealing with the problems of food, water, shelter, health, education for a very long time.

Businesses can learn that such women solve their problems by applying common sense: they rely on their innate ‘softer’ skills, their collective memory, ingenuity and creativity. Their nurturing skill means they will be prepared to go for the long haul, not just the short term quick buck. Despite the handicap of illiteracy or little capital and no concept of risk management, they will not be afraid to seize an entrepreneurial opportunity if it means improving the lives and livelihoods of their families.

In fact, there are some compelling examples which show that education need not be a barrier. And that solutions need not be high-tech. Take one particular example – the Barefoot College (http://www.barefootcollege.org) in Rajasthan, India. It has created a formidable cadre of women solar engineers, water hand pump mechanics, and FM radio operators in India, Africa and Latin America. It would be natural to assume that getting solar power to off-the-grid rural communities is a complicated engineering problem best left to highly educated experts. The ‘Solar Sisters’ – all of them poor and many of them illiterate – would prove you wrong. They know how to assemble, install, use, repair and maintain solar units used in lighting, cooking, heating and water desalination. The College teaches them how to build and repair simple solar lamps, right down to soldering the circuits. The ‘granny’ engineers return home with the skills and tools they need to light up their villages at night.

The training programme works because it is rooted in common sense and because it taps into the power of human ingenuity and creativity. The ‘Solar Sisters’ show you cannot necessarily use illiteracy as an excuse for not engaging women in finding perfectly feasible technical solutions to the challenges their communities face. It takes guts – maybe, self-belief coupled with a desire to improve the lots of their communities – that persuades women to leave for the first time not only their village but in some cases, their country to learn a new skill. Their ingenuity means hundreds of households in several communities will reap the benefits of clean, solar-powered energy.

The returns from partnering with women are huge. Companies not only help the women and their communities but also themselves. They can grow their markets; they can work with the women to create better more relevant products and reach markets they wouldn’t otherwise e.g. by making them part of a local distribution chain or part of their marketing channels. Companies can improve the diversity of their workforce. Investing in women’s training and literacy can improve workforce productivity. Investing in their families’ health and welfare means loyalty and retention, less absenteeism.

Business can also help raise the profile of women entrepreneurs from the ‘South’ – especially in those markets where discriminatory social institutions still hold back progress on gender equality and women’s empowerment. It can inspire and build confidence and raise the possibility of being able to pursue own life choices and to fully benefit from practical opportunities for personal, family and community development. Similar visibility in the ‘North’ would stimulate other opportunities for businesses and the movement on women’s economic empowerment would gather pace.

 

Refocusing corporate partnerships to build assets

At Rippleseed, I take an assets driven approach to developing strategic corporate-community partnerships¹ .

If companies are to create long term, sustainable businesses, then the communities in which they work and live need to be well functioning, stable and self-reliant. Long term stability comes  when both sides are able to generate, own, share, deploy, diversify and grow their assets.  It requires effective and efficient collaboration and leads to mutual commitment.

I do not use the term ‘asset’ in the accounting or financial sense – but extend the common dictionary definitions to provide a description that focuses on community development and how companies deliver substantive social impact: an asset is a useful, desirable, valued, or valuable quality, person or product in the community; an advantage or resource generated and held by the community.

Such a description resonates with the aspirations of every individual and community seeking to develop and leverage their human, social, financial, physical or natural assets. Owned by the community, assets engender the pride and dignity that comes from being self-sufficient and self-reliant. It puts people in control of the pace, direction and substance of what they do with their assets and hence deal with whatever opportunities and challenges (natural or man- made) that may come their way.

It is easier to use the language of assets. In the recent few years, we have seen among others, the emergence of ‘base of pyramid’, ‘inclusive business’ and ‘social value creation’  concepts and some notable examples of their practical applications. The language that underpins these concepts certainly makes sense upstream in think tanks, business schools, management consultancies, businesses, international development organizations and elsewhere the concepts have been adopted.  But then , I have also seen them being lost in translation further downstream at the community level where there might be a hundred different languages and words to describe the same thing. The language of assets is an easier pathway to building grassroots level engagement. It is possible  to get your head around some tangible human, social, physical or financial outcomes of a collaborative project or partnership when it is explained in plain language.

