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 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
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
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
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
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
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
Federal cash for social programs will drop massively by 20%
Federal cash for NonProfits is lowest in 40 Year Average of GDP.
In 2019, it drops to 11.1%.
Social Security and Medicare costs place incredible pressure
to shrink community development, education, arts, afterschool, LGBT civil
rights, etc. Some of that money flows to
states and cities and then to your agency –it’s drying up by 10% right now. I
see frantic responses to save great programs that are cash starved,
Contributions are declining. Tax Law changed in 2017 so there is no tax benefit for most people to make a gift.
Religion is quickly declining. Religion has been an important teacher about charity and volunteering. Belief has dropped 12% in a decade.
On Giving Tuesday, I’m offering five NonProfit leadership teams relief from the stress. Apply here. It’s not a miracle but you may get a new direction. I’ll give a two hour coaching session to each team over the holidays. There is no cost at all. Part of the discussion will be planning multiple cash streams to keep your agency stable. I use the proven Four Decisions system (People, Strategy, Execution, Cash).
Apply here. Like the lottery, the only way to win is to try! I hope the best for you.
Many nonprofits are being damaged by fundraising. The change is like being hit by a fast freight. Next year will not feel like last year. Nonprofit leaders often regard charitable gifts as the first and major provider of money. It’s critical! Cash pays staff and helps clients. Three forces are changing the giving landscape. Are you ready?
First, Tax reform in 2017 doubled the standard deduction. Only richer people and tithers (people who have a spiritual habit of giving) benefit financially from gift-making. Reports indicate that gifts from individuals declined by 1.1% in 2018. Charitable gifts from corporations increased. Gifts from those over 70 years old who made gifts from IRAs also increased.
Second, the number of corporations that received half of all profits in the USA declined. In 1975, 109 companies made 50% of all profits. In 2016, the number dropped to 30. There are very big gifts but not as much capacity for small and medium gifts.
Thirdly, Christian religious affiliation is declining rapidly in the USA. Christianity has been a major inspiration for giving. Pew Research shows a decline of 12% in the last decade! It’s hard to describe what changes this rapid rejection of religion will make in American society, but charitable gifts will be affected.
Are you watching your dependence on gifts and making appropriate changes?
I coach nonprofits who face turbulence. Contact me at email@example.com for a free consultation.
Many nonprofit leaders focus on the problems of their organizations. And yes, we all have problems!
Scaling Up framework focuses on building capabilities. It will change your mood and the mood of the staff team. It leads to the Deep Work that Cal Newport writes about. It brings happiness to doing good things.
The free workshop is September 18 and 19th (details below) on Zoom. This is one workshop where you won’t be late because the subway was behind schedule!
The first recession proofing we talk about is loneliness of leaders when facing external problems. Since I lead a nonprofit as well as serve as a coach, I speak about these feelings because loneliness has been a companion several times as a CEO or ED.
Here is a quick video recap and details are below to register with Zoom
Recession Proofing Nonprofits
You are invited to a Zoom meeting on Recession Proofing
When: Sep 19, 2019 08:00 AM Eastern Time (US and Canada)