Unbalanced Partnership? Business' Role in the Nonprofit World

by Sonya Behnke

The marketing terms are now commonplace in our collective American vocabulary: “Social investing,” “venture philanthropy,” and “cause branding” may be relatively recent phenomena, but their potent presence in our evolving notions of corporate and nonprofit activity is undeniable. The quick and natural emergence of corporate-nonprofit partnerships has spawned these new terms as the practice continues to expand in size and scope.

While the definitional terms for corporate-nonprofit partnerships are now clearly outlined for both sectors, the emerging power dynamics within such relationships are more difficult to ascertain. The potential hazards and benefits of corporate-nonprofit partnerships lead to fundamental questions about the identity and strength of the nonprofit sector: are charitable missions incompatible with a profit-driven environment? Do partnerships between corporations and nonprofits necessarily favor the more resource-laden business world, or could they be the key to expanding charitable giving in our market economy?

In the wake of the Enron scandal and other high-profile business travesties, many American citizens are skeptical of the “charitable” intentions of corporations. Susan Berresford, President of the Ford Foundation, agrees that this sentiment is well-founded. She says that “the engagement of businesses in underserved communities is not charitable; their investments are intended to boost the commercial outcome of companies while enhancing economic opportunities for communities.”

Corporate giving has never been a major source of revenue for nonprofits in the United States. According to the National Center on Nonprofit Enterprise, even in 1999, corporate charitable contributions comprised only 6 percent of total contributions, and this represented a paltry 1 percent of corporate pretax income. Where corporations once contributed to charity out of moral obligation, or through strategic contributions to community causes, nowadays many corporations would rather “invest in” than simply “give to” nonprofits, with the expectation of some quantifiable return. Inversely, as the drought of government funding continues for the third sector, more and more nonprofits are seeking resources and revenue via willing corporations.

But in the nonprofit world, where trust and reputation are the defining factors of success, it is difficult to see how business might exert a positive influence beyond that of an increased flow of revenue. Pablo Eisenberg, former director of the Center for Community Change and a senior fellow at the Georgetown Public Policy Institute, says, “There is a myth in America about the great efficiency and management of the business world. But look at the failures of Corporate America: they cheat the public, they steal pensions, they lie to shareholders, and that’s supposed to be the ideal organization model?”

It may be true that corporations have an enormous advantage over nonprofits in terms of access to monetary resources, but it may not be the case that this is causing unbalanced partnerships to form. Bea Boccalandro, adjunct faculty at the Georgetown Public Policy Institute’s Center for Public and Nonprofit Leadership and President of VeraWorks, Inc., argues that “there is little reason to think that partnerships are causing nonprofits to become more business-like beyond IT and operational upgrades. In fact, it is the influence of nonprofits that is having a transformative effect on the corporate workplace.” Boccalandro says that it is not just profits, but the existence of a “meaning gap” that truly separates corporations from nonprofits. Where businesses have “rubbed off” on nonprofits in areas such as incorporation of new technology, partner nonprofits have actively brought new “meaning” into the workplace. Many corporations now subsidize volunteer opportunity and engagement with local nonprofits, and have developed new ways to incorporate and encourage employee involvement with social causes.

These types of “win-win” relationships can have clear benefits for both parties. For businesses, a strong connection with a nonprofit organization can promote a positive public image, enhance community relations, build customer and employee loyalty, open up previously untapped markets, and can differentiate them from other competition. Nonprofits that undertake such partnerships may obtain more funding, resources, marketing and organizational support, an increased number of volunteers, improved visibility, and management expertise.

There are obvious benefits for both parties, but the potential costs on either side may also indicate something about the nature of the relationship. For corporations, when a partnership fails, it indicates an unprofitable venture and a loss of profit – an everyday risk in the business world. For a nonprofit, it is not money, but reputation that is at stake. The value of a nonprofit rests in its mission and name. A bad business partnership can put the very heart of the organization in jeopardy. In a recent report, The National Center on Nonprofit Enterprise said, “A good name is a nonprofit’s chief asset. If this is depreciated in the course of doing business with a corporation, the ability of the nonprofit to address its charitable mission can be seriously harmed.” If, for example, a nonprofit attaches its name to a corporation’s faulty product, they may do damage to the very population they are seeking to help. Such failures have consequences of both moral and financial scope.

Despite the potential risks associated with corporate-nonprofit partnerships, many of these relationships have produced truly positive results for both parties. National partnerships between groups such as Home Depot and KaBoom!, or Starbucks and the once-local America SCORES organization, have brought significant benefits to both business and the communities their partner nonprofits aim to serve.

It is on the basis of these ideally successful partnerships that our evolving vocabulary flourishes. Most businesses and nonprofits are clear (despite lack of legal standards on such procedures) in their intentions and missions, and join together only when goals are clearly aligned and defined. On the basis of this, “partnership policies” and “strategic alliances” are formed so that “social investing” may commence. Where one sector once dominated the use of a word (i.e. nonprofits and “social” and business with ‘investing”), these two-word phrases join the concepts of mission and charity with business goals.

It seems possible, therefore, that both sectors are engaging in a process of redefinition. The change in the function and form of nonprofit and corporate language may actually signify a healthy partnership moving from adolescence into adulthood. Each party can adapt to, respect, and benefit from their partner’s approach without sacrificing their own identity. When functioning properly, nonprofits and corporations utilize the strongest aspects innate to the partner’s sector or organization, without taking ownership of the traits.

There may then be little reason for concern that corporations will have a harmful effect on nonprofit practice. Boccalandro argues that, despite the dominance of corporations in terms of monetary resources and thus, power, “the nonprofit sector is incredibly resilient; it has a way of righting itself. Many nonprofit leaders forewent lucrative corporate jobs to follow this mission. They are deeply committed to social aims. If the promise of substantially higher pay did not derail them from their lofty mission, pressure from a corporate partner certainly won’t. They won’t sell their soul to a corporation.” Indeed, the “human element” that nonprofits bring to the workplace may be the defining factor in these partnerships. Of her extensive experience working with corporate-nonprofit partners, Boccalandro has observed that “while many business representatives recognize the need for partnerships to be win-win, after experiencing the smiles of children or listening to the breast cancer survivor through their nonprofit partnerships, they get hooked on social aims. The last thing they want to do is eliminate the intrinsic rewards of altruistic gestures and make their community involvement as dry as the rest of their jobs.”

A partnership between a corporation and nonprofit, therefore, may not need an equal “bottom-line” to indicate balance. While the nation’s nonprofits need monetary and organizational resources now more than ever, perhaps it is a little more soul that is needed most desperately by our corporations. Undoubtedly, corporate-nonprofit partnerships are evolving in a manner that indicates positive movements for both sectors. Functional partnerships support the notion that benefits extend beyond the strictly quantitative, and that the ideology of each sector can be used to actively advantage its counterpart. Corporate-nonprofit partnerships have an enormous potential not only to bring greater resources to the nonprofit sector, but also to help cleanse the reputation and improve the dry functionality of the everyday corporate world.

Email Sonya Behnke at ssb38@georgetown.edu



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