From Beneficiaries to Business Partners
Updated: Aug 14, 2019
Published December 23, 2015 on Stanford Social Innovation Review
Not too long ago, nonprofits generally approached companies and corporate foundations only when they were looking for handouts—donations (in cash and in kind)—so that they could go about their work trying to do good in the world. As someone who used to authorize these types of grants and donations, I can say there was (and is) nothing wrong with that. But today, I think it’s a shame when the relationship ends there. There is just so much more that the private sector and civil society can and should do together.
These days—through my roles as a member of the World Economic Forum (WEF) Global Agenda Council on Social Innovation, a program advisor to the Clinton Global Initiative (CGI), and an advisor to nonprofits including Save the Children and WeConnect International—I see an exciting, evolving role for NGOs. There’s a real opportunity for them to become true business partners with the kinds of companies they used to approach only for donations. What’s more, they can advance their causes more effectively in the process.
For example, pneumonia kills nearly a million young children (under age five) around the world each year. Many of these deaths occur simply because the first local health worker to see the child makes an incorrect diagnosis. When managers at the Dutch technology company Philips recognized what was happening, they immediately saw the need (and a business opportunity) to provide a better way of diagnosing pneumonia in low-income, rural village settings, where many of these misdiagnoses occur. After further studying the situation, they were confident that the company could develop and roll out an effective tool. What Philips couldn’t do—because it didn’t have the necessary insights stemming from experience working in the settings where the tool was most needed—was cost-effective concept development, concept testing, and market-acceptance work.
So the company turned to the global health community and child services nonprofit Save the Children. Working through Save the Children’s existing network on the ground in East Africa, Philips is now quickly and cost effectively testing and refining the new tool’s design, confirming its efficacy, and gaining market acceptance for it among potential customers. Without Save the Children’s help, this “bottom of the pyramid” product would have required more time and money for Philips to develop, therefore putting its viability at risk and increasing the chances that the product would never have been launched. This would have deprived a great many children of a faster, more accurate diagnosis and ultimately better treatment.
That’s just one example. There are many, many more, including market-making partnerships such as Unilever and CARE’s Shakti project in Bangladesh, and supply chain initiatives such as Mondelez International’s Cocoa Life, which involves NGOs like CARE, World Wildlife Fund, and Save the Children. With Cocoa Life, Mondelez ultimately benefits from higher-volume, higher-quality supply; farmers benefit from improved livelihoods and lives; and NGOs gain ground in making a sustainable, positive difference in the world.
This evolving “business partner” model is far superior to the “donation-only approach” for three main reasons:
It’s more sustainable. These partnerships deliver measurable business value; as a result, the corporate partners are more likely to be able to continue to fund them. Indeed, the best partnerships have built-in market-based mechanisms that can make them self-funding over time. So, an intervention is not one-off support but instead a continuing effort that can truly transform a village or a community.It’s more scalable. Since they offer a clear business benefit, the potential pool of money these programs can tap is likely much larger than if they had to rely solely on charitable dollars. Yes, corporate foundations must be very careful to avoid self-dealing. But in my experience, there are many ways for companies and corporate foundations to work side by side without falling afoul of restrictions or regulations. And once the effort becomes self-funding, it can grow exponentially—way beyond the scale that even most multi-year donations could afford to support.It’s more replicable. While every situation is unique, these types of models are most often aimed at similar outcomes, such as creating a new market, testing a new product, or reducing supply-chain risk (for example, supply chains based on scarce resources). As a result, many of their principles and main attributes apply to other products and in other markets. The lessons learned during the process are also often transferable. That makes them highly replicable in ways that many grant-oriented programs are not.
So if you are leading a nonprofit today, don’t shy away from talking business with your corporate donors. Figure out how you might be able to add real business value for them and approach them with those insights. In this day and age, more and more companies and corporate foundations are interested in hearing about new ways to improve their business while also addressing an important social issue.
ABOUT PERRY YEATMAN:
Throughout her career, Perry has been a leader in working at the intersection between business and society. From the early days of CSR to the rise of B-corps to the mandate for all brands to embody a social as well as functional mission, her work has helped companies, NGOs, multilateral organizations and governments simultaneously achieve economic, social and environmental benefits. Perry's experience includes revamping and running corporate foundations; developing public-private partnerships; defining and driving brand social innovation; marketing one of the world’s leading social impact measurement firms; and advising leaders from all sectors on how to create and lead purpose-driven organizations. To learn more about her thinking on these issues, visit her blog here.