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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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  • Sstuder

    I work for a social venture company. Social venture companies are a cross between traditional for-profits and a non-profit as it uses profits from the sale of a product to make social and/or environmental differences. In essence providing for growth and company benefit while working like a self-sustainable non- profit. Win/Win for everyone. B- corps are the wave of the future:

  • Reynolds Anthony Harris

    Totally agree -  I'm working with a local BOD here on their consideration of moving to a B-Corp structure or at least adopting the principles for now.

  • Bunmi A.

    Well stated. There are 2 trends and a suggestion i have for companies wanting to do this "good work". 

    The first trend I'm noticing is that companies want to volunteer without providing some financial commitment to the organization. In a time where non-profits are being scrutinized for their use of funds and social investments are in high demand, non-profits can not afford to plan lofty volunteer projects for free. It takes time and human-power to put those together and make it meaningful. 

    The second trend I see is that environmental responsibility is becoming the sole focus of business philanthropy. In a way, it's the easy way out of having to deal with social problems (ie domestic violence, homelessness, education inequality, etc). I understand that businesses want to do "good" according to what their values are...but to me, social and environmental responsibility go hand in hand. 

    Last suggestion/thought I have on this is on the notion of advocacy. Recently, I heard the head of Mary Kay's foundation speak at a conference. He talked about how Mary Kay lobbied Washington to pass critical bills around the issue of domestic violence and breast cancer. They have made significant headway around this issue from a systemic level. I believe that if a company has an opportunity to impact change on a systemic level, they should do so. Many of the social issues we face will continue if there aren't institutional/systemic changes..and often times companies (together with non-profits) can reach the right people to address the core of the issue.

  • Johnm4douglas

    Wishful thinking... Businesses chase after profit. IBM is doing that to gain entry on new markets...

  • Bunmi A.

    I don't think there's anything wrong with this. That's the nature of business--to make a profit. If they didn't then they wouldn't be able to do their philanthropic work. As long as their businesses aren't making things worst or hurting anyone, then they should totally go for new markets. This is like asking a basketball player not to bounce his/her ball. I talked about this in a post i wrote for VaultCSR. If you are interested, feel free to read:

  • Adam Zand

    Great to put some pressure or encourage corporations do give back to communities that keep them in business. In my previous work life of Development Director for a Boston-area nonprofit, I found Govt. support (AmeriCorps & Mass. Legislature) and foundations (some independent/some with corporations) to be what kept our programs operational.

  • Student

    Wonderful article. Coordinating cross-sector collaboration is exactly what I wish to continue doing once I graduate. 

  • Pa

    Great read! Always good to see pharma companies on the right track with social innovation. Does Abbott do most of its citizenship work through partnerships with NGOs and nonprofits?