Relationship matters: not-for-profit community organisations and corporate community investment

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Contents

• Cover Page
• Table of Contents
• Executive summary
• Chapter 1 - Introduction
• Chapter 2 - The context — trends in not-for profit partnerships
• Chapter 3 - Ideology and motivation of the sectors
• Chapter 4 - Determinants of successful NFP-business partnerships
• Chapter 5 - Nature of partnership activities
• Chapter 6 - Partnership management
• Chapter 7 - Accountability and regulatory environment
• Chapter 8 - Recommendations
• Appendix A - References
• Appendix B - Contributors

Chapter 5 - Nature of partnership activities

In this section:

• 5.1 Sources of business support
• 5.2 Volunteering
• 5.3 Commercial and employment drivers
• 5.4 Capacity building
• 5.5 Collaborative models
• 5.6 Social enterprise
• 5.7 Chapter summary

Sources of business support

There is a wide variety of levels of engagement in partnerships. Historically, arms-length philanthropy and provision of one-off or sequential funding has been the basis of most relationships.

As noted in Chapter 2 of this report, in recent years this has evolved into more dynamic and sophisticated partnerships into a transactional stage.

This research concludes that businesses and not-for-profit organisations are working towards an integrative stage, where each party is seeking to create deeper relationships embracing collaborative research, address specific community needs, collaborate to ensure skills to deliver community benefits (such as education, welfare and community capacity building), innovate, and work directly in partnerships.

These closer, deeper relationships involve business volunteers working with not-for-profits, including business executives involved in management and governance. Not-for-profit organisations are increasingly involved in business community consultation committees and bodies.

The survey indicated that more than 17 per cent of NFP respondents say the main source of support from the business sector is support for community activities, followed by marketing-related sponsorships.

Fig 5.1: Sources of business support

Fig 5.1 - Long description

Survey question: Of your overall corporate support, please provide your best estimate of cash and kind received from the following:

Source: Centre for Corporate Public Affairs, Survey of NFP organisations 2008. Note: Figures are expressed as a percentage of total corporate support. ‘Other’ includes in kind donations. Some categories overlap so responses do not sum to 100 per cent.

Corporate marketing sponsorships remain vitally important to some NFP organisations, especially those who sustain research or provision of services via public donations.

Organisations such as MS Australia, for instance, place significant importance on corporate sponsorships associated with cause-related marketing, or other marketing arrangements. These relationships are often philanthropic to transactional in their nature, but necessarily so given the structure and modus operandi of the relevant NFPs.

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Volunteering

NFP organisations participating in this report, and corporations in previous research report that there has been an increase in business volunteering programs in recent years, where businesses allocate time for their employees to contribute their labour in various ways to assist not-for-profit organisations.

This includes a wide spectrum of volunteer contributions such as manual labour, skilled labour (i.e. accounting or legal support) and senior leadership mentoring.

The Centre’s online survey indicates that half of NFP respondents host corporate volunteers. Of these, 65 per cent have up to nine corporate volunteers involved in their organisation (see Figure 5.2). Ten per cent of respondent NFPs work with between 100 to more than 500 volunteers.

Fig 5.2: Not-for-profit organisations and the number of corporate volunteers

Fig 5.2 - Long description

Source: Centre for Corporate Public Affairs, Survey of NFP organisations 2008.

Box 5.1 illustrates some employee volunteering trends in Australia.

As a core component of NFP-business partnerships, not-for-profit organisations that participated in the Centre’s online survey say they have a positive view towards corporate volunteers (see Figure 5.3).

Seventy-seven per cent stated corporate volunteers help corporations understand NFP organisations, and 76 per cent stated these volunteers positively affect their business and operational performance. One NFP commented:

We want business staff to have a connection to our organisation.

Fig 5.3: Attitude towards corporate volunteers

Fig 5.3 - Long description

Survey question: Corporate volunteers:

Source: Centre for Corporate Public Affairs, Survey of NFP organisations 2008. Note: The response categories ‘strongly agree’/‘agree’ and ‘strongly disagree’/’disagree’ are combined in this graph.

NFP organisations participating in our research also believe that business volunteering can also assist develop ‘ambassadors’ for NFPs in the business sector.

From the business perspective, employee volunteer programs are desirable because they are seen to increase job satisfaction and retention, improve morale and team cohesion and facilitate a skills-transfer to the not-for-profit organisation.

This is in addition to the value of obtaining wider community understanding and experience.

