CB BureauImagine a profit-driven multinational corporation mapping its next investment target and an impassioned non-governmental organization (NGO) championing a bold environmental agenda in the same boardroom – a recipe for disaster, you might say. For all the talk about cooperation and partnership between the private sector and NGOs, they do not really work out, do they?
There are reasons to believe that the NGO”business relationships can and do prosper, with the right strategy and approach. This article examines the shift towards strategic partnerships and looks at key success factors behind such partnerships in Asia Pacific.
Organizations are moving beyond corporate philanthropy to partnerships with NGOs that have a strategic and long-term purpose to both social development and business objectives. With corporate philanthropy, there is typically little interaction between the donor and recipient, limited two-way exchange of knowledge and resources, and most significantly a lack of strategic business interest for the company. Without the business rationale, philanthropic donations may be relegated to just a ‘do good’ effort that may be reduced or even suspended during difficult economic times.
Corporations and NGOs are starting to rethink and change their relationships to focus on making the ‘investment’ work for the social agenda as well as business goals. Social investment through the joint efforts of both parties can achieve so much more than cheque-giving. This is made possible by bringing together different skills and perspectives, which creates what I call the multiplier effect in the socio-economic setting. The multiplier effect begins with the outreach to a community that is usually led by the NGO. Through community development programmes, such as healthcare initiatives or microfinancing that improve the quality of living and alleviate poverty, the community is able to consume more goods and services. With time and effort, the positive cycle becomes self-sustaining as the community gains access to livelihood opportunities and becomes active members of the market economy.
In a survey by the Economist Intelligence Unit, NGOs are placed at the top of the list for being the most important ‘non-traditional’ stakeholder group to businesses. According to the report, while reputation risk management has been and continues to be a key reason for partnerships, more companies are seeing direct commercial benefits in cooperating with NGOs. From the perspective of the company, partnership usually stems from a desire to mitigate the reputation risk of being labelled negatively by the NGO. Whilst being a perfectly legitimate reason for partnership, bringing it to the next level by developing a common objective achieves greater good for both parties and builds a more balanced relationship, which in return further mitigates the reputation risk. Companies may feel that the close partnership will cause unnecessary friction and animosity due to conflicting ideals. Seen from another perspective, however, the partnership lends credibility to the company’s sustainability initiatives due in part to the critical surveillance of corporate actions by the NGO.
In the remaining part of this article, I will highlight examples of NGO”private sector partnerships in Asia Pacific that are built upon three key success factors: strategic integration of social development and business goals, trust and respect, and commitment.
Having a strategic integration of social development and business goals forms the bedrock of sustainable NGO”business partnerships. Before embarking on the partnership, both parties must identify their own goals and communicate that information to each other. While the goals can and are likely to be different, a common objective must be established. Often the NGO might find the profit motive of corporations conflicting to their development goals and they do not wish to compromise their values. At this stage, it is worthwhile to take a step back and review the broader agenda and ultimate objective. If both are willing and able to commit to achieving a specific outcome and the individual interests do not impede the successful delivery of that outcome, then there is more reason to cooperate than refuse.
The Unilever”International Development Enterprises (IDE) Vietnam partnership is an example of a cooperation embedded in strategic social and business goals. IDE Vietnam and Unilever launched the Lifebuoying Hands campaign to improve children’s health in rural areas in Vietnam by encouraging hand washing with soap among children. IDE saw the benefits of collaborating with Unilever, which included product resources, marketing experience and, very importantly, the long-term sustainability of the programme after the intervention phase of marketing and education was phased out. The sustainability was made possible by the increased demand for Unilever’s Lifebuoy soap, which was introduced in the campaign. For Unilever, the partnership was strategic as it not only boosted its market presence in Vietnam but also raised public awareness of its corporate social responsibility and increased access to future partnerships with government authorities or developmental agencies.