Every business relies on local resources to run its business – people, goods and services, water, land and other natural resources, amenities etc. It make sense to take a long term strategic assets driven view.  Business can do substantively much more than it currently does in terms of deploying its assets to help vulnerable communities to build and make better use of their assets. The symbiotic relationship, however, is far from well understood. For instance, the current ‘default’ model of most corporate partnerships is transactional, focused on short term goals and transient relationships: selective community projects that serve the company’s immediate vested interest or current social cause (often with a public or shareholder stamp of approval in mind); corporate giving; and employee volunteerism.

Corporate reporting  tends to amplify only the company’s side of the story, presenting its contribution to community investment as evidence of good corporate and brand behaviour. Often, the focus is on outputs – the numbers delivered – rather than on the more transformative and systemic long term societal outcomes for the communities. The transient nature of community projects shows its worse aspect when a company chooses to exit from the community – when the mine or factory is no longer economically viable or there is a cheaper place to relocate to. That is when the company’s legacy truly becomes visible: not just in the form of derelict and decaying physical assets or depleted natural assets the company leaves behind but in the (in) ability of the community to make the most of its social and human assets.

There is no denying that ‘capital’ can bring about change in the short term .  However, if it remains the default method, it will create a fragmented impact, lacking in cohesion or coherence. At its worse, it can create a sense of dependency and uncertainty in the community if it thinks it can make changes in a piecemeal way because it has to rely on handouts from what is increasingly becoming discretionary corporate expenditure.

The goal of corporate partnerships should be to create integrated programmes where businesses can make the best use of their own assets to generate and improve local social , human and other assets. In addition to local content partnerships and bringing communities into supply and distribution chains, companies can bring to the communities such core business skills as access to training and other human resource development capacities; borrowing capacity; assistance to local firms to gain access to new technologies; project and contract management skills; improved access for local firms to their supply and distribution chains; marketing and distribution know-how.

The business benefits for a company from taking a more enlightened deployment of its core business skills and assets are obvious: a better fit with its core business, a more efficient and effective use of its resources, opportunities to co-create and innovate its products and services or enter new markets or extends it channels to market, opportunities to learn about and from its markets, economies of scale through replication and scale, more substantive evidence of its social impact, and opportunities to enrich and enliven its brand story. It is not only the community which benefits: local NGOs, community based organisations and other civil society partners would also gain experience, knowledge and capacity to support their communities once the corporate involvement may have moved on.

At Rippleseed, we are passionate about using our business management, corporate social responsibility experience and insights and our partnering expertise to promote and support innovative partnerships. Our aim is to create opportunities for companies to look at what programmes or partnerships work well and how they can use those as the foundation to build on.

We recognize that a company may begin its community ‘partnership’ with a cheque or some other transactional relationship, but our aim is to help envision and develop how that initial investment can lead to the generation of other assets in the community. We feel the company’s social impact is more assured if it pursues a partnering approach that delivers more integrated outcomes , eventually leading to the creation of inter-connected ‘virtuous circles’ for both company and community. It could be the beginning of the formation of a covenant between business and society. Would that not be amazing?

¹ Ripplesset asset mapping is part of the methodology used by Rippleseed to support its partnerships’ development work

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Moving from corporate fundraising to strategic corporate partnerships

Should charities and small NGOs  rethink their approach to corporate partnerships in a competitive, dynamic marketplace where access to corporate funding is finite?. Yes, if they are to survive in the long term.

 

I see an increasing number of recruitment ads where the title says ‘corporate partnerships manager’ but the copy further down says “seeking an exceptional corporate fundraiser”  and uses language which is more akin to managing corporate sponsorships and relationships. The language of partnering is used interchangeably to describe what is more about corporate fundraising and sponsorship. It maybe a matter of pragmatic expediency to do that but it has wider consequences for the substance of the relationship.

It is understood that charities and small NGOs need funding to operate. And do so by pursuing a transactional, philanthropic relationship : a discrete time, issue or programme related effort with an emphasis on financial contribution, employee volunteerism and public relations. Philanthropic partnerships typically draw in one or two core partner competencies.  They may involve minimal complexity but bring short term gains to both partners. They can be risky. If the charity or NGO  is perpetually preoccupied with fund-raising, it may fail to see the bigger picture and its strategic place in it.

The reality is that transactional corporate -non-profit sector partnerships operate in a world which is changing.

On the one side are societal pressures. Emerging geo-political, social, environmental, technological and economic trends will change priorities for governments, businesses and the civil society. This will affect the dynamics of future cross-sector collaboration. It will be about delivering  more joined up  systemic transformation and less about piece meal change driven by parochial interests of individual organizations or sectors.

