Building Partnerships Between Corporations and NGOs

Relationships with NGOs Have Been Fundamental to Many Corporations’ Social Responsibility Programs

Monday Developments, September 24, 2001, Volume 19, Number 17

By Thomas Fox                                                                                                         Reprinted with special permission of Monday Developments, September 24, 2001 

Globalization is affecting the often-blurred relationships among governments, multinational businesses, and civil society in developing countries. In particular, globalization seems to be encouraging intersectoral collaborations or partnerships among the three sectors—especially businesses and nongovernmental organizations (NGOs)—partnerships that advance each of their fundamental goals and objectives. The manifestations of corporate social responsibility and strategic philanthropy are complicated and require effective strategic planning and capacity building within both corporations and NGOs.

Based on a wide variety of interviews and other research, an emerging consensus reveals that most American multinational corporations are deliberately strengthening their corporate social responsibility programs in developing countries. A cross-section of American corporations, well-positioned observers of corporations’ activities, and a wide range of NGOs are saying the same thing: corporations in their grantmaking, in their overall corporate social responsibility and social investment programs and in business operations themselves are deliberately expanding and improving their relevance to countries’ fundamental social and environmental issues.

Corporations’ relationships with NGOs, both international and local, have been fundamental to many corporations’ social responsibility programs. First, many NGOs have been very influential in identifying issues connected to corporations’ behavior in developing countries. In addition to broad-based, business-oriented organizations like The Conference Board, the US Chamber of Commerce, and Council for Economic Priorities, consider the advocacy and watchdog roles of groups such as the Sierra Club and Greenpeace, the labor-serving Solidarity Center, the Rainforest Alliance and the Forest Stewardship Council, and Transparency International. These organizations have been influential in calling the public’s attention to issues and directly confronting corporations in different fora and the media. However, it would be difficult to call these relationships “partnerships,” since the corporations rarely ask for NGOs’ opinions of their operations.

But there are examples of NGO-corporation partnerships at the service provider level, examples that involve NGOs like CARE, Save the Children, INMED, Pact, and the International Youth Foundation (IYF), and corporations like Starbucks, Texaco, and Merck.

 
Mutual Benefits
For the NGOs, the benefits are obvious. They are able to extend their reach to more people than they might ordinarily, both overseas and in the United States. They learn new skills and disciplines. They find new ways to carry out their mandates and fulfill their missions. And they are able to access more financial resources to support their programs. (There are also some concerns that NGOs express, primarily around the possible tension between the NGOs’ mission and their immediate stakeholders’ expectations and values and the purposes and priorities of the business community. These are important concerns to talk through with potential corporate partners.)

Corporations, too, appear to have a wide variety of reasons for working with and through US-based NGOs in their corporate responsibility programs. In virtually all cases, the good reputation and moral influence of NGOs is a great asset to the corporations that successfully partner with them. In some cases, the attraction is contacts and relationships with leaders and organizations within countries. Or, it is their particular expertise in the program area that the corporation has identified as its priority. Additionally, some NGOs have a presence in several countries where the corporation seeks to expand its corporate responsibility efforts. In other instances, the US NGOs established management capacity and therefore ability to relieve the corporation of certain kinds of paperwork and grants management tasks is attractive. Some corporations have noted that working with NGOs can be a way of working in a country without getting tied up with a difficult government. And, finally, in many instances, corporations seek such partnerships because of the tax-deductible status of US NGOs. A corporation’s grant to a US “charity” is automatically tax-deductible to the corporation, whereas overseas organizations may only qualify where a corporate foundation exists and then with some challenging paperwork.

Needless to say, not all NGOs have all of these characteristics and strengths, so organizations with these attributes can be an asset for an individual corporation seeking a NGO partner. The selection of an appropriate partner is a key step for the corporation, one that often requires careful networking and advice.

Some corporations, however, raise cautionary notes about partnerships with NGOs. For example, US NGOs understandably require support to cover management costs; however, some corporations resent contributing funds that do not reach local groups and seek ways to grant directly with local organizations (and still get tax deductions.) Other corporations would prefer to engage their employees directly in the grantmaking/corporate social responsibility programs and feel that the US NGO role could make such involvement increasingly difficult. Some corporations believe the US NGO role could, and sometimes does, reduce the visibility that the corporation itself seeks. And, finally, some corporations note that some NGOs are not as accountable or as business-minded as the corporation would like. These are all important issues for both the corporation and the NGO; but it is nonetheless impressive to note that several corporate-NGO partnerships have worked through these issues.

Difficulties in Partnerships
Despite the examples of promising or successful partnerships among corporations and NGOs, the fact remains that these partnerships are very difficult to create and then to sustain. The corporation needs first to accept that the criticisms will not go away without their addressing them, and that the issues can be addressed in a way that brings direct business benefits to the corporation. This suggests a direct role for top management (as most corporations and NGOs have discovered). The corporation also needs to acknowledge and then act upon the fact that it does not have the experience or skills to manage social programs in developing countries. And, finally, corporations need to see NGOs or other potential collaborators as resources and assets with the expertise and contacts the corporations need to implement good social programs. The diversity of examples that exist should demonstrate this point; but again, regular provision of good case studies and best practices and strategic planning would be useful for multinational corporations.

For the NGO, the obstacles are equally apparent. Does the NGO have the capacity to see its strengths and experience as assets to a business, appealing to a corporation’s “bottom line”? (Having high-level corporate executives on its Board of Directors certainly helps...) Does the NGO have the self-confidence to negotiate a partnership as an equal, including having clarity on what its own mission allows it to do and not to do? Is it prepared to give the corporation the visibility and credit necessary, while also being attentive to its own PR needs?

In any event, initial research suggests strongly that NGOs that are the most effective in working with corporations are those that seek a partnership relationship, not simply a “one-off” check to support their work. This means that NGOs need to be prepared to collaborate visibly with corporations and to assist the corporations in achieving visibility for their efforts. For NGOs to think in these terms, however, requires a paradigm shift, both about “partner-raising” as opposed to fundraising and about partially subordinating themselves to corporations with purposes considerably different than their own. Some capacity building and strategic planning for NGOs is already taking place, but more is likely needed.

For both the corporation and the NGO, different cultures and different missions are coming together because their interests can intersect. But these partnerships are not easy. Nike took considerable time (and criticism about “sweat shops”) to realize how a program like the International Youth Foundation-coordinated Global Alliance could serve its needs. Other successful partnerships overcame skepticism and even hostility within the two partners’ ranks. Although there can be “language” differences and mistrust, successful partnerships can be done.

The opportunities for effective and creative partnerships are virtually limitless—if the prospective partners learn the skills to work around their differences, learn to trust the capacities and good will of the other, and brainstorm and “vision” together. In the meantime, there is substantial positive momentum; and the discussion and debate about these issues is enormously healthy and valuable.

Thomas Fox currently serves as an independent consultant. This article is based on a paper for The Conservation Company, a Philadelphia-based firm with a track record in strategic planning for the public good and a commitment to help bring corporations and NGOs together in developing and transition countries for mutual benefit. Fox previously served the Agency for International Development as Assistant Administrator for Policy and Program Coordination.

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Reprinted with special permission of Monday Developments, InterAction's bi-weekly newsletter on international humanitarian developments, issues, and trends. For more information about InterAction, visit its website at www.interaction.org.