The Potential for a Substantive Alliance Between Business and Nonprofits

October 5, 2020

Emerging Mission-Focus of Business
More and more companies are embracing the concept of corporate purpose as Americans’ perceptions of big business have shifted. In a discussion at the 2019 Aspen Festival, Chip Bergh, CEO of Levi Strauss & Co., said his company has been taking a stand. “We desegregated our factories in the South ten years before it was the law of the land…It’s not just about making a buck and returning dollars to shareholders. It’s also about making a difference in communities and the world,” he said.

PayPal President Dan Schulman stresses that corporate purpose is not simply hanging your company values on a wall, but ensuring that the products and services you offer are part and parcel of your social mission. “If you don’t take action on your values as a company, then they’re really just propaganda,” said Mr. Schulman.

Corporate purpose doesn’t just give companies a reason to pat themselves on the back—it actually drives success and profit. During this same Aspen Festival, Nancy Green, President and CEO of Athleta, stated that shifting Athleta’s focus to shared values, sustainable practices, and female empowerment changed the way the company profited while benefiting the bottom line.

Historical Mission Focus and Emerging Business Practices of Nonprofits
Since 1741, when it is thought that the first charitable organization—Foundling Hospital in London—was established to give homes and support to orphaned children, nonprofit organizations have been fighting for social justice and sustainable solutions to meet the needs of society’s most vulnerable.

Annually the nonprofit sector contributes an estimated $1.047.2 trillion to the US economy composing approximately 5.6 percent of the country’s gross domestic product. According to a 2019 report by the Center for Civil Society Studies at Johns Hopkins University, nonprofits account for roughly one in 10 jobs in the US private workforce, with total employees numbering 12.3 million in 2016. Equally as important, the nonprofit social service sector has a community of dedicated volunteers—an estimated 25.1 percent of US adults volunteered in 2017, contributing an estimated 8.8 billion hours.

Further, over the course of the past decade, with shrinking government resources and increasing operating costs (talent, facilities, utilities, insurance) the nonprofit sector has shifted its operating structure and practices to mirror those of business. This means tightly managing revenue and expenses, evaluating growth opportunities such as mergers and acquisitions, investment in technology and other critical infrastructure components, expanding to international markets when indicated, and establishing and tightly monitoring financial targets. These practices are in service to our mission.

Limitless Potential
One can only imagine what would happen if the business and nonprofit community moved past the traditional “sponsorship” relationship to something much more substantive—where they intentionally and strategically joined forces to design long term, smart and sustainable solutions to some of society’s most intractable problems. The potential that could result from leveraging the experience, resources, talents, and community connections is limitless.

Stay tuned for further discussions on the potential of business-nonprofit solution-focused partnerships and strategies both entities can apply to secure meaningful, productive alliances that result in measurable impact.

As always, I welcome your thoughts.