On the other side is an increasingly crowded, highly competitive marketplace. There may be close to 40,000 major NGOs in the world. Charities, non-profits and community-based organizations number in their hundreds of thousands.  It is not uncommon to find several NGOs and charities going for the head, heart and pocket of the same company.  In the ensuing competition for executive attention and cheque books, knowing how to stand out from the crowd with a more compelling case becomes critical. The reality is that however important or high profile a cause or how established the contractual relationship or how big the PR effort, economic realities will eventually favor the survival of the smartest.

Corporate funding is a finite pot. Companies face increasing pressures on their discretionary budgets. The need to link their social investment more closely to the core business and value chain, and provide evidence of impact of such investment will push many companies to take a more considered and critical look at their options. I have certainly been at the receiving end of the revolving door syndrome  in my corporate career and have always chosen to go for the organization and programme that had the closest link to our core business. A strategic and transformational partnership paradigm was more attractive than an opportunistic philanthropic one.

Differentiate through strategic partnerships

NGOs and charities have some choices. They can continue with the status quo around philanthropic and opportunistic partnerships. They can increase their PR and campaign spend to reach  a wider donor pool.

Or they can break away from tradition and differentiate themselves by creating more strategic and content-rich partnerships with the corporate sector. This includes not feeling constrained by having to target only global businesses but also seek out  small and medium-sized or regional companies for local mutually beneficial partnerships.

Strategic partnerships will involve more effort. But, when effective, they will yield significantly higher benefits than a philanthropic partnership. By tapping more smartly into the core competencies, skills and know-how of all partners –resources and assets, local presence , technical expertise, marketing know-how, advocacy and convening power, supply chain and distribution networks etc – the partnership can deliver more substantive outcomes for the partners and its beneficiaries in the community.

The more entrepreneurial NGOs, non-profits and charities can move away from short term expedient thinking and a legacy way of working (especially where it has been conditioned by risk aversion, strategic gaps or a scarcity of the right kind of resources and competencies) into a more innovative space.  In time, as the transformational partnerships movement grows, such entities would be well positioned to facilitate systemic change around cross-cutting challenges across the globe – whether it is access to health care or clean water or energy, gender equality, child poverty or youth skills.

All of this means NGOs and charities will need to develop a broader range of skills.  And specialized resource to help identify scope, build and manage effective partnerships with the corporate sector as a critical component of their strategy. What they should not do is to expand the role of an existing fund-raiser/relationship manager to do the strategic partnering work.   He/she is likely to have a very different set of skills, experiences and attributes when compared with a professional partnership broker/ facilitator. However good the person might be in raising funds, you cannot assume they can make the leap into partnership facilitation and management. It may do more harm than good if the partnering process fails to achieve its ambition because of a poor partnership brokering approach.

Internal partnerships for more effective reputation management

When the recent furore over tax avoidance by five global brands erupted in the UK, we can imagine the kinds of conversations taking place inside the companies. Some would be trying to explain and justify the corporate position to counter the backlash from customers, the media and activists; others trying to assess the damage to sales, market share and brand equity; a few others trying to prevent a slide in staff morale and concentration. Almost all would be in some crisis planning mode to try and limit damage to the company’s reputation.

In such circumstances, it is easy to take a pragmatic view and say despite the best risk assessments, unforeseen events do occur; it is possible to be blind-sided.  That may be so. But the reality is -as show by public’s reactions -stakeholders take an unforgiving line if they perceive a disconnect between a company’s actions and its statements on corporate behavior. Proclamations on corporate and brand values and CSR principles begin to sound hollow. How could they begin to reconcile a company’s vow to dedicate itself to earning the trust and respect of its  publics by being responsible and doing things that are good for society with its actions to minimise its contribution to the public services coffer?.   It is at times like these that the value of achievements resulting from CSR programmes and brand campaigns – in fact, from all good deeds across the company – takes a tumble.

The companies argued that their activities were legal. They obeyed European taxation laws. And they have a duty to minimise corporate liability and maximise shareholder value. That may be right and proper. However, it is good management to be also sensitive to the broader unintended consequences of such decisions. And not leave the company open to accusations of any malpractice – in this case, tax evasion.  You cannot assume that the public has a deep knowledge or understanding of corporate laws and regulations. It merely sees a company’s actions as being ‘good’ or ‘bad’ and almost always in emotional, visceral rather than cerebral terms.  Any artificial depression of profits and other measures to reduce the tax bill and hence not contribute to public services is likely to be seen as just plain ‘bad’.

