In September, we wrote on Social Impact Investing (SII), an approach by the corporate world to investing that seeks to generate positive social and environmental outcomes alongside financial returns.

The shift to SII as a way of investing is driven, among other things, by the need for companies to demonstrate they are meeting environmental, social and governance (ESG) standards and the demand from customers and clients for businesses to contribute positively to the broader economy and environment.

SII and Return on Social Investment [SROI] – what is the difference?

SII allows companies and corporations to partner with non-government agencies (NGOs) and social enterprise businesses to create innovative solutions to complex problems; however, corporations are still seeking a return on their investment.

The question for NGOs and social enterprises is how they demonstrate their value to companies looking to invest.

The power of being able to demonstrate return on social investment

NGOs and social enterprises demonstrate their value by articulating and demonstrating their return on social investment.

What is the Return on Social Investment [SROI]?

SROI, at its core, measures whether the social value created by a program outweighs the cost of running the program [1]. Calculating the effectiveness of the social program allows the organisation to identify areas where they can improve their impact. It is in these areas that NGOs are most likely to attract companies seeking to invest and contribute because, as mentioned, SII prioritises investments with a measurable impact while generating a financial return.

Hence, the difference between SII and SROI is one measures social value, while the other is predominantly an investment strategy.

The seismic mind shift for NGOs in moving to a Social Return on Investment perspective

Many NGOs and non-profit organisations continue to operate with a mindset based in the 20^th century without realising the rapid shifts that have occurred in the last two decades, particularly in the transition towards SROI.

The changing landscape for NGOs and not-for-profit organisations

Significant shifts have occurred over the last two decades for many NGOs, including:

 1.  Increase in both demand for services and complexity of problems

Many non-profit organisations are finding that:

a)     there is an increasing number of clients presenting for assistance and

b)     clients are presenting with increasingly complex problems.

These two factors impact the organisation’s ability to meet demand in several ways.

●    The impact on Human Resources

Increasing demand often impacts issues like staff retention and burnout. When staff become burnt out with the ongoing demand, and there is high staff turnover, the results for the organisation are:

a)     Higher recruitment costs.

b)      Loss of organisational knowledge and expertise.

c)     Reputational damage as people become aware of the high turnover of staff.

d)      Impact on service delivery to clients when there is high staff turnover.

●    The need for professional staff and the impact of higher wages

Clients or communities with complex problems often require services from a multidisciplinary team of professionals who work together to address the issues.

Many NGOs do not pay the professional wages paid in the private sector to attract the professionals required. This can lead to problems in employing suitably qualified staff skilled at dealing with complex issues.

2. Reduction in donor and government funding

The ability of an NGO to offer higher wages to engage professional staff who can meet increasing client demand is further impeded by the reduction many NGOs are experiencing in donations from donors, particularly post-COVID, and greater accountability requirements from the government.

Many NGOs are caught, like hamsters in the wheel, trying to work harder and faster, doing the same things to meet increasing demand with reduced funding. Shifting to an SROI model would enable many NGOs to demonstrate their value and impact, making them attractive to companies seeking SII opportunities providing an additional funding stream.

Making the shift

NGOs seeking to make the shift need to do the following.

1.  Change the focus from a mission focus to an impact-focused mentality

Many NGOs are mission-focused. Their mission statement is a statement about what they want to achieve. Their mission statement is about the organisation’s unique reason for existence and how it will achieve its vision. The organisation’s vision statement is also about their desired future state of the world.

In other words, a mission-focused NGO talks about itself. Its uniqueness and how it works to achieve a desired future state, as it sees the world or the community. While vision and mission statements are essential, they are aspirational. They do not clearly articulate the impact the organisation is having on its community or clients.

NGOs that are impact-focused change their language from mission and vision to the impact they are having on clients and the community.

This is something companies and, increasingly, governments want to know. How does an organisation impact the lives of its clients or community? Is the funding provided to the organisation having an impact that can be measured, or does it still focus on its aspirational desires? Becoming impact-focused means being comfortable with a results-driven mentality.

2.  Become comfortable with a results-driven mentality

Many NGOs talk about the programs they run rather than the results they achieve.

One of the leading indicators many NGOs use for the success of a program is the number of clients assisted. While numbers are significant, they are only one indicator and usually not a very reliable indicator of the impact a program is having.

