Executive Summary
In this section:
- At what stage are corporate community partnerships in Australia?
- More secure funding streams and capacity building
- What is driving corporate community partnerships?
- Barriers to and opportunities for more corporate community partnerships
Corporate community partnerships are able to address, or assist in addressing societal issues and produce outcomes that governments cannot (or cannot do alone), and that businesses and not-for-profit organisations cannot achieve exclusively.
These partnerships are unique in that they often bring together entities with different ideologies. While some not-for-profit organisations and large businesses (the focus of this report) may have different views about how activity should be measured and how profits should be distributed, they share frequently the notion that risk should be embraced to achieve their respective outcomes. This is very different to the philosophy underpinning the government.
This report examines barriers to corporate community partnerships developing further in Australia, examines differences between not-for-profit organisations (NFPs) and corporations, identifies positive and negative factors at play in these partnerships, and focuses also on trends and developments. It looks also at how to best leverage the operations and activities of NFP organisations to enhance interactions with large businesses.
It comes at a time when economic uncertainty has been prompted by a crisis in international credit markets, which is creating uncertainty in business, governments, among NFPs and in the wider community.
The depth of any economic downturn in Australia from 2008 is likely to test the strength of many corporate community partnerships. NFP organisations, business and governments are aware that during past economic downturns in Australia and internationally, investment in the community by corporations has been strained by business financial considerations.
These past developments occurred when corporate community investment and corporate community partnerships were generally at an early and less sophisticated stage of evolution. How these partnerships will be tested during and following the financial crisis that enveloped markets in September 2008, will be watched keenly by those analysing the path of business relations with NFPs.
This report included quantitative survey research with 153 not-for-profit organisations and qualitative research workshops of NFPs in Sydney, Canberra, Perth and Melbourne, as well as individual consultations with senior NFP sector executives. It follows the 2007 publication by the Centre for Corporate Public Affairs and the Business Council of Australia, Corporate Community Investment in Australia.
At what stage are corporate community partnerships in Australia?
The direction of corporate community partnerships — supported by most NFPs — is towards an ‘integrative’ stage of collaboration, in which partners create new services and activities as a result of their collaboration.
Outcomes produced by so-called integrative partnerships include better societal outcomes, and improved delivery of services at a local level. NFP organisations report that many corporate community partnerships operate within this realm.
Some corporate community partnerships in Australia remain at an initial ‘philanthropic’ stage of development (traditional donor-recipient relationship delivering funds to the NFP and strengthening the reputation of the donor).
The largest number of partnerships sit in the orbit of ‘transactional’ collaboration, characterised by an exchange of resources via partnership activity, producing mutual reputation and positive outcomes for society. As they develop, these partnerships move towards ‘integrative’ collaboration.
The trend towards integrative corporate community partnerships reflects the trend in collaborations internationally (especially longer term partnerships), particularly in the United Kingdom, and increasingly in the United States. This report, and the 2007 report on corporate community investment, identified internationally innovative approaches in integrative community partnerships in Australia.
Development of network governance in Australia (pursuit of holistic societal outcomes between all-of-government, NFPs and business to access resources needed or utilise resources differently to generate policy solutions), and the evolution of social enterprise (community initiated and controlled entities using entrepreneurship to contribute to community issues), is also having an impact on how corporate community partnerships evolve and operate.
More secure funding streams and capacity building
This report finds that corporate community partnerships continue to grow rapidly in Australia. About 10 per cent of the income of the NFP organisations contributing to this report is derived from corporations.
Almost all NFPs indicated they partner with business to secure a funding source that is often more reliably available over time than funds available from governments (which remain the prime source of NFP funding).
Three-quarters of NFP organisations partner with business also to get access to specialist corporate skills, and assist build their capacity. Consultations undertaken for this report illustrate the importance of skills-transfer for both NFPs and also business.
About 70 per cent of NFPs — which are primarily ‘mission-driven’ entities — indicated partnerships with business improves what they do, and about half said also that their projects are more successful than if they did not partner with corporations.
What is driving corporate community partnerships?
Research for this report indicates that among smaller NFPs in particular, with little experience of collaboration with business, there remains some natural and ideological suspicion about the motives of businesses seeking to partner with them.
Most NFPs believe marketing benefits and reputation motivate business primarily to form relationships with NFPs (reputation was rated as the second highest motivation by corporations in the Centre’s 2007 report on corporate community investment).
They also rate corporate citizenship obligations as a main driver (rated number one by corporations in the 2007 Centre study), and see meeting stakeholder concerns as another key corporate community partnership driver for business (rated number four by corporations in 2007).