Employee-volunteering programs are increasingly an important factor in attracting potential employees because of the social responsibility reputation of participating companies, and because they are seen as an opportunity to develop skills (Cavallaro 2007).

As corporate volunteering with NFPs grows, however, the capacity of NFPs to host and create volunteering opportunities that are meaningful and of value to them, and their corporate volunteers, will be a challenge for some organisations.

Our discussions with NFPs suggest that employee volunteering programs can be challenging when businesses know little about the capacity or modus operandi of a NFP organisation, or when the organisation has limited ability to take and manage large numbers of volunteers. This is especially so with smaller NFP organisations.

According to one participant:

The idea of workplace volunteering sounds good, but if you are a smaller NFP and have to find things for large groups of volunteers to do frequently, it can be a challenge, and can distract from core operations ...I guess we need to be more firm with our corporate partners. But in a way, we cannot risk losing their financial contributions.

One Australian author noted, ‘occasionally the (volunteer) programs are driven by what is in the best interests of the company at the expense of those of the not-for-profits’ (Cavallaro 2006).

About one-quarter of not-for-profit organisations participating in our survey indicated corporate volunteers present a challenge in terms of personal safety and behaviour, 48 per cent stated they require substantial organisational resources.

NFPs were fairly evenly split (see Figure 5.3) as to whether corporate volunteering was a drain on their resources.

These challenges of corporate volunteering was of some importance in research with NFP organisations. There was a broad consensus during workshop consultations that NFP organisations need to be open about their capacity to host corporate volunteers, and if necessary, request assistance — including funds — to be able to host and manage meaningful programs — especially those sought, inter alia, for the benefit of companies and their employees.

A number of NFPs reported they are familiar with ‘last-minute’ phone calls from corporations requesting volunteer opportunities for large numbers of employees in the coming next week. ‘I wish we could just say no,’ said a senior executive from one NFP, ‘but they sign the cheques, so we scramble to try and find something for them to do’.

It is apparent that expectations of some businesses about the desirability to place large numbers of corporate volunteers for short placements in NFP organisations need to be aligned better with NFP capacity to manage such arrangements. As in other areas of the relationship, dialogue to clearly and openly communicate business need, and NFP need and capacity, is fundamental to mutually satisfactory volunteer arrangements.

Some innovative approaches are being employed by some NFPs in their partnerships with business to ensure corporate volunteering is mutually beneficial and sustainable.

Our research reveals some NFPs are now charging businesses for access to their corporate volunteering services (for example, on a fee for service basis).

This innovation positions NFPs to meet the demand from business for meaningful corporate volunteering experiences for employees, and provide resources and infrastructure that some NFPs require to host and utilise corporate volunteers.

Another development is that some not-for-profit organisations only offer volunteering opportunities to their business partners (for example, those that have made longer-term commitments to the NFP and that will fund additional capacity to provide volunteer opportunities).

Many NFPs continue also to establish training programs for prospective volunteers to maximise the value and depth of the volunteering experience for the NFP and the corporate employee. Fifty-eight per cent of not-for-profit organisations in the online survey say they have training or educative programs for volunteers in place. These include orientation programs, induction training, in-service training, mentoring, and manuals.

Box 5.2 illustrates how Conservation Volunteers, a not-for-profit organisation focusing on employee participation as a key component of its business partnerships, manages some of its corporate volunteering.

The nature of volunteering

Research for this report confirms other studies that indicate most corporate volunteers participate in unskilled volunteer activities, including packing Christmas hampers, reading books to people, cleaning up local environments, soliciting money during fundraising drives, painting or helping to renovate facilities (see Figure 5.4).

Our qualitative research suggests NFP organisations prefer corporate volunteers with specific skills to assist their operations. A significantly higher value is placed on skills matched to the capacity and skills needs of the not-for-profit organisation and placements that build organisational capacity.

Concurring with the Centre’s wider work in corporate community investment, the survey indicates that while most volunteering is in activities described as ‘unskilled’, half (52 per cent) of volunteer interaction is skills-based, involving skills transfer between the business and the NFP. Fifty-two percent of survey participants also have corporate volunteers involved in capacity building.

Skill-based volunteering typically utilises individual or collective business expertise to support the work of a not-for-profit organisation. It involves applying or transferring individual or organisational skills, such as strategic planning, marketing, information technology management, human resources, leadership mentoring, and leadership support. There are also opportunities for skills transfer via the provision of placements within the corporation for NFP executives.