If we take mental health counselling as an example. One counsellor may see 25 clients a week, while the second counsellor may only see 18 clients weekly. Looking simply at the numbers, it would appear the first counsellor is more successful because they are seeing more clients. However, the second counsellor may be more successful because the impact of their counselling means clients do not need to have as many appointments because they are skilled in applying self-help techniques away from the counselling sessions.

A results-driven mentality looks beyond the numbers and thinks beyond traditional programs towards social marketing, social enterprise, advocacy, and collaborations. It is about achieving results that drive system change [2].

Many NGOs’ failure to harness social media’s power is a clear example of these organisations’ failure to shift to an SROI perspective. Many continue using organisational social media platforms as they do their personal social media profiles. They post photos of recent staff activities or events. Posts are ad-hoc and often rely on a staff member remembering to upload a post or a photo.

NGOs should have a designated line item within their budgets for social media and a clear business plan to use the power of social media to bring about change and demonstrate the impact of what they do, not just for the individual but for communities and to bring about system change.

3.  Entrepreneurial versus risk-averse mindset

Many NGOs are risk-averse. While this is understandable when dealing with government grants and donations, it can also result in an organisation being unwilling to try innovative ideas. Developing a mindset based on SROI requires considering, tolerating, and implementing new ideas that may carry some risk.

Developing an organisational, entrepreneurial mindset starts with the Board of Management. Most NGO Boards are risk averse; in part, this is often due to the make-up of Boards. Many boards, when seeking new members, think about lawyers, accountants, and other professions that, by nature, are risk-averse. NGO Boards should actively recruit entrepreneurs who can assist other Board members in developing a constructive risk appetite and seeing entrepreneurial opportunities.

In developing a constructive risk appetite, the Board needs to create a culture based around four qualities:

i)               Openness and the ability to share information and lessons learned.

ii)              Adaptability in monitoring, assessing, and responding to internal and external changes.

iii)             A commitment to tracking outcomes and impact of service delivery; and

iv)             Supporting a learning culture where everyone can learn without fear of being blamed or criticised.

Making the shift is not easy. It takes time and energy, time to step back from the demands of constant service delivery and reflect on what needs to change. Again, the Board’s responsible for providing direction; otherwise, staff must keep meeting increasing demand without reflecting on what needs to change. It also takes energy to learn to do things differently. However, being able to shift to an SROI mindset and talk about the impact the organisation is making is essential for several reasons.

1. It opens opportunities for collaboration and investment from companies and corporations looking to invest in services making a social and environmental impact.

2. Being transparent about the impact an organisation is having is positive for the workplace culture. A positive workplace culture attracts staff has lower staff turnover and greater staff satisfaction, which reduces the risk of burnout.

3. Being clear about the impact of an organisation brings clarity to its vision and mission. Also, it enables it to know where it should invest its financial and human resources, that is, in areas with the most significant impact. This reduces organisational waste and deficit.

While NGOS need to develop an SROI mindset, it is also important to understand there are some things that SROI doesn’t measure. For example, increasing self-confidence or family stability cannot be measured. However, the strength of an SROI model increases as the organisation gains evidence of its outcomes through best practices research or self-evaluation studies.

[1] https://socialimpactarchitects.com/sroi/

[2] https://socialimpactarchitects.com/nonprofit-trends-2017/

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As managing non-profit organisations becomes increasingly complex and challenging, it is necessary to step back and reflect on trends likely to impact organisations in the coming year. Times of reflection are not something we prioritise, deeming them a luxury compared with meeting current demands. Yet, such times are necessary to ensure we can lead and adapt to emerging changes and give the organisations we lead the best chance of success. 

One of the consequences of not allowing ourselves time to reflect is that we lead our non-profit organisations using outdated service delivery models that worked in the early 20th century. Unaware of the changes, we do not know how to adapt the management model to one necessary for success in the 21^st century.

This blog examines some emerging trends and what they mean for organisations.

Leadership trends in 2024

Leadership starts with the board of management. This is a simple fact that many Boards do not fully appreciate or understand. The failure of a Board to fully understand this fact is commonly seen in two ways.

– Many Boards will use the mantra “we do not get involved in operational matters” as an excuse to distance themselves from difficult leadership decisions. Boards should not involve themselves in operational matters. However, difficult leadership decisions will often impact operating procedures. Boards must understand this rather than abdicating responsibility to the CEO or Director.

– The second example where Boards demonstrate a failure to understand their role of leadership is with cultural change. Boards often fail to understand their role in setting and reinforcing the organisational culture. This failure places the CEO in a no-win situation when bringing about cultural change.

Two trends impact this area of leadership that Boards and CEOs/Directors need to consider moving into 2024.

