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Chapter 6 - Partnership management

In this section:

Governance

Not-for-profit organisations frequently have similar management structures, as complex as business organisations of comparable size due to overlapping, and the often times conflicting, needs of multiple internal and external stakeholders.

Anheier terms this ‘the law of non-profit complexity’, a factor contributing to some business impressions of the NFP sector as inefficient and backward (Anheier 2000).

Figure 3.2 illustrated how NFPs say that when working with business, they see themselves as fairer, more flexible and more responsive than their business partners. However, as other analysis in this report has concluded, NFPs see their relationship with business as beneficial and generally positive.

The not-for-profit sector faces many of the same issues as the business sector, including motivating employees, ensuring the quality of goods and services, risks associated with financing and new programs, collaboration with sector and institutional partners, and creating a successful Internet presence (Young 2003).

Our consultations indicate mixed experiences of business seeking to assist NFP organisations bolster their governance capacity. While some NFP organisations have attracted a great deal of assistance from business to strengthen their governance procedures and structures, others have attracted none.

Many smaller not-for-profit organisations say they require further governance capacity building from business to allow them to operate more effectively.

There is a strong view among many not-for-profit organisations participating in workshops for this report that the corporate sector believes their sector is characterised by weak governance performance.

As two senior NFP executives stated in the workshops for the report:

We do need help with governance, but sometimes, the businesspeople we hope can assist us seem to park their brain at the door. They keep operating in the context of the corporation, not taking into account the size, budget, staff resources and mission of the NFP.

We need active directors from business. Some people are great. But others seem to want to be associated with us, but not do the heavy lifting.

The demand and desire for corporations generally, and as part of corporate community partnerships, to play a role in the governance of NFPs is common across the NFP sector.

Research for this report concludes demand for contributions to governance of NFPs is greatest among small to medium NFPs, which comprise the lion’s share of NFP numbers in Australia (based on employment demographics, see Figure 1.1).

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Leadership and the not-for-profit Board

Most medium and all large not-for-profit organisations responding to the Centre’s survey have at least one corporate representative on their Board. One NFP executive stated:

If the NFP organisation has a recognised Board, this gives an element of comfort to business.

Many not-for-profit organisations say they benefit especially from having a corporate CEO on the Board. These benefits are contingent on Board members having the requisite understanding of the NFP sector to contribute effectively. As one workshop participant noted:

Members of the Board need a good understanding of the NFP organisation. They need to spend some time within the organisation.

Box 6.1 provides an example of a corporation supporting NFP boards and providing other executive level support to assist NFPs build capacity.

CASE STUDY — MACQUARIE GROUP FOUNDATION

The Macquarie Group Foundation is active across a range of areas, including art, education, environment, health, sport, staff, and welfare. It promotes staff engagement and participation with the non-profit sector through staff donations, fundraising, volunteering, workplace giving and other grants. As well the Foundation encourages its staff to take an active role assisting NFP management, including:

Source: Macquarie Group Foundation 2008.

A prominent business manager on the Board of a not-for-profit organisation presents other opportunities for the NFP to pursue, including the NFP offering potential sponsors and partners the opportunity to network with prominent Board members. Comments from our NFP workshop participants included:

The Board plays a very important role in fundraising. Directors need to work on behalf of the organisation.

People are appointed to the Board because they have a circle of influence. We need more business leaders on our Boards.

We are currently reshaping our Board. We want people to be able to think strategically. It is all about the individual relationships.

Corporate involvement as part (of partnership arrangements) on an NFP Board is integrative, though the nuance around how involvement is positioned, and the positioning of such contributions may require some caution in NFPs where there has not previously been a culture of corporate participation on the Board by a partner.

In some cases where balancing a business’s involvement in and influence over a NFP organisation is managed poorly, such involvement has appeared heavy-handed. This was described by a workshop participant as a ‘Big Brother mentality’.

Good practice suggests not-for-profit organisations should have detailed job descriptions and requirements for their volunteer Boards, including the desirability of corporate Board members.

Finally, workshop participants noted that there is a significant lack of women on NFP Boards, mirroring the typical Board construct in the for-profit sector.

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The role of brokers in partnerships

Partnership brokers may facilitate and guide the partnership process by interpreting one party to another or negotiating agreements. A broker’s specific technical expertise and familiarity with the local or sectoral culture may also be useful when developing a community business partnership.

The number of brokers in Australia is testament to the role they play, particularly in supporting smaller NFPs that need to ‘outsource’ due to capacity constraints, or to seek counsel, connections and expertise.

Brokers often play an important role in ‘matching’ NFPs and business, using their expertise to establish aligned relationships.

Successful partnership brokers follow the principles of interest-based negotiation to:

Brokers are also helpful to corporations that have recently entered the community investment arena, and for smaller businesses that require external assistance. As one NFP commented:

Brokers are more important for NFP organisations that don’t have the relevant internal resource.