Fig 5.4: Type of Corporate Volunteer involvement

Fig 5.4 - Long description

Survey question: Corporate volunteers are involved in the following activities:

Source: Centre for Corporate Public Affairs, Survey of NFP organisations 2008. Note: Respondents selected as many answers as were applicable.

Feedback from our not-for-profit consultations is that some NFP organisations prefer companies to combine volunteer days of a large number of corporate employees into fewer, longer placements, rather than have large numbers of employees for one to two days per year.

However, this is preferred only when the modus operandi or organisational need is relevant and appropriate to fewer, longer volunteer placements.

One not-for-profit executive stated, ‘I can’t use 30 people for one day. I’d rather one person for 30 days’.

The following case study is an example of longer-term skills-based secondments, funded by business. Companies such as Westpac also offer long-term employee volunteers to organisations such as Cape York Partnerships.

Pro-bono contributions

While obtaining substantial benefits and value from the pro bono contributions of professional service firms (accounting, management consulting, and law) not-for-profit organisations have mixed views on this mode of corporate labour contribution.

While one NFP organisation said it derived great benefit from the pro bono work of professional service firms, another said:

Seeking pro bono help is not always ideal because you are not treated as a paying customer and you are often at the lower end of their priority.

Most NFP organisations in our workshop consultations agreed that as part of any pro bono arrangement, service-level agreements were desirable to make it clear what services a professional service firm will deliver, and when.

Pro bono arrangements have long been a mode of corporate community partnership, though they do not readily provide for skills transfer. However, many arrangements remain valued by NFPs, and are valued also by contributing companies.

Good practice in volunteering

The following case study provides principles for good practice in corporate volunteer programs.

For the purposes of this report, our assessment of volunteering is:

• workplace volunteering is increasing, as is demand for placement of corporate volunteers
• many NFP organisations face management and organisational capacity challenges accommodating corporate demand for workplace volunteering opportunities
• some corporations (e.g. National Australia Bank) and many NFP organisations are investigating a shift in workplace volunteering focus from unskilled to skilled placements
• many NFP organisations (though this depends on the nature of operations) indicate they would prefer a skilled-based focus in their volunteering relationship with their corporate partners, though other NFP organisations are content with relationships in which they have access to large numbers of volunteers for activities such as community fundraising, or low-level manual labour
• some NFP organisations are levying charges to corporations to accommodate and manage unskilled workplace volunteers in particular, so they can sustain and capture maximum value from corporate volunteering.

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Commercial and employment drivers

Most not-for-profit organisations have a combination of funding arrangements in place, including from business, governments and the community. As illustrated in Figure 5.1, a large share of the business contribution to not-for-profit organisations involves marketing-related and non-marketing sponsorships.

Beyond marketing activity, which is not corporate community investment, many corporations pursue more cause-related marketing with NFP organisations, with funding an important, but not the only, component. Cause-related marketing and workplace giving are part of such arrangements.

Cause-related marketing is an important source of revenue and brand positioning activity for some not-for-profit organisations and corporations, and especially some organisations categorised as national charities and corporations with a retail component of their operations (Centre for Corporate Public Affairs 2007).

The not-for-profit organisations most involved in this acknowledge that cause-related marketing is not corporate community investment by corporations, and while raising funds, is a marketing and commercial sales-associated activity.

Workplace giving programs that allow employees to donate to NFP organisations (many of them charitable organisations) through automated payroll deduction is a form of community investment by corporations and has increased in recent years.

As highlighted in our Corporate Community Investment in Australia report (Centre for Corporate Public Affairs 2007) and noted in earlier discussions about partnerships, employee engagement is a growing driver of corporate community investment.

As some companies aspire to become employers of choice in their sector, they find that being corporately responsible, and partnering with community organisations as part of their approach to CSR is an important factor in recruitment.

It is also considered good practice for businesses to consult their employees to determine which community organisations they wish to support via payroll giving. Recipient organisations must usually have DGR (deductible gift recipient) status.

Some companies choose to match (dollar-for-dollar) funding provided through workplace giving programs. Research with Australian business (ACOSS 2007) indicated 30 per cent of respondents had a workplace-giving program in place.

Of this group, only 4 per cent had a matching program (where the corporation matched to some level each dollar of giving by employees). However, our work with larger companies suggests a majority of companies match employee contributions at least dollar for dollar.

Our consultations with not-for-profit organisations found some (mostly larger NFP organisations) have relationships with workplace giving advisory or brokering organisations. Australian Charities Fund, Charities Aid Foundation and United Way are some organisations that assist corporations establish and manage their workplace giving programs, including liaising with community organisations.