Boards of Management

For many non-profit organisations, particularly small to medium-sized organisations, the Board of Management is made up primarily of baby boomers. That is, people born between 1946 and 1964. While not discounting the individuality of the board members, each generation has several defining characteristics when it comes to the qualities and characteristics they bring to the workplace. For example, young people who are Gen Z tend to be socially aware and entrepreneurial within the workplace. Baby boomers are often characterised by how they define themselves by their roles. Their loyalty to the role means they often struggle with work-life balance or remain in positions detrimental to their well-being. They also value hierarchical structure within the workplace.

Baby boomers bring these characteristics with them when they come onto Boards.  For example, they are concerned with organisational structure, which tends to be hierarchical. They are also job-focused and can demand the CEO or Director demonstrate the same qualities, which is often judged by how many hours the CEO puts into the role and what additional duties they take on. This can lead to tension when a CEO has a clearer understanding of the importance of maintaining boundaries and having a work-life balance.

While not denigrating the commitment and investment of baby boomers, the characteristics they bring to boards are one of the reasons many non-profits have a service delivery model based on a 20th-century model.

Some of the other characteristics are:

– They are often more wedded to preserving the organisation’s history and how services were provided than how services now need to be adapted and changed to meet the changing needs of community members.

– For many Boomers, technology is not as intuitive as it is for Millennials and Gen Zs. This means there is often a failure to understand the potential of technology and social media to enhance and build the organisation and its impact on the community.

– Boards that are predominantly Baby Boomers are strongly risk-averse, which means calculated risks that would enhance and potentially build the organisation are not taken. This reinforces the status quo and ‘doing things as they have always been done’.

One emerging trend that Boards must grapple with in 2024 is the increasing number of Millennials and Gen Zs who want to contribute by serving on Boards.

As discussed, Millennials and GenZ bring different characteristics to Boards. For example, these generations bring a digital-first approach. They are confident and skilled at using social media and digital platforms to engage with communities and causes in ways that can cause anxiety for Baby Boomers, who are generally more hesitant with social media. They also emphasise sustainability and the willingness to take risks to ensure sustainability. This takes higher priority than organisational history.

What does the influx of Millennials and GenZ mean for Boards?

When considering succession planning, Boards often discuss the need to attract Millennials and GenZ. Many times, having attracted a younger person, the Baby Boomers on the board will continue to hold power and shut down the younger person’s ideas and enthusiasm. This can set up a destructive power dynamic at a Board level. It is often portrayed as an essential disagreement between those who want to hold onto the organisation’s history and those perceived as not understanding the importance of history. In reality, it is a difference in generational perspective and how each generation wants to utilise their strengths.

Boards that have mainly Baby Boomers as members need to think through how they will share power and responsibility with Millennials and GenZ in constructive ways. Failure to adapt to the perspectives and strengths of Millennials and GenZ will condemn Boards to increasing irrelevance, particularly when staying current with technology.

USE OF FRACTIONAL LEADERSHIP

The traditional model of leadership for non-profit organisations is hierarchical. This is to have a CEO or Director who is expected by the Board to manage every situation, particularly when the non-profit is a small to medium-sized organisation. 

This expectation, which is very much a characteristic of baby boomers, is unrealistic and unreasonable in the 21^st century. 

Fractional leadership is an emerging trend where organisations temporarily hire external executive talent to fill specific roles. For example, one area where it can be productive to have a fractional executive is the HR area. Many CEOs in small to medium-sized organisations find HR matters time-consuming, emotionally draining and anxiety-producing. HR matters are also costly if mishandled, many of which are due to the inexperience of the CEO. Having an executive deal with this area on a part-time or as-needed basis provides the benefit of working with a seasoned executive without committing to long-term expenses.

These executives often bring a wealth of experience and different perspectives that can benefit the organisation.

The increasing numbers of Millennials and GenZ who want to serve on Boards of Management and the use of fractional executives are two trends that Boards and CEOs must think through in 2024.

Technology trends in 2024

Technology will continue to grow in importance for the non-profit sector in 2024. Many Boards, particularly when most board members are Baby Boomers, fail to understand the importance of investing in technology. 

This failure is usually demonstrated in two ways. 

– Firstly, investment in technology is viewed as diverting funds away from direct service delivery rather than understanding that investment in technology is essential to service delivery. This perspective is based on a failure to truly understand how society is being driven by technology and how technology impacts the social problems many non-profit organisations were set up to deal with.

