Collaboration between nonprofit organizations and businesses

• In Event: Civil Society and Collaboration with the State and the Market

Abstract

As for-profit businesses are pressed to demonstrate more social responsibility, and many nonprofits have become proficient in applying market-oriented approaches, collaborations between nonprofits and businesses have increased. We address the motivations and design parameters of such collaborations, highlight widespread or innovative forms of collaboration, and discuss associated pitfalls and opportunities.
Nonprofits and businesses collaborate for various reasons, and it would be an oversimplification to say that nonprofits do it purely out of altruism and businesses out of self-interest. Research has shown that the line between altruism and self-interest is often blurred. Typically, there are six primary motives for such collaborations (Oliver, 1990): meeting regulatory requirements, collectively exercising more power, acquiring resources, increasing efficiency, achieving stability, and enhancing legitimacy.
Nonprofits and businesses can collaborate in many ways, with their partnerships shaped by varying levels of formality, permanence, interdependence, and intensity (Austin & Seitanidi, 2012b; Guo & Acar, 2005). Collaborations with typically low levels of formality, permanence, interdependence, and intensity include information sharing, joint programs, and shared services. At the other end of the spectrum, we find close collaborations, such as joint ventures, the formation of parent-subsidiary relationships, and mergers.
Business-nonprofit collaboration can take rather generic forms, such as shared services or joint ventures, which are also common among for-profit companies. However, there are forms of collaboration that are specific to nonprofits. Some of these are quite common, such as corporate volunteering (Schneider & Neumayr, 2021), cause-related marketing, and certification programs. Others are innovative and have attracted considerable attention but have not been widely adopted, such as social impact bonds (Maier et al., 2018) and shareholder activism.
Collaboration between nonprofits and businesses is fraught with several pitfalls. One of the biggest is unequal power relations (e.g., Bouchard & Raufflet, 2019; Schiller & Almog-Bar, 2013). Research shows that equal partnerships in which decisions are made together lead to better outcomes (e.g., Selsky & Parker, 2005). However, in nonprofit-business collaborations, power is often unbalanced; business partners tend to have more power, and nonprofits tend to lose control over decision making (Schiller & Almog-Bar, 2013). Another important pitfall is the cost versus the benefit to the nonprofit. Collaboration with contested companies or industries , i.e., companies or industries that suffer from legitimacy problems, is particularly sensitive (Galvin et al., 2004). Firms in contested industries, such as tobacco, gambling, mining, and oil, have been documented to be particularly active in CSR (Van Balen et al., 2017), presumably with the intention of mitigating their legitimacy problems. A third challenging issue is the fit of motivations (Austin & Seitanidi, 2012a). Too often, nonprofits see collaboration with businesses primarily in terms of revenue generation, and businesses see it primarily as an easy way to improve their image. In this case, both partners have different motivations, and for neither is the motivation deeply integrated with their mission. Such collaborations can become transactional at best, and fail at worst. For collaborations to have transformative potential, the partners must share a common motivation, and that motivation should be close to their mission.

References
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Authors

• Florentine Maier, WU Vienna University of Economics and Business

• Michaela Neumayr, WU Vienna University of Economics and Business