Welcome to Charity Navigator's Blog!

The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

Return to Main Site   |   Find a Charity   |   Receive Email Updates   |   Support Charity Navigator

Tuesday, July 2, 2019

Nonprofits & For-Profits: A Match Made in Heaven?

Whether it be knowing that their coffee beans are a product of fair trade, or that the packaging they come in is made from recycled products, consumers are increasingly expecting goods and services that fulfill their initial need and attempt to improve the communities that they are profiting from.

Partnerships between nonprofits and for-profit organizations are becoming more and more popular as consumers continue to seek out ethically conscious businesses.

How exactly can these partnerships function? According to Nonprofit Information, these relationships should benefit all parties involved. The nonprofit organization should see increased success from the association with that particular company and vice versa.

One innovative partnership that garnered both positive and negative attention in the news was charity: water’s decision to accept Uber, WeWork, and Casper stocks to a program called “The Pool,” where a portion of those shares are donated to charity: water, which is then reinvested into their employees’ bonuses. Currently, that would be split between 78 employees. 

There are two sides to this particular partnership. On one hand, it seems to be contradictory. A nonprofit is defined as “not making or conducted primarily to make a profit,” which essentially means giving to others before yourself. Yet, on the other, as the founder of charity: water, Scott Harrison, points out, “it seemed unjust that the tech-savvy millennials working at charity: water should toil away on nonprofit salaries while their friends got rich” for comparable work. 

The above is just one example of a for-profit/nonprofit partnership. Craig Kielburger, the co-founder of WE, discussed with Forbes about how it can actually further the mission of an organization. Kielburger focuses on child labor, stating;

“To have a real impact, companies need to address the root cause, which is desperate poverty. Companies must take responsibility for the welfare of the communities where their suppliers are located. I’m not suggesting that all businesses start charities. But in accordance with Goal 17 of the UN's Sustainable Development Goals, "Partnerships for the Goals," for-profits can and should work with development organizations, pooling respective talents, resources, and networks. There’s a host of opportunities for successful cross-sector marriages.”

He goes on to cite partnerships such as Bata Shoes and the UN that created a program called the Rural Sales Program, facilitating economic opportunities for women in Bangladesh, as well as Unilever and the WE foundation, “implement[ing] financial literacy training for 80,000 women harvesting tea in Kenya.”

Inspired (https://www.inspired.com/), “a lifestyle brand that transforms the things we do on a daily basis - like swiping a card - into opportunities to do good, feel good, and experience more,” has built a brand off of the demand for ethical capitalism. Essentially, the app, once linked to any debit or credit card, will utilize a portion of the transaction fees to donate to a cause that you’re inspired by at no expense to you. As Inspired states, “every single time you spend, we’ll donate on your behalf. All donations are covered by Inspired, so it’s 100% free to you. Seriously, that’s it. You spend, we donate, and together we’ll change the world!” So, a simple coffee at Starbucks can “spark” a donation. Inspired makes revenue through their partnerships with payment companies, receiving a portion of the fee that the said company charges, for instance, Starbucks, for every card transaction, while a portion goes to the organization of the card user’s choice. 

Katherine Hildebrandt, Marketing Assistant at Inspired, believes that these partnerships are not only possible, but serve a necessary function. She told me that Inspired “really leans into the ‘do good, feel good’ model, because what we allow people to do is really feel the benefit of being charitable and making a difference, but without having to spend an arm and a leg. It removes a lot of the guilt that’s inherent in the giving process, which is a helpful way to get people more involved.” Through this model, all parties benefit simultaneously. 

That being said, before siding with either argument about nonprofit and for-profit partnerships it is important to truly consider both perspectives.

What do you think: Are nonprofit and for-profit partnerships possible and sustainable? Is there an ethical line that shouldn’t be crossed? What should be the guidelines, if any at all? Comment below!

This post was contributed by Jessica Cunha, a Digital Marketing and Fundraising Intern at Charity Navigator. Jessica is currently studying at Emerson College in Boston, Massachusetts as a Political Communication Major with minors in Nonprofit Communication Management and Public Diplomacy. She believes that nonprofits play a vital role in the world and is passionate about Charity Navigator’s mission to identify charities the public can trust and support.

As a 501 (c) (3) organization itself, Charity Navigator depends on public support to help donors make informed choices. Please consider investing in the future of Charity Navigator by making a donation today.  Donate now >>

No comments: