The growing magnitude and complexity of socioeconomic problems facing societies worldwide mean there is an urgent need for not-for-profit and for-profit organisations to work together effectively to create sustainable communities. 

Collaboration between for-profit and not-for-profit organisations, often called cross-sector collaboration or partnerships, can yield several benefits for each organisation and contribute to the broader social, environmental, and economic well-being of communities and society. 

However, these collaborations are not without their challenges and require a shift in the mindset of both for-profit and not-for-profit organisations.

Shifting the mindset – moving from history to the present

Historically, many not-for-profit organisations were distrustful and wary of for-profit organisations. The fear was that for-profits’ need to achieve profit would negatively impact and distort the not-for-profit’s goal of addressing social issues.

Even when seeking donations from for-profits, many not-for-profit organisations wanted to keep the relationship at arm’s length.

Conversely, many for-profits viewed non-profit organisations as “not quite businesses”. Not-for-profits were considered as being managed by people attempting to do “good in society” who had limited or no business understanding or skills.

There is increasing recognition among leaders in non-profit and not-for-profit organisations that these mindsets are detrimental at both an organisational and community level. Several factors are driving the need for change.

1. Complexity of issues facing communities

The social and environmental issues impacting society and communities are more complex and interconnected than were previously recognised. For example, there is greater awareness that increasing living costs often drive people in precarious financial positions into homelessness. The rising cost of living also impacts transport and building costs required by the building industry to provide more homes or accommodation options for people who are homeless. The flow-through effect of homelessness impacts a society’s health system in terms of increased need for mental health services and increased presentations of people who are homeless at hospital emergency departments.

Hence, homelessness not only has individual ramifications for the person who is homeless but there are economic, structural and health impacts on the community and broader society that require the involvement of government, business, health and no-for-profits to address adequately.

2. Requirement for For-Profit organisations to contribute to society and the environment

This requirement has been brought about by a shift in consumer expectations, particularly from Gen Z. Consumers are no longer driven by price alone. They also want their purchases to have a positive social impact and engage with companies doing good in their communities. 

Companies and brands understand the need to contribute authentically to the greater social good. Hence, socially responsible consumerism has become a foundation that enables for-profit and not-for-profit organisations to develop meaningful relationships mutually beneficial to everyone when done successfully.

3. Greater recognition of each other’s strengths

While historically, for-profits and not-for-profits often viewed each other with distrust, there is now greater recognition of the strengths of each sector and how these strengths can contribute to each other’s success.

MODERN NOT-FOR-PROFIT ORGANISATIONS RECOGNISE THE BENEFITS OF DRAWING ON FOR-PROFIT BUSINESSES

In the past, there was a view among not-for-profit organisations that they had to do everything in-house. For example, they would employ staff to run their marketing campaigns. Whenever a need arose, the mentality was, “We need to employ a staff member”.

While this mentality still exists among many smaller to medium-sized not-for-profit organisations, there is growing awareness that employing staff for non-core functions is not an effective use of funds. It is more effective to outsource jobs and roles such as marketing, social media, and public relations to for-profit businesses for whom this is their core business and who have the skills and connections to make these partnerships successful.

WHAT NOT-FOR-PROFITS CONTRIBUTE TO FOR-PROFIT BUSINESSES

One of the main benefits not-for-profits provide to for-profit businesses is looking beyond the bottom line of profit and loss to view people and situations more holistically and create positive work environments that flow through to greater productivity.

As one person said of their not-for-profit work experience;

The nonprofit experience has actually helped me take a much different approach in the corporate world. When I started Ascend to help people with their personal finances, I was able to draw upon many of the foundational experiences from my nonprofit work to help people and make a positive impact instead of looking at everything from the lens of profit and loss.

Requirements for a successful cross-sector collaboration

Successful collaboration between for-profit and not-for-profit organisations requires thought, careful planning, clear communication, shared goals, and a mutual understanding of each other’s strengths and limitations. For this to occur, the following must be considered.

1. Is there a shared vision and goal?

Both parties must clearly understand the purpose and objectives of the collaboration. Spending time at the beginning of any collaboration, ensuring a shared vision and common goals, not only helps align efforts and create a sense of purpose but also reduces the likelihood of miscommunication and misunderstanding as the collaboration progresses.

Part of considering this shared vision is identifying each organisation’s unique expertise, resources and capabilities and identifying how the strengths of one organisation can complement the weaknesses of the other. Identifying strengths and weaknesses requires honest communication because there can be a tendency to downplay weaknesses and present a good front.

2. Open Communication

Honest and open communication is essential. This requires both sides to openly communicate their expectations, strategies, challenges, and progress. Regular check-ins and updates help ensure everyone is on the same page.

It is also essential when communicating that there is clarity about the roles and responsibilities of each organisation. Making assumptions about what each organisation will do in the glow of goodwill is easy. However, once the light has faded, unless there is clarity and agreement about roles and responsibilities, the result is often confusion and disagreement about who is doing what.

3. Mutual Respect and Alignment of Values

It is essential to approach the collaboration with mutual respect for both organisations’ values, missions, and cultures. Part of respect is being transparent about their intentions, strategies, and any potential conflict of interest.

Even though for-profit and not-for-profit organisations have different missions, it’s crucial to find common ground and values that underpin collaboration. 

This alignment, respect and transparency help build trust and enhance the partnership’s longevity by fostering positive working relationships.

4. Agreement on Outcomes

As mentioned above, there needs to be open and transparent communication, particularly around defining what success looks like for the collaboration. This could include both qualitative and quantitative outcomes. It is essential to have measurable goals that provide a clear framework for evaluating the collaboration’s impact and success.

Regularly assessing the impact of the collaboration on both organisations’ goals will enable the organisations to make informed decisions about the collaboration’s future.

5. Legal and financial considerations

Legal agreements, contracts, and financial arrangements must be clearly defined. Again, open and clear communication is required to address issues related to intellectual property, revenue sharing, funding, and liabilities.

6. Flexibility and adaptability

Collaborations can evolve due to changing circumstances; therefore, both organisations should be flexible and willing to adapt to new challenges and opportunities. Part of being flexible is to view the collaboration as a learning experience. Continuously gather feedback and insights to improve the partnership’s effectiveness and make informed decisions. 

Another aspect of being flexible and adaptable is to consider the long-term sustainability of the collaboration and plan for how the partnership will continue to thrive beyond its initial stages.

7. Leadership and support

For a collaboration to be successful, both organisations must have strong leadership support and a commitment to lead and oversee the collaboration. Strong leadership helps ensure the partnership receives the attention it needs to succeed.

8. Conflict Resolution Mechanisms

Conflict will likely occur at some stage, even with respect, values alignment, and open communication. Establishing a process for resolving disputes or disagreements that may arise during the collaboration before the conflict occurs is essential. This process should be fair and unbiased.

Successful collaborations require effort and dedication from both parties. While challenges may arise, a well-structured and thought-out collaboration can lead to positive outcomes for for-profit and not-for-profit organisations and assist in addressing many of the complex problems within society.