Other corporations manage their own workplace giving arrangements with NFPs or seek assistance to establish such arrangements with small, specialist consultancies.

Workplace giving programs are acknowledged widely to be valuable sources of ongoing funding for many community organisations.

The role of brokers and agents as part of corporate community partnerships can be found in Section 6.3 of this report.

Box 5.5 provides an example of the Australian Red Cross Society’s approach to funding apropos business partnerships.

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Capacity building

One of the biggest challenges, along with sustainability of funding for NFPs is the demand within their organisations to work to complete their mission, while at the same time continually building their capacity to operate efficiently, innovate, develop their employees and compete for resources and staff.

Capacity building is a component of many NFP-business partnerships (52 per cent, see Figure 5.4 on volunteering).

Capacity building is the process, often over a long period, that strengthens and improves the ability of all parts of an organisation — including external relations, internal infrastructure, finances, management and staff — to most effectively fulfil its core mission.

The not-for-profit sector faces the constant challenge of adapting to operating circumstances with limited resources including, most frequently, restricted access to funding and revenue streams. A very real concern is that failure to adapt and strengthen will mean a failure to deliver the core mission for the public good.

In contrast to the business sector, which is driven primarily by the need to return value to shareholders, not-for-profit organisations are driven primarily by a set of voluntary and not-for-profit missions and values.

Our research confirms that many not-for-profit organisations rely on fundraising and charitable contributions for capital, necessitating that staff time not spent on developing and implementing the core mission is expended on fundraising and attracting donors, and corporate and/or government support.

This means that partnerships with business, or with other NFPs, are an attractive means of extending and building organisational capital, providing avenues to skills, resources and knowledge that may not have been available otherwise.

In this way, partnerships with business enable NFP organisations to learn from the operations, management and structure of business or to benchmark or assess its own capacity, while collaboration with other NFP organisations can benefit sector capacity building.

Not-for-profit organisations may also pursue other ways to build their capacity, including hiring external consultants or partnering with the government to secure resources.

Box 5.6 examines characteristics necessary for effective capacity building in the not-for-profit sector.

Not-for-profit organisations may find it hard to engage in their own capacity building because it can be ‘difficult, time-consuming, and expensive in the short run’ (Venture Philanthropy Partners 2001, p.27). Some not-for-profit organisation founders or managers may also tend to concentrate on their mission and strive for success in the shorter term instead of investing in capacity.

Other obstacles to capacity building often faced by NFP organisations include:

• scepticism over the relevance of business practices to NFP organisations
• dysfunctional funding environment that benefits support for tangible products instead of general administrative costs
• lack of a shared conceptual capacity building framework that can be applied widely across the sector
• difficulty in attributing increased social impact to particular capacity building initiatives (Venture Philanthropy Partners 2001).

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Collaborative models

The focus of this report is on relationships and collaboration with NFP organisations and companies.

Unlike the United States, but in common with the United Kingdom, many Australian not-for-profit organisations find themselves partnering frequently with corporations and governments and their agencies to achieve their goals and mission.

Indeed, more Australian NFP organisations participating in our quantitative survey indicated they partner with government agencies and other NFP organisations to achieve their goals and mission, rather than with corporations, reflecting, we posit, the mixed nature of the Australian economy and the role of the state in Australia in areas such as health, education, human services, the arts and community services.

Almost 80 percent of survey respondents (see Figure 5.5) indicated they partner with government agencies to achieve their goals and missions. Sixty-one percent of NFPs partner with other not-for-profit organisations, and almost half indicate they partner with business.

Fig 5.5: Partners of not-for-profit organisations

Fig 5.5 - Long description

Survey question: Most of our work requires multi-party collaboration between us and...

Source: Centre for Corporate Public Affairs, Survey of NFP organisations 2008. Note: The response categories ‘strongly agree’/‘agree’ and ‘strongly disagree’/’disagree’ are combined in this graph.

The propensity of NFPs to collaborate with government is consistent with developments in network governance canvassed in 2.3 of this report.

These collaborations require active relationship management, assessment and accountability as NFPs as they seek support and partnership benefits to achieve their missions.

Our workshop consultations highlighted that to manage collaborations, NFP executives require well honed negotiation skills, and the ability to operate across numerous and sometimes ambiguous organisational environments and hierarchies.

