Soul-selling vs. sustainability

Benefits and risks of corporate partnerships for NGOs

Work with a local NGO! This is widespread advice for companies that seek to do business with low-income people in the developing world. That NGOs are interested in these partnerships is often taken as a given. It is not.

Indeed, there are plenty of examples of corporate-NGO partnerships. In Brazil, World Vision and Danone cooperate to identify and train women vendors for Danone’s door-to-door sales model. Grameen has partnered with Telenor in Bangladesh to develop the Grameen Phone. CARE worked with Allianz to develop a community-based health micro-insurance in India.

These partnerships are usually lauded for the benefits they create on both sides, and there are quite a few to mention:

1. Sustainability: Building social impact into a corporate’s business helps to achieve sustainability. If profitable, the business is not dependent on regular injections of cash, as traditional NGO programs are.
2. Scale: The profits can fuel growth. Grameen Phone is creating incomes for more than 250.000 village phone ladies.
3. Capabilities: NGOs can complement their own strengths with the technologies, technical know-how, and management capacities of their corporate partners.
4. Funding: Corporates often pay for the support provided by their NGO partner, creating an additional source of revenues.

Looking inside NGOs reveals that the decision to enter into partnership with a corporate is far from trivial. NGOs thoroughly consider the risks and challenges of engaging with the private sector.

1. Reputational risks: Its brand is an NGOs most valuable asset. Is working with corporates compatible with this brand at all, or could it be perceived by key stakeholders as “selling out”?
2. Implementation risk: Working in partnership also means giving up control. What if the commitment on the partner side dwindles, or capacities are not as strong as perceived? How can the NGO live up to its standards of quality management in implementation?
3. Strategic risk: Will engaging in partnerships on demand distract the NGO from pursuing its strategic objectives and deploying resources in the most effective way?
4. Identity risk: Can NGO staff identify with a corporate approach? NGOs often fight major ideological battles internally about the implications of allowing corporate agenda’s to enter into project design. For example, is it ok to make health care a paid service, or should it be provided for free by the government?

Most NGOs have now gathered experience with corporate partnerships. They recognize that market-based approaches, including working with companies, will continue to gain importance in the future. Many are now devising strategies to guide internal decision making.

To support NGOs in this process, Endeva is currently setting up a peer-learning process with leading NGOs in the space. Through workshops and research, this process will devise guidelines and good practices for NGOs Inclusive business strategies, including corporate partnerships as well as own venturing. Please get in touch with me if you would like to engage in the process or learn more about it!

This post is a part of the May 2016 series on Partnerships delivering inclusive businesses. View the whole series for more business examples, research and insights on partnering for impact.