For the past several years Nike has worked with the Global Alliance for Workers and Communities (GA), a non-governmental organization dedicated to improving the workplace experience in developing nations.
Citigroup has a longstanding relationship with Habitat for Humanity, a partnership it says is natural since both organizations share the goal of helping families assume the responsibility of homeownership.
Why do these and other companies build alliances with local, national and international nonprofits?
For the corporation, partnerships can produce tangible benefits in the form of brand equity, risk reduction, market advantage, or simply learning a different view of the world. Partnerships often result from relationships that, years ago, might have been strictly adversarial. In recent years, advocacy groups have been successful in bringing about change by working with a company rather than against it. A well known example is the partnership begun in 1989 between McDonald's and the Environmental Defense Fund, which laid the foundation for an entirely new approach to solving environmental problems.
And companies may find unexpected benefits from their NGO partnerships. IBM, to cite one example, has discovered new technologies through its alliances: The company says that in 2000 alone, it applied for 15 patents that resulted in some way from its community partnerships.
Corporations may also receive the additional benefit of positive media coverage for their partnership efforts. Home Depot received national coverage, including CNN and The New York Times, for changing its timber procurement policies so that less wood was logged from endangered rainforest regions – a joint effort with The Nature Conservancy (TNC). (Potential media coverage is one reason to involve your communications or marketing department in the planning stages of developing a partnership.)
A March 2004 Center TeleConvening featured an hour-long presentation by Josh Knights, Director of the International Leadership Council at The Nature Conservancy, on “Building Alliances with Environmental NGOs.” Knights, who fosters worldwide partnerships between TNC and corporations, focused on NGO partnerships in general, as well as his own organization’s alliances.
Making a Match: Partnership Criteria
What characteristics make an NGO a suitable partner? Knights referenced the Conference Board's five key criteria:
Credibility: Respected organization with track record. Partnering often means co-branding. Outsiders may begin to mention your company in the same breath as its new partner. A track record means that your partner also has a reputation to uphold.
Risk: Project oriented, not politically oriented. Choosing a nonprofit with a rigid political orientation runs the risk of disenchanting certain stakeholders, while selecting an NGO that is action-oriented will compel stakeholders to focus on what your organizations are doing together.
Stakeholders: Regional presence. A regional presence means a greater likelihood that the partnership will result in both community action and employee voluntarism. Those are two instant “wins” for your company. And by teaming up with a local NGO, you also enhance your chances of reaching target audiences within your region. That’s because most local NGOs are “plugged in” to their communities. If you find an NGO with a strong local network of contacts and allies, then eventually you will be able to leverage the NGO’s network to reach your target audiences. (Just as the NGO will be able to leverage your network to extend its message.)
Involvement: Leadership opportunities. Does the partnership give your company the chance to be the first to complete a specific mission? If so, then the alliance presents a legitimate chance for stakeholders to view you as a “thought leader” of some sort.
Alignment: Corporate image. You don’t want to partner with a nonprofit whose image is radically different from yours. A company with a maverick image (such as the Virgin companies) should not seek a stodgy bedfellow. Likewise, a business needing to project trust and conservatism (an investment bank) shouldn’t team up with a headline provoking nonprofit (such as People for the Ethical Treatment of Animals). Explaining why Bristol-Myers Squibb (BMS) found TNC to be an ideal partner, Susan Anton-Switka, Manager of environment, health, and safety, cited an alignment of images: “They’re a conservative NGO, and we’re a conservative company.”
Identifying the Right Partner: Continuing on the subject of image alignment, Knights enumerated four broad categories of NGO types:
Partnering with NGOs: The Advocate. The advocate promotes behavioral change by advocating a specific position. At its extreme, advocacy can involve tactics that are highly confrontational and public such as litigation in order to generate pressure on a target—usually a single company. The Rainforest Action Network (RAN) exemplifies the extreme form of this category. Recent RAN campaigns have resulted in high-profile changes at Home Depot, Staples and Boise Cascade. However, advocacy can take “softer” forms that do not involve confrontation such as leading by example, such as Oxfam International.
Certifier: The certifier validates the corporate partner’s claim that its products meet certain quality standards, either informally through its affiliation or formally through a certification system. The value proposition for the company is that it will increase sales to consumers who want a certified product (and, in some cases, may be willing to pay a premium for it). The Rainforest Alliance’s Smartwood program (forestry certification) and Conservation International’s shade-grown coffee standards are such examples. Another example is a partnership between Green Mountain Coffee and Transfair USA, a third-party certifier of Fair Trade products. Green Mountain committed to purchasing a percentage of coffee from fair trade farmers, which Transfair verifies. In the first year carrying Fair Trade, Green Mountain experienced 37% growth in their Fair Trade coffees (over the previous year without verifications.) They sold 872,000 pounds of Fair Trade coffee that year, doubling what they expected. (Learn more...)
Technical Advice (Consultant): The consultant provides the company with environmental advice as well as tangible items like scientific and market data. The Nature Conservancy’s work to inventory the biological content of MeadWestvaco’s timberlands is an example. (Note: Because of the benefit to the company, corporate support may not be tax-deductible.) Other examples are the World Resources Institute and Environmental Defense’s Alliance for Environmental Innovation.
