Challenges for not-for-profit organizations
The fight for not-for-profit (NFP) funding is more intense than ever before. In the UK, 30 percent of charities have seen their income decrease, four out of ten charities are operating on less income than they budgeted for (Charities Aid Foundation), more than half of the organizations affected by the recession have dipped into their reserves, and according to Royal Bank of Scotland donations will continue to fall until 2011. This type of environment turns every not-for-profit (NFP) chief executive into a fundraiser, focused on gaining funds for survival in the short-term rather than thinking strategically about long term objectives.
The increasing importance of CSR and sustainability is making the fight for resources even more challenging, with strongly branded commercial companies occupying traditional NFP territories. While the Edelman Barometer shows that trust in corporations has gone down in the past year, there are examples of businesses that have taken advantage of new needs (for example, around sustainability) to become trusted partners to their customers and stakeholders. One brand that has shown consistent leadership in this area and is a reliable source of information for consumers wishing to live more sustainable lives is Marks & Spencer. IBM also now provides advisory services on climate change. Likewise, BT’s “Carbon Impact Assessment,” helps companies identify ways to reduce carbon emissions and energy costs.
These trends indicate the need for NFPs to prove their relevance in this increasingly competitive environment. They also highlight the importance of using financial and human resources in a more efficient, effective, and targeted way.
A strong brand can help NFPs to stand out within the market (helping to attract and establish long term partnerships to secure future income) and also promote further engagement with employees and volunteers. Indeed, brands such as Forum for the Future and WWF have embarked on long-term and strategic partnerships from which other NFPs can learn. NFPs that adopt a business model more focused on longterm partnerships are in a better position to keep delivering their mission even in tough times. Says Chris Sherwin, Forum for the Future’s Head of Innovation, “Forum for the Future may not have suffered as much as other charities because of the reliance on long term partnerships.”
From philanthropy to strategic partnership
In order to understand how NFPs can create effective partnerships with commercial businesses, it is first important to take a closer look at how businesses interact with NFPs. We can identify five different relationships: donations, sponsorships, operational services, consulting services, and co-created programs. Each of these relationships varies in the level of engagement between the commercial and the non-for-profit organization as described in Figure 1. The level of engagement in these relationships has a direct impact in the benefits of the initiative for both parties. To further elaborate on the chart above, donations and sponsorships are important sources of income for NFPs and could give some visibility to the commercial organization, linking its brand to sustainable causes.
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