Relationships matter: not-for-profit community organisations and corporate community investment

This report examines barriers to corporate community partnerships developing further in Australia, examines differences between not-for-profit organisations (NFPs) and corporations, identifies positive and negative factors at play in these partnerships, and focuses also on trends and developments. It looks also at how to best leverage the operations and activities of NFP organisations to enhance interactions with large businesses.

The Department of Families, Housing, Community Services and Indigenous Affairs (the Department) commissioned the Centre for Corporate Public Affairs (the Centre) to undertake a major study into not-for-profit (NFP) organisations and business community partnerships in late 2007.

This follows two previous reports — Corporate Community Involvement: Establishing a Business Case (Centre for Corporate Public Affairs 2000) and Corporate Community Investment in Australia (Centre for Corporate Public Affairs 2007)— that werecompleted by the Centre in conjunction with the Business Council of Australia. These two reports have already been highly influential in the way government, business, and the not-for-profit sector have come to think about the issues around community investment. It would be most constructive for this current report to be considered in conjunction with the 2007 study.

The 2007 report investigated trends in corporate community investment and concluded that business activity continues to increase and deepen.

This form of business engagement with the community was described as ‘corporate community investment’ because it reflects engagement with the community as a core business activity, and the fact that it is accorded strategic importance in the business sector.

The Centre expects this report into not-for-profit and business community partnerships will further inform development of policy in this area. The report will also assist NFP organisations and businesses develop and maintain more effective community partnerships.

This report included quantitative survey research with 153 not-for-profit organisations and qualitative research workshops of NFPs in Sydney, Canberra, Perth and Melbourne, as well as individual consultations with senior NFP sector executives. It follows the 2007 publication by the Centre for Corporate Public Affairs and the Business Council of Australia, Corporate Community Investment in Australia.

The report covers the following areas of discussion.

At what stage are corporate community partnerships in Australia?

The direction of corporate community partnerships — supported by most NFPs — is towards an ‘integrative’ stage of collaboration, in which partners create new services and activities as a result of their collaboration.

Outcomes produced by so-called integrative partnerships include better societal outcomes, and improved delivery of services at a local level. NFP organisations report that many corporate community partnerships operate within this realm.

Some corporate community partnerships in Australia remain at an initial ‘philanthropic’ stage of development (traditional donor-recipient relationship delivering funds to the NFP and strengthening the reputation of the donor).

The largest number of partnerships sit in the orbit of ‘transactional’ collaboration, characterised by an exchange of resources via partnership activity, producing mutual reputation and positive outcomes for society. As they develop, these partnerships move towards ‘integrative’ collaboration.

More secure funding streams and capacity building

This report finds that corporate community partnerships continue to grow rapidly in Australia. About 10 per cent of the income of the NFP organisations contributing to this report is derived from corporations.

Almost all NFPs indicated they partner with business to secure a funding source that is often more reliably available over time than funds available from governments (which remain the prime source of NFP funding). Three-quarters of NFP organisations partner with business also to get access to specialist corporate skills, and assist build their capacity. Consultations undertaken for this report illustrate the importance of skills-transfer for both NFPs and also business.

What is driving corporate community partnerships?

Research for this report indicates that among smaller NFPs in particular, with little experience of collaboration with business, there remains some natural and ideological suspicion about the motives of businesses seeking to partner with them.

Most NFPs believe marketing benefits and reputation motivate business primarily to form relationships with NFPs (reputation was rated as the second highest motivation by corporations in the Centre’s 2007 report on corporate community investment).

Barriers to and opportunities for more corporate community partnerships

Most NFP organisations believe better overall business sector understanding of NFPs and their complex stakeholder relationships, as well as the longer-term view they must take to mitigating societal issues or achieving community goals (when compared to the shorter-term profit cycles of business), would underpin more successful partnerships.

Building capacity

However, the most critical challenge facing not-for-profit organisations — which they see corporate community partnerships playing a lead role addressing — is building their capacity to achieve their missions.

Most of the work of not-for-profit organisations requires multi-party collaboration with government agencies, other NFPs and businesses.

Many NFPs say they have low operating ratios, and most have staff numbers between one and nine full-time employees. Many rely on volunteers (including from corporate partners and other businesses).

There is high demand among NFPs of all sizes to have access to the skills and capability that corporations can offer, transfer and embed. This includes capability in core management enterprise functions such as human resource development and training, finance, marketing, corporate governance, administration, strategy and leadership development.

Clear view of good and best practice

Related to increasing the capacity of the not-for-profit sector, there remains demand among NFPs and business — especially medium to small entities — for a portal or ‘clearing house’ of good and best practice in identifying, managing and nurturing corporate community partnerships.

Data collected during research for this report suggests the absence of a central portal results in considerable ‘reinvention of the wheel’ across the NFP sector in how corporate community partnerships are identified, managed, measured and reported.

Transparency

A common theme of this report is that while many NFPs benefit from working with business through community partnerships, many believe there remains a deficit in how well business and the wider community understand their goals and operations, and that in some quarters, perceived poor transparency affects negatively the reputation of the wider sector.

Some NFPs have adopted voluntary annual reporting of progress against mission, values, strategy, financial and operational performance, corporate partnerships and government assistance.

Regulatory reform

Different regulatory regimes pose significant operating cost and administrative burdens for NFPs operating across State and Territory borders, including in joined-up and collaborative arrangements with other NFPs, or with corporations or governments.

Follow this link to access the full report on the FaHCSIA website.