They play a role in getting NFPs started…but they are not conducive to building sustainable partnerships.

The number of brokers in the corporate community partnership area, working with corporations and NFPs, suggests demand remains strong for the services of brokers.

As noted earlier in this section, brokers play various roles in partnerships — during identification and establishment; monitoring and relationship assessment; fundraising and donor identification.

Smaller and medium NFPs participating in discussions for this research often employ the services of brokers for all of the roles listed above.

Not-for-profit organisations participating in the online survey held mixed feelings about whether brokers playing a role selecting potential partners was an issue for their business partners. Thirty-six per cent of respondents agreed the use of a broker rarely caused an issue with their partners, with 49 per cent of respondents indicating a neutral response (see Figure 4.6).

Figure 6.1 highlights the motivations of not-for-profit organisations engaging with brokers. The results indicate 42 per cent of respondent not-for-profit organisations use broker organisations or other intermediaries to secure funding.

Significantly, only 3 per cent of NFP organisations stated that they have more confidence in achieving results if a broker is involved.

This result may reflect that 42 per cent of NFPs indicate that fundraising — a time-intensive and resource-exacting activity — is the main reason their organisation works with brokers, effectively outsourcing an activity that if conducted in-house would distract too much from core mission, but which if they had the resources, they could conduct effectively.

Fig 6.1: Motivations of not-for-profit organisations to work with brokers

Fig 6.1 - Long description

Survey question: What is the main reason that your organisation works with intermediaries/brokers?

Fig 6.1: Motivations of not-for-profit organisations to work with brokers - This graph identifies the reasons why respondents work with intermediaries/brokers by percentage.

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

The Centre’s experience in other studies and our experience with major companies suggest the matching role of brokers, and assistance with, for example, program design for workplace giving, have been regarded favourably by companies and NFPs.

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Competition for corporate community partnerships

Not-for-profit organisations, businesses and the government operate in the same market, often providing similar goods or services to address community needs. This is known as cross-sectoral competition.

Competition exists also within each sector, including between not-for-profit organisations that appear to be offering services and solutions to meet similar community needs.

Most respondents to our online survey note strong competition within the not-for-profit sector for donations (89 per cent) and corporate support (88 per cent). Not surprisingly, most respondents agreed also that it is difficult for NFP organisations to secure sufficient funds (83 per cent). These results are displayed in Figure 6.2.

Fig 6.2: Attitude towards not-for-profit sector competition

Fig 6.2 - Long description

Survey question: When thinking about the NFP sector…

Fig 6.2: Attitude towards not-for-profit sector competition - This graph depicts the views of respondents about competition within the not-for-profit sector by percentage.

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.

As noted earlier, not-for-profit organisations that appeal to individuals, or whose mission is more aligned with business interests, will naturally tend to be more attractive options as community partners in this competitive environment.

An alternative approach for NFPs that find it difficult to cement corporate partnerships has been to seek collaboration with NFP colleagues, either on a single-project or on a broader strategic basis. However, organisations cite that competition for funding and resources can also create barriers to this.

Additional challenges for such collaborations are similar to those not-for-profit organisations face when partnering with businesses, including gaining public trust for initiatives, avoidance of brand damage, and the challenges associated with project management.

Our analysis for this report confirms other research findings that the number and extent of collaborative activities can increase when an NFP is ‘older, has a larger budget size, receives government funding, and has more board linkages with other nonprofits’ (Guo & Acar 2005).

Discussions about collaborations between NFPs to achieve common goals and shared missions leads often to discourse about rationalisation or consolidation in the NFP sector.

Some NFPs posited during our research that consolidation among NFPs with similar or the same mission may:

Our considered view of consolidation or mergers in the NFP sector is that these issues are matters for individual NFPs.

We note, however, that discussions around a social compact and development of network governance arrangements including NFPs, governments and business could lead to consideration of frameworks or network governance arrangements that may encourage yet further collaboration between many NFPs.

The rise of the NFP ‘marketing enterprise’

Some NFP organisations have chosen to respond to competition from other NFPs by developing competitive strategies and increasing marketing activities, to position themselves as a niche organisation (Abdy & Barclay 2001).

They may also use branding techniques to differentiate themselves, develop trust among stakeholders, develop awareness for their cause, and build loyalty among supporters (Stride 2006).

Some of Australia’s NFPs are also some of the nations most high profile and trusted brands — Oxfam, Australian Red Cross, The Smith Family, the RSPCA, and The Cancer Council.

Larger NFPs especially place considerable emphasis and make significant investment in their brand equity. Such brand equity is advantageous in raising funds, and as noted earlier in this report, raises visibility and organisational reputation and can influence corporate partnership selection.

The reputation and brand equity held by some of Australia’s NFPs, also as noted earlier, is a key consideration for some not-for-profit organisations when they are considering the reputation of prospective corporate partners.

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Chapter summary

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Chapter 7 - Accountability and regulatory environment

Chapter 5 - Nature of partnership activities