Another example is the ANZ Bank”UNDP partnership for microbanking in Fiji. The ‘Banking the Unbanked’ initiative is a financial and educational programme that provides commercial banking services to rural communities in Fiji as well as financial literacy training to educate the local people on sound financial management. For ANZ, the strategic rationale for entering the partnership is clear: building a financially stable and prosperous community in an otherwise overlooked market creates new business opportunities. UNDP brings onboard the expertise of operating microfinancing schemes in developing nations and assists in managing government relationships and designing financial literacy programmes.
Trust and respect are key elements of a successful partnership that are often the hardest to develop. A clear and transparent contract with a fair distribution of roles and responsibilities sets the foundation for the partners to interact on mutually agreed terms. While the exact dynamics differ on a case-by-case basis, the partnership should avoid heavily skewed relationships in which there is a severe imbalance of ownership and resource or operational contribution. The partnership between Coca-Cola and the United Nations Foundation in the post-tsunami reconstruction effort serves as a useful example.
Both parties wanted to move beyond traditional corporate donations, a shared sentiment which led to the secondment of a Coca-Cola employee to the UN office for a year. It was a move that brought real action into the often touted ‘partnership for development’ and allowed both parties to experience firsthand the challenges and rewards of building trust and mutual understanding. In the words of the Coca-Cola employee, communication with partners required ‘engaging not just with the believers but also with the critics, the unconvinced, the suspicious, the people who see the world a different way.’ Both parties must be willing to listen, experiment with new ways of doing things, and plan for the long term. Measurement and evaluation should be built in from the beginning so that all involved are clear about the progress, milestones and impact.
Another example of building trust is the Unilever”Oxfam partnership. In 2003, Unilever and Oxfam formed a joint research team to explore the links between wealth creation and poverty reduction in Unilever Indonesia’s operations. The partnership was a major step for both organizations in terms of the depth of engagement. For Oxfam, it was their first time to examine in great detail the motivation, trade-offs and choices that businesses make. The two-year partnership saw both parties engaged in many intensive and challenging debates that pushed them to open up, challenge entrenched views and explore alternative views. Oxfam and Unilever came to understand that while their missions and goals may differ, they shared a commitment to contributing to poverty reduction and economic development. The partnership enabled them to appreciate their differences and understand the limitations and opportunities of corporate stewardship.
Commitment through thick and thin can be a demanding task that gets easier once the above two criteria are fulfilled. For the company to remain active and committed, support from the senior management is necessary. Again, the prioritization of the partnership on the management’s agenda will be strengthened if the strategic integration with the business is clear. Going back to the ANZ example, the rural banking programme in Fiji has grown over three times in deposits in less than four years, and the services are now extending to two more remote islands of Kadavu and Taveuni. With the synergies of the UNDP partnership well established and more growth potential in the Pacific region available, ANZ is clear in expressing their commitment to rural banking in Fiji and to continuously strive to make this programme sustainable for future continuation. Besides top management support, commitment also comes from the participation and ownership by the employees.
The Accor-ECPAT International partnership to fight against sex tourism involving children has been a defining trait of the hotel’s operations since 2001. ECPAT is a global network of organizations and individuals that work to eliminate child prostitution, child pornography and trafficking of children for sexual purposes. In the service-oriented tourist industry, effective implementation of the partnership is only possible with the engagement of employees across all levels. Over 10,000 Accor employees are trained every year to recognize high-risk situations. The skills required can be challenging for some employees as it requires astute monitoring and quick reaction to the situation on hand. The programmes at Accor are largely driven by the Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism, a project which joins the tourism private sector and ECPAT in preventing sexual exploitation of children at tourism destinations. The creation and development of the Code was actively led by representatives from the hotel industry, which made it meaningful and practical for the companies to implement, thereby reinforcing the sense of ownership.
Each NGO”private sector partnership is uniquely defined by specific goals, timelines and resources. While the size and scope may differ, successful partnerships share the common values of trust, commitment and strategic alignment. As society demands greater corporate accountability in sustainable development, the move from foe to friend, from adversary to cooperation between NGOs and corporations, is likely to grow in Asia’s fast developing economy.
The article was originally published in CSR Asia. The author can be contacted at jill.chin@csr-asia.com