– The second way this failure is demonstrated is the failure of many non-profits to budget for investment in technology. 

This failure to invest directly impacts the staff’s job performance. For example, one larger non-profit organisation had allowed their IT systems to deteriorate to such a point it would take staff anywhere between 20 to 40 minutes to log onto their work platforms in the morning because each time a staff member arrived and logged on, it crashed the system for staff who were already logged on.

Boards must understand the importance of investing in technology, particularly in the 21^st century. Technology is integral to service delivery.

Investing in technology

Technology ensures a non-profit’s adaptability, resilience, and success in the changing landscape.

It is not just the importance of staff being able to log into work systems to perform their jobs, as discussed above; the power of data analytics allows organisations to make informed decisions about service delivery. 

Many non-profit organisations will spend a day reviewing their strategic plan, yet rarely is that review conducted with data showing the trends over the past one or two years. Data is rarely used to determine where the organisation will invest its time and resources over the next one to three years to achieve its mission and vision. One reason for this is that the data is not of sufficient quality to allow such decisions to be made with any confidence.

VIDEO CONTENT and Digital Fundraising

The rise of social media, particularly the growing importance of videos in digital content, provides new opportunities for non-profit organisations to tell their story and connect with people authentically and meaningfully. With videos, stories come to life and capture attention.

The visual medium is powerful in conveying the human element of an organisation, hence making it more relatable and evoking an emotional response in people.

Telling the story through video marketing is essential for diversifying an organisation’s fundraising strategy.

Traditional fundraising techniques are increasingly ineffective both in time and human investment required to generate diminishing returns. At the same time, digital fundraising provides new opportunities to engage with a broader audience and do so cost-effectively.

The other advantage of video marketing is that it allows an organisation to target its messaging to niche audiences rather than having a blanket scattergun approach.

The emerging trends of 2024 provide both an exciting and challenging opportunity for non-profit organisations. Exciting because there are so many opportunities to do something different, to take an informed risk to message a larger audience and to create new service delivery models better suited to the 21st century. It is challenging because it requires boards of management to step outside their comfort zone and traditional ways of doing things and begin to hand over power to millennials and GenZ and build on their strengths for the future.

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In a previous article, we wrote about the growing imperative for not-for-profit organisations to develop a Social Return on Investment (SROI) framework to ensure they survive and thrive in a changing funding environment.

In that article, we stated that SROI, at its core, measures whether the social value created by a program or service run by an NGO outweighs its cost. Calculating the effectiveness of the social program allows the organisation to identify areas where they can improve their impact and attract alternative funding sources. 

Many NGOs struggle to measure the impact of their services and the social value they provide.  This difficulty arises from several factors, two of which are;

1. There is an ongoing and often overwhelming need to keep up with the demand for service delivery. When organisations struggle to meet the constant pressure for services and staff feel engulfed by the needs within a community, it is challenging to think critically about the outcomes and impact of the services. Within an SROI framework, the terms outcomes and impact have a particular meaning, which is explained below.

2. The problem of language. The language used when developing a methodology around SROI is often confusing. For example, what is the difference between an output and an outcome? What is the difference between an impact and an outcome? When staff are unfamiliar with the terminology used by SROI and faced with community needs, it is easy to fall into the trap of viewing SROI as theoretical mumbo-jumbo best left to academics while the “real needs of people” are dealt with. The problem of language presents an opportunity for for-profit organisations looking to engage in social impact investing (SII) to work with NGOs to understand the terminology and embed this understanding in service delivery practices.

An opportunity for for-profit organisations

We have written previously about the importance and benefits of collaboration between for-profit and not-for-profit organisations. 

Companies and brands are more aware of contributing to the greater social good. One way of contributing is through social impact investing (SII). Companies and brands work with NGOs by investing in them and working with them to address complex social needs. The NGO benefits from the investment provided by the company, and ultimately, the business has a return on its investment.

Many for-profit organisations look for NGOs that already have and are operating under an SROI framework. However, working with an NGO to develop an SROI framework presents opportunities for for-profit organisations to develop a shared vision and understanding with the NGO. This allows the for-profit organisation to be involved at the beginning of the NGO’s journey in developing an SROI framework and can lead to constructive relationships and positive outcomes in addressing community needs.

While there are opportunities for for-profit organisations to work with not-for-profits to develop their SROI strategies, equally, there are steps NGOs can take to establish an SROI framework that will put them in a better position to work with for-profit organisations who are looking to invest in addressing social and community needs.