As external pressures build up, some companies sought to make appropriate reparations. To its credit, Starbucks accepted public criticism of its tax affairs and stepped up to pay some corporate tax voluntarily.

A sceptic might respond by asking if things have to go wrong first before they can be put right. No, they do not. Some prevention is always better than a cure. Some foresight built on insights is better than myopia. However plausible reparations might be, they are a short term fix. The deep down core problem remains. The de facto way of managing reputation in most organizations is still built on territorial and hierarchical lines, where decisions may be taken to uphold the supremacy of a particular function and where a pecking order of influence on corporate decisions prevails. How often do CSR managers feel that they have the clout and reach in their organizations to influence the Board or finance or corporate strategy decisions?

Chances are that the impact of decisions in one area are not always validated in terms of their consequences on another equally important area, creating huge imbalances in the way the company’s behaviour is perceived and rated. If the company has built a credible CSR track record, this can be easily undermined by poor governance, financial, marketing or human resources decisions which took no account of the impact on CSR. A huge crack appears in the minds of stakeholders in terms of what the company says and what it does. It reinforces the beliefs of the anti-business lobby that business shows schizophrenic and sociopathic tendencies in its dealings with society. Any attempts to appear to be responsible are mistrusted.

So what is the solution?

At the strategic level, it is about remodelling and incentivising the responsible business management approach to make it more rounded, collaborative, interconnected and interdependent. At the practical level, it is about creating collaborative systems and ways of working – such as internal partnerships – to facilitate better decisions  for delivering societal obligations.

Responsible business management is the one area where clichés around ecosystems actually hold. The codes of conduct, attitudes and actions of a company towards its shareholders, customers, employees, suppliers and distributors, communities and the environment are symbiotic.  A very simplified illustration – good governance structures and enlightened leadership create well run companies. Sound workplace and HR practices with respectful treatment of employees engenders a productive and committed workforce. Good eco-friendly and ethically sourced products and inclusive marketplace behaviours generate sales and loyalty. Effective community involvement and sound environmental practices create social goodwill. All of these have a positive effect on financial performance, which satisfies the shareholders and encourages more investment.

In reality, this harmonious picture may not always be there. Instead, it is more likely that the functions which look after shareholder/investor, customer, supply and distributions chain, employee, community and environmental stakeholders work largely in isolation of each other, with some nominal and perfunctory overlap of shared interests. The proof of this lies in the way crises emerge, leaving you wondering if they could have been avoided if there had been a more substantive bond between the functions and the people who lead them.

So where do you start in practice?

The company’s annual strategy management process is a good time to do a health check on how its  key functions interact ; its code of  business conduct/ethics; its corporate governance /accountability and transparency procedures ; its decision-making protocols/processes; its leadership and management approach (performance measurement and development) and its values systems  and communication culture.  And where gaps arise, these can be fixed through temporary internal partnerships between the relevant functions and led by influential managers.

You might begin by setting up an internal partnership to make systemic changes in the communications culture and modernise your communications systems.  This would bring together investor relations, communications , marketing, CSR/sustainability, HR, legal and operational decision-makers and practitioners to provide strategic oversight of reputation building as one coherent and cohesive activity, look at the impact of decisions in one area across all other areas, contribute substantive content for corporate narratives, and create opportunities for richer dialogues between the company’s external and internal ‘markets’.

You may then want to set up an internal partnership to review the different codes that define your corporate behavior  and synthesise them into one superior code. The next step would be to help embed the combined code in all business operations from sourcing to product design to product creation to manufacturing to marketing to environmental affairs and in all support functions from corporate strategy to HR to finance to communications.

Internal partnerships may seem a strange notion given that the usual way to finding solutions is to set up steering groups/’tiger team’s,  projects and project teams. In my experience, partnerships and projects have different attributes, perform very different roles and deliver very different outcomes. Partnerships deliver more transformative outcomes, more lasting changes in behavior. Internal partnerships are an effective and sometimes a radical way of delivering business, cultural and organisational transformation, including the integration of responsible business practice into core business operations. Project management is just one of the several methodologies available to support the partnering process.

Partnering is not easy. It critically depends on establishing strong working relationships between key individuals with often parochial and positional interests. It requires a radical change of mind-set and behavior together with a willingness to think and act in new ways. Partnering effectiveness requires specific skills, self awareness, persistence, courage, tenacity and imagination in those involved – and leadership.  The upsides of collaborative ways of working across functional boundaries and management hierarchies are, however, considerable.  They make it possible for a company to withstand the impact of unintended consequences from a much stronger position.