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The Disappearing Barriers Between Business And Nonprofits Are Driving Innovation

Gone are the days when businesses existed to make money and nonprofits focused only on making the world better. Now both organizations are influencing each others’ practices and finding ways to work together.

From the hallways of the UN to Fortune 500 boardrooms, new developments are taking place that are redefining how companies and nonprofit organizations are interacting and learning from one another. This disruptive change is good for everyone because it’s creating new opportunities for how to address some of society’s long-standing, complex problems, and strengthening business and nonprofits in the process.

Several key trends are driving this evolution. In today’s economy, the interdependence between business and society is front and center in many people’s minds. A new generation of customers and employees are calling on companies to take action to help address complex and challenging social issues, from spurring local economic opportunities, to solving global health problems.

Similarly, nonprofits have to do more with less due to increasing community needs and continuing economic difficulties around the world. They’re also being held to higher standards for delivering results that will meet both urgent needs and be sustainable for the long term—a challenging proposition even under the best of circumstances.

Clearly there is a need for business and nonprofits to adapt to these new realities. The good news is that we’re beginning to see examples of businesses and NGOs reinventing themselves, and how they work together, through social innovation. There are many different approaches and ideas that are breaking down the barriers between the for-profit and nonprofit sectors—but several key themes are beginning to emerge that bring clarity to these trends.

Going local

Grassroots organizations are expert at leveraging the power of local communities to advance a cause. This is a core capability of most nonprofits, but, in many ways, global businesses are just beginning to realize the importance of taking a locally focused approach. Especially in developing and emerging markets, companies are learning that a better understanding of local needs can drive creative new solutions. This bottom-up approach to innovation is helping companies to strengthen their own operations. In Bangladesh, British retailer Marks & Spencer is working with local suppliers to increase productivity, and reinvesting the cost savings locally to raise wages and work standards—just one example of how companies are looking across local supply chains to find ways to improve business performance, and have a positive impact on the communities where they operate.

Similarly, new opportunities exist for locally focused partnerships between for-profit and nonprofit organizations to advance creative approaches to long-standing problems. In India, my company, Abbott, is partnering with the global nonprofit organization PATH and local rice millers to expand the market for fortified rice. In a country where rice is the staple food for 65% of the population, fortifying rice with vitamins and minerals holds great promise for addressing the pervasive local problem of malnutrition.

Leveraging core business expertise and resources in new ways

Companies are thinking beyond traditional philanthropy to apply their unique products, people and know-how to build local capacity and address specific issues that align with their business. One example is IBM’s Corporate Service Corps, which sends hundreds of employees to emerging markets to tackle local socioeconomic issues through information technology, while gaining cultural proficiency and increasing leadership skills.

In Haiti, Abbott scientists and engineers are working with Partners In Health to build a new food manufacturing facility that will create local products to address severe malnutrition. Similar to our work in India, the goal is to apply our expertise to help address a critical health need, while spurring local economic development.

Harnessing market forces to address societal needs

Many NGOs are looking for new and innovative ways to ensure their interventions are sustainable. Partnerships with for-profit companies are integrating market-based solutions, and new hybrid social enterprise startups are embracing both social missions and reasonable financial returns.

CARE's President and CEO Helene Gayle said it best when she used the parable of fishing to illustrate this philosophical shift: going from giving a fish, to teaching people how to fish, to looking at why there aren’t enough fish to begin with—and fixing that problem. Reflecting this approach, CARE’s poverty-alleviating efforts leverage private-sector resources and provide technical training to help people start small businesses to provide long-term sources of income.

Further growth and expansion of these types of partnerships, as well as new business and nonprofit models, hold tremendous promise for addressing longstanding, previously intractable social problems. Further cross-sector collaboration also exposes people to new ideas and expands the boundaries of what’s possible—which can help to catalyze change across an organization’s broader operations.

Perhaps the biggest benefits are the ones we can’t imagine yet. By taking a new look at what it means to be a business or a nonprofit and applying these learnings in creative new ways, we’re leveraging the unique assets of each to get the best of both worlds. This holds great potential for unlocking the ingenuity of people in countries around the world—and for opening up new avenues for innovation. Given the accelerating environmental and social challenges we’re all facing, this is exactly what is needed to keep our businesses and communities healthy in the years ahead.

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