Barriers to and opportunities for more corporate community partnerships
If the benefits of a more integrative approach to corporate community partnerships are to be encouraged and nurtured, then barriers to their development, operation and success need to be understood and removed.
About one-quarter of NFP organisations said business does not understand their objectives. Yet the most successful partnerships are characterised by corporations and NFPs making considerable effort to understand the mission and intent of how each entity operates.
Most NFP organisations believe better overall business sector understanding of NFPs and their complex stakeholder relationships, as well as the longer-term view they must take to mitigating societal issues or achieving community goals (when compared to the shorter-term profit cycles of business), would underpin more successful partnerships.
Building capacity
However, the most critical challenge facing not-for-profit organisations — which they see corporate community partnerships playing a lead role addressing — is building their capacity to achieve their missions.
Most of the work of not-for-profit organisations requires multi-party collaboration with government agencies, other NFPs and businesses.
Many NFPs say they have low operating ratios, and most have staff numbers between one and nine full-time employees. Many rely on volunteers (including from corporate partners and other businesses).
There is high demand among NFPs of all sizes to have access to the skills and capability that corporations can offer, transfer and embed. This includes capability in core management enterprise functions such as human resource development and training, finance, marketing, corporate governance, administration, strategy and leadership development.
Conversely, many large businesses value highly the opportunity for their employees to work with NFP organisations, and the exposure this can provide them to different operating models and community experiences (this is in concert with the findings of our 2007 report into corporate community investment).
As well as building capacity via employee volunteering and skills transfer through collaboration with business, we recommend later in this report development of a Community Corps in partnership with NFPs, business and governments, to practically and innovatively build capacity in the not-for-profit sector, and build business understanding also of NFP organisations.
Capacity-build through employee volunteering
Employee volunteering, a mode of corporate community investment that also engages staff with their employer’s corporate responsibility, has the potential to play a greater part in skills transfers to NFP partners and capacity building.
Fifty two per cent of NFPs report that corporate volunteers are already involved in skills transfer and capacity building activities, and 42 per cent say corporate volunteers are involved in their governance (Boards, oversight and management committees).
Orienting more of the 70 per cent of employee volunteering described by not-for-profit organisations as unskilled towards capacity building and skills transfer, would be highly beneficial to NFPs across the nation, and meet the demand of these organisations for assistance to build their capacity to achieve their mission.
Clear view of good and best practice
Related to increasing the capacity of the not-for-profit sector, there remains demand among NFPs and business — especially medium to small entities — for a portal or ‘clearing house’ of good and best practice in identifying, managing and nurturing corporate community partnerships.
Data collected during research for this report suggests the absence of a central portal results in considerable ‘reinvention of the wheel’ across the NFP sector in how corporate community partnerships are identified, managed, measured and reported.
There is also a desire in the sector for good and best practice to be accessible and disseminated, primarily as a means to assist non-for-profit organisations to strengthen their performance.
Transparency
A common theme of this report is that while many NFPs benefit from working with business through community partnerships, many believe there remains a deficit in how well business and the wider community understand their goals and operations, and that in some quarters, perceived poor transparency affects negatively the reputation of the wider sector.
Some NFPs have adopted voluntary annual reporting of progress against mission, values, strategy, financial and operational performance, corporate partnerships and government assistance.
We conclude such voluntary reporting, which may be resource intensive, is likely to be beneficial to the reputation of the NFP sector. Such reporting would also go a considerable way to ensuring the operations of NFP organisations are more transparent to potential (and existing) corporate partners.
This report focuses mainly on the experiences of large businesses, however we note that some NFPs suggest also that small and private businesses could improve transparency and reporting.
Regulatory reform
There is also considerable demand among NFP organisations (and we conclude merit) in continued examination of how NFPs are regulated in Australia across nine State, Territory and Australian Government jurisdictions.
Different regulatory regimes pose significant operating cost and administrative burdens for NFPs operating across State and Territory borders, including in joined-up and collaborative arrangements with other NFPs, or with corporations or governments.
We conclude in this report that State and Federal governments accelerate work towards regulatory harmonisation of the not-for-profit sector, with a desirable outcome of such harmonisation freeing up financial and human resources — including management attention — to focus on delivery of NFP missions nationally.
Governments — the main funding source for NFPs contributing to this report — should also examine developing within their jurisdictions, common tender and grant application criteria for NFPs.
The report also canvasses reviewing the legal entity of NFPs relating to directors’ liability. It notes that not-for-profit organisations expose directors to the same liabilities as corporations, therefore limiting the number of business executives available to sit on the Boards of NFP organisations.