Steps in developing an SROI framework for not-for-profit organisations

There are steps not-for-profit organisations can take to develop an SROI framework.

1.  Understanding the importance of an SROI framework for the organisation’s future

Developing an SROI framework is essential for organisations. It will be the difference between the NGOs that survive and those that either are forced to close or are taken over by larger not-for-profit organisations. The need to demonstrate the impact of the services provided by an NGO is being driven by two factors.

a)     The model of funding from governments has changed, and there is now greater demand to demonstrate that services are providing value for the funding they receive. Funding bodies often opt to go to open tender to ensure they achieve value for money. This means funding can no longer be relied on. Organisations that have provided services to the community for years are often defunded as new service providers win the contract.

b)     The demand to demonstrate value for money also impacts philanthropic funding and how donors gift their money. Donors no longer donate simply to good causes. They also want to see the value their donations provide.

Smaller to medium-sized NGOs are vulnerable to the changing funding landscape. This vulnerability is increased if they cannot clearly articulate the benefit and impact they provide.

Developing an SROI framework must be driven by the Board. Too many Board’s have a myopic understanding of the organisation’s impact and view it as a ‘feel good’ factor. In other words, the organisation has an impact because “we do good work”. There is no understanding of the broad, long-term effects created by the services provided by the organisation within a community. This is the true meaning of impact, and most Boards cannot clearly articulate these long-term benefits within the community the organisation serves.

2. Begin to understand the language of SROI

Not-for-profit organisations must begin to understand the language of SROI and start using it in their service delivery.

As mentioned, some terms that cause the most confusion initially are outputs, outcomes, and impact.

a)  Outputs

The outputs of an organisation are the activities required to support what they are trying to achieve. For example, if an organisation is providing a counselling service, the outputs are the number of staff who are counselling and the number of hours of counselling provided over a week or a month.

Outputs are usually quantitative and easy to measure whether they have been provided.

b)   Outcomes

Outcomes are what the organisation is trying to achieve. For example, in the case of the counselling service, the organisation may be trying to ensure clients are more empowered in their daily lives and feel a greater sense of resilience in managing their circumstances.

Measuring feelings of empowerment and resilience is challenging because they are based on the client’s perception and, therefore, more difficult to measure. Because of the challenge of measuring outcomes, many not-for-profit organisations are content to continue measuring outputs. Annual Reports will be filled with the number of clients assisted and the number of hours of service delivery, and these numbers will contribute to the Board’s belief that the organisation is making an impact.

However, in the example of counselling services, if 80% of clients are dissatisfied with the counselling they have received and feel they are not empowered, the organisation is not meeting its intended outcome. This is where it is essential to understand clients’ needs, the challenges they are facing and the issues, constraints and priorities that are important to them so a way can be found to measure clients’ perceptions and feelings of empowerment.

One of the other traps many not-for-profit organisations fall into around outcomes is providing a case study. A case study is used as an example of the outcomes the organisation is achieving. The problem with case studies is their individual nature. It shows the outcome of the service provided by the organisation to one person but does not accurately measure the outcome to the client cohort. Failing to measure outcomes can lead to false reporting of the organisation’s success.

c)   Impact

Outcomes are the short-term effects achieved from the outputs, whereas the impact is the broader, longer-term effect of the service provided. Using the example of the counselling service, the outcome is the ability of the client to manage their current situation that is causing distress. The impact is the ability of the client to apply the skills they have learned to other areas of their life. In other words, the client doesn’t need to keep coming back for counselling because they have learned skills they can apply to other areas of their life, resulting in greater life satisfaction.

Not everything can be measured in an SROI framework. However, it is essential to understand the terminology and consider how to apply it to the organisation’s current service delivery model. Understanding and thinking about applying the basic concepts and terms of an SROI framework is a start on the SROI journey. It also means when approached by a company or brand, the organisation can demonstrate its initiative and commitment to developing an SROI framework.

3. Developing an SROI framework is a journey

Developing an SROI framework takes time and commitment, particularly in the early stages. Becoming clear about outcomes, the impact of the service, and how to measure them takes thought and often revising what is being measured.

As the organisation becomes more confident with the SROI framework, what is measured for outcomes and impact will often be changed and refined.

It is essential to understand that developing an SROI framework is a journey so that when things get difficult and frustrating, it is not seen as failure but just another part of the journey.

The benefits of persevering are the sense of confidence and assurance that an SROI framework can provide when the organisation can clearly articulate its impact and benefit and how these benefits are cost-effective.

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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.