Facilitator: The facilitator brings businesses into a dialogue with government agencies, local communities and other NGOs for a common purpose. Only a facilitator who is perceived as non-partisan can usually accomplish this. The Pew Center for Global Climate Change is an example.
In addition to these four types, The Center also recognizes that partnerships can be established where a corporation and an NGO come together and work collaboratively. In this type of partnership, the decisions and programs are pulled together and the management resides between the two organizations. The relationship is based on the talents of each party, but is housed between the organizations. For example, the Union Bank of California launched a partnership with Operation Hope, a nonprofit credit counseling organization, and Nix Check Cashing to offer banking services to Los Angeles’ underserved, inner-city neighborhoods. Traditionally, this market is served by check cashers and pay-day lenders, groups which advocates have criticized as furthering the cycle of poverty. Together, Union Bank of California and Operation Hope provide education to transition individuals from check cashing services to asset building products such as savings or checking accounts.
Rating Your Partner
Knights also suggested examining the various sources of NGO “ratings” when performing due diligence on prospective partners. Watchdog groups such as the American Institute for Philanthropy and BBB Wise Giving Alliance keep ethical tabs on NGOs. In addition, several publications compile annual rankings of “efficiency”—the percentage of financial contributions that actually go to the nonprofit’s mission (as opposed to overhead or other operating expenses). You can find rankings in the Chronicle of Philanthropy, Forbes, the Christian Science Monitor, and Worth. The Center recommends that the corporation and the NGO align their goals and visions and understand each other’s practices, as well as establishing goals for the partnership. It’s also important to establish goals for each partner. The more the sets of goals align the better.
A Partnership in Action
Home Depot first engaged TNC in 1999, when the Rainforest Action Network targeted the retail giant for logging from endangered forest regions. Home Depot sought out TNC for assistance in developing green-friendly procurement policies. Among other things, TNC helped Home Depot recognize which of its logging areas were endangered grounds. Since then, with the help of TNC, the retailer has learned the origins of 8,900 of its nearly 50,000 wood products. Home Depot also announced it would give purchasing preference to wood certified by the Forest Stewardship Council. In addition, RAN and Home Depot maintain an ongoing relationship. The two meet annually each October to “formally evaluate the implementation of their 1999 commitments,” says RAN spokesperson Brand Olson.
So far, the alliance between Home Depot and TNC has produced several measurable results. Home Depot reduced its imports from Indonesia by 70% because there was no third-party certification available there, and now receives less than 1% of its wood from Indonesia. Likewise, less than 0.15% of the company's wood products come from areas around the Brazilian Amazon Basin. In addition, Home Depot has received a lot of media attention for its efforts, turning RAN’s initial dose of negative publicity into positive coverage.
Misconceptions of NGO Alliances
The Home Depot-TNC partnership seems like a win-win proposition, but that has not always been the case when NGOs and companies get together. Knights admits that many corporations falsely believe that a partnership with TNC will automatically clean up their acts. “One of the biggest misconceptions companies have when they approach TNC,” he says, “is that they think we can 'green' their operations. Our niche is biodiversity conservation through habitat preservation. While we can help companies with their management of natural resources and offer technical advice aimed at their procurement policies (e.g., Home Depot), we do not have operational skill sets that would allow, for example, us to help a company reduce its greenhouse gas emissions. Other organizations like The Natural Step are better positioned to do this.”
Another aspect to your due diligence should be examining worst-case scenarios. What would happen to your alliance if, say, your NGO partner had to go through a restructuring? TNC restructured its Board of Governors in January 2004, in part because The Washington Post ran a three-day series of critical articles from May 4-6, 2003. (In addition, both the Senate Finance Committee and the IRS have launched separate probes into TNC.) Though TNC felt the Post’s reporting was imbalanced, the restructuring still took place. Through all of this, Bristol-Myers Squibb has retained its partnership with TNC. But Anton-Switka admits she was concerned that, in the wake of the shakeup, BMS’s needs “would drop from [TNC’s] radar screen.” She adds that, next time BMS is searching for a nonprofit partner, she’ll “ask them ahead of time what should happen if a reorganization takes place.”
While TNC has an enviable roster of big-name partners, there are numerous examples of corporations who’ve chosen to align with less prominent NGOs. The Center has published a case study about the partnership between Pfizer and several NGOs devoted to fighting HIV-AIDS.
The Bottom Line
While an NGO partnership is a great way to improve your standing as a socially responsible company, there are pragmatic benefits as well. You may have a vision of how your company can improve its communities; NGOs have a wealth of experiential know-how about how to execute those visions on a regional level. To that end, an alliance can provide “on-the-ground” marketing and image-building opportunities that your business might not otherwise encounter—in inner city neighborhoods, for example, or perhaps at a local school or park. Then there are the ancillary benefits that any partnership confers: the chance to reach new networks of stakeholders by leveraging those of a trusted ally. NGOs also have merit as partners precisely because they are nonprofit organizations: an affiliation with a reputable NGO validates your company’s credibility. And as rapidly as corporate citizenship is growing, there are still hundreds of businesses that haven’t embraced the basics of it. By forming meaningful partnerships, your company can establish a leadership position in social responsibility, a concept of mounting importance to mainstream investors.
Source: Center for Corporate Citizenship (http://www.bcccc.net/)