A case study of the Fairbridge not-for-profit organisation (Box 5.7) illustrates the nature of collaborative partnerships between NFPs and business, government and other like-minded NFPs.

A following example of Microsoft’s community investment programs indicate also the nature of collaborative partnerships across business, government and not-for-profit sectors. These include funding, capacity-building and skills development elements, and sponsorship. These partnerships exhibit characteristics of integrative business and community collaboration.

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Social enterprise

As noted in Chapter 2 of this report, there is no settled definition of social enterprise but it has been described as a ‘means by which people come together and use market-based ventures to achieve agreed social ends, with a focus on community rather than individual profit’ (Adelaide Central Mission 2002).

Another leading observer noted ‘Social enterprise is a means for non-profit agencies to maximise their mission-related performance through the development of new ventures or by reorganising existing activities to improve operational efficiency...The term also reflects the importance of social partnerships between non-profit organisations, business and government in addressing societal problems’ (Simons 2000).

Social enterprise is at an interesting stage of development in Australia, with governments supporting the concept and with corporations such as AMP keen to support social enterprise incubation, and bolster especially the efforts of individual social entrepreneurs.

In the UK, encouraging social enterprises to develop, prosper and deliver, as contractors, public services such as cleaning, community transport, catering, laundry services and skills training is public policy, under the stewardship of the UK equivalent of The Treasury.

The Australian Government in the late 1990s to 2007 sought actively to contract-out some previously publicly managed labour market skills development and some job placement programs to NFPs, some of which were managed under a social enterprise model by various organisations, which tendered successfully to manage these functions.

As noted earlier in this report, some NFPs and the private sector share a modus operandi under which they pursue and manage considerable risk at an enterprise level, which is a characteristic not shared commonly with the contemporary role of government in Australia.

Social enterprise pursued by organisations established specifically to use market-based ventures to generate profits to be reinvested for social and community purposes, often requires outlooks and management structures that may differ markedly from NFP organisations established and structured not to use the market to generate revenues and profit for reinvestment.

Social enterprise may be harnessed by ‘traditional’ NFPs as a means of achieving mission and creating additional revenue streams. However, social enterprises involve taking and managing risks within market-based economies, which may perhaps not be compatible to cultures existing in all NFPs, whose source of funds and modus operandi may be risk adverse deliberately.

NFPs investigating and examining social enterprises was a common theme in our NFP group workshops.

The motivations for examining and pursuing deliberately social enterprise varied from pursuing care mission by tackling a problem or issue in a different manner, seeking new revenue streams, or searching for social innovation as an outcome.

Many not-for-profit organisations regard social enterprise as a growth area for the NFP sector, especially allowing a social enterprise to operate as a revenue-raising adjunct.

As noted in Chapter 2, despite some exciting innovations and solid achievements, there is still some equivocation about social enterprise in more conservative NFP organisations.

The growth of social enterprise within the NFP sector poses a special financial policy challenge, as increased fundraising and revenue streams may affect tax-deductibility status.

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Chapter summary

• The main source of support from the business sector for NFP organisations is for community activities and marketing-related sponsorships
• Half of NFP respondents host corporate volunteers. Of these, 65 per cent have up to nine corporate volunteers involved in their organisation
• Almost 80 per cent of NFP organisations say corporate volunteers help companies understand their organisations, and three-quarters say they affect positively the performance of their operations
• Seventy per cent of NFPs engage unskilled corporate volunteers. Fifty two per cent said they also host volunteers who transfer skills to their organisation (capacity building)
• Some NFP organisations are charging corporations fees (including their corporate partners) to host corporate volunteers as a means of covering infrastructure costs, and to ensure the volunteering experience is of maximum value to the NFP organisation and the corporate volunteer
• Many NFP organisations said significant value would be created if more corporate volunteering was skilled-based. This would boost capacity building
• Capacity building is one of the most pressing issues facing NFP organisations in Australia
• Capacity building in Australia’s NFP organisations is most commonly achieved via collaboration with other NFPs, partnerships with one or more business entities, partnering with government, or by hiring external expertise
• Most NFP organisation collaboration in Australia requires collaboration with government agencies (79 per cent of NFPs), other NFPs (61 per cent) and with corporations (47 per cent)
• NFPs are exploring social enterprise as another avenue towards achieving their missions, finding new streams of revenue, and, or, generating social innovation that can achieve wider societal outcomes for the NFP and business

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Next: Chapter 6 - Partnership management

Previous: Chapter 4 - Determinants of successful NFP-business partnerships

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