NonProfits rarely see the need to find a business partner. At best, they find a favorite auditor, attorney or supply vendor and essentially develop no-bid contracts with their favorites. Stuart Mendel and Jeffrey Brudney found that nonprofit and business partnerships were only 10% of partnerships.
Partnerships mean that both partners get something that they want from the relationship. Nonprofit CEOs are nervous about relationships that might make a business – more profitable. Actually, every time that you pay your auditor, I assume that they get richer! So there is nothing illegal or unethical about partnership with business.
What are bad partnerships with Business?
Brand Risk – The biggest risk is Brand risk. If you choose to partner with businesses that don’t match your values, mission, or values of your clients, you can seriously damage your brand. Partnerships with business should hire a coach to help you review partner proposals with your leadership team, board, and stakeholders before you proceed. For example, the company in New York that has done audits for Mr. Trump also pushes aggressively in the nonprofit space locally. Would it affect your nonprofit brand if you chose the same auditor? What questions would you raise before you made the decision? Your coach can help.
Kentucky Fried Chicken partnered to give money for breast cancer cure. They printed a month of pink buckets for chicken. Media quickly seized on the links between calories, obesity and breast cancer. There was nothing unethical with the business relationship but the nonprofit failed to consider key implications of their brand. Proceed slowly and use a coach!
Process Risk – A second risk is process risk. The processes and corporate cultures of all companies are far different. When any two groups develop a partnership, there needs to be a written charter that the coach helps you to carefully spell out details
Both Brand Risk and Process Risk can be managed. Leaders lean into the danger, use a coach, and do risk management! You can partner with business.
What’s a good reason to partner with Business? Mendel and Brudner list four reasons and I add two more!
- Your nonprofit needs money – Pampers diapers and UNICEF were partners for a long time and UNICEF got funding for its mission. Pampers added to its brand strength by being interested in children. Find a business owner who really likes your mission.
- Your nonprofit helps a Business that helps your clients – A family doctor has a practice locally that easily accepts cash and his prices are low. Any nonprofit that helps low income families would be helping their clients by referring them to the doctor if there are not other good choices.
- Your nonprofit needs more expertise – A local construction company is willing to partner with your nonprofit with internships. You have a training program for people released from prison but no expertise in introducing your best graduates to the job market. The construction company gets a supply of semi skilled workers that come there with your recommendation.
- Both you and the Business want market share – You realize that a local bakery attracts young parents whose children would be eligible for your school. You already have 200 parents who don’t go to that bakery. If both companies give discounts to each other’s customers for a month, then both groups of parents are now potentially interested in both companies.
- Sumo Number Four – Bernie Brenner suggests that you find a partner who is 10x bigger than you and partner with them. For example, a real estate developer suddenly gets bad press about rodent infestation. They need a brand partner who will help them clean their brand. They donate money to your nonprofit and rebrand as the safe rental for families. This partnership is the most risky for the nonprofit but potentially the most effective.
- More Respect Than Government – Government partnerships are often take it or leave it contracts. They add conditions without reflecting on the costs of compliance. They assume that they are the head in the partnership and your nonprofit is the hands and feet. Business partners can be different, You can search until you find the right business to partner but you can’t easily choose another government to partner if you don’t like the first one!
Conclusion: Partnerships are critical in the growth of nonprofits and often welcomed by business. You will be treated as a co-equal partner by the right Business. Remember:
- This is not a plan for next week – it’s in your three-year plan.
- Use a coach and develop carefully.
- Avoid brand and process risk
- Involve your leadership and board in the decision
- Enjoy the expansion of your good work!