SMART Partnerships

Ten years ago, I did some informal research with some large and small companies to get a sense of how well for-profit and nonprofit entities who engage in partnership discussions understood each other and I am in the process of repeating this inquiry. My original research indicated that corporate investments in charitable causes often happened with little thought to synergy with business objectives. The reason most often mentioned for partnering with nonprofits (36% of the responses) was, "it is the right thing to do." This was followed by "someone in leadership was touched by the cause" (22%). Not surprising at the time, only 32% of the corporate contacts responding to the survey considered a nonprofit's ability to add value to business objectives when selecting causes to support. Companies did and do believe that there is a "halo effect" or positive customer perceptions and loyalty generated from supporting popular causes. The correlation between good corporate citizenry and customer favor and loyalty has been well documented by Cone, Inc. going back at least two decades. In essence, when my first research was done, any relationship between charitable involvement and business objectives was largely seen as solely supportive of company efforts to achieve greater credibility or for promotional value. Only a few respondents at that time felt that charities could impact other business issues such as pricing strategies (8%), product development (14%), market research (18%) or product distribution (20%).

What if, nonprofits could impact those other corporate business challenges and more? How much more would companies invest in nonprofits if there was a measurable impact on their bottom lines or a measurable impact on “points of pain” that inhibited corporate growth? I've dealt with such issues and know that such impact is possible. Charities have different assets and capabilities by virtue of the leadership and operations employed to pursue their missions. Sometimes it is the value of the brand itself. For example, American Cancer Society is respected on par with personal physicians, so a product endorsement by them could move consumer behavior. Other nonprofits have the ability to impact other critical business issues such as costs, credibility, distribution, media reach, pricing, brand affinity, and positioning. Unfortunately, it is rare to see these conversations explored between profit and nonprofit parties. Some of the barriers to such conversation include:

• Weak awareness of nonprofit assets from a “for profit” perspective – For example, well-known and trusted nonprofit brands can be seen as a magnet for new customers to the right company.
• Weak valuation of nonprofit assets -It is hard to negotiate your best deal if you don’t know your value. I had a deal go from $150k a year to $15 million over five years by estimating the number of new customers that companies would capture and their likely purchasing power.
• Communications challenges – For companies and nonprofits attempting to discuss business relationships, it can feel a lot like challenges documented in the book “Men are from Mars and Women are from Venus.”
• Negotiation skills – nonprofits don’t typically hire staff with such skills. They often approach such partnerships with a “beneficiary mindset” rather than a partner mindset and companies often see nonprofits as beneficiaries rather than partners.
• Ethical considerations - Corporations and nonprofits have concerns about ethical considerations and perceptions. Both may fear that companies may be, or be seen as, attempting to exploit nonprofits.
• Corporate unfamiliarity with legal and tax regulations for partnerships with nonprofits.