Simon Heap
Great Britain

Emerging global NGO-busines relations

Aim: to outline the key issues for NGOs considering engaging with the private sector as a development strategy.

INTRAC

    INTRAC, the International NGO Training and Research Centre, is based in Oxford, Great Britain. It was set up in 1991 to provide specially designed training, consultancy and research services to organisations involved in relief and development. INTRAC is an NGO serving NGOs - an NGO Support Organisation. INTRAC's goal is to improve NGO performance by exploring NGO policy issues and by strengthening NGO management and organisational effectiveness. INTRAC runs a large programme in Central Asia and INTRAC's website, <www.intrac.org>, provides a comprehensive list of all work.

INTRAC's Research Project

    The private sector will be an increasingly important target for NGOs, yet the dynamics of such relationships has been very little researched. The aim of INTRAC's project, funded by the Ford Foundation of America and Soros Foundations in Kazakstan and Uzbekistan, was to find out whether, when, and how NGOs and the private sector can effectively work together. The research is being used by both sectors to conduct the best future strategies in engaging each other in more dynamic relationships for sustainable development and is directed at three distinct NGO and corporate audiences:

• organizations asleep on this subject who need an alarm call;
• enterprising individuals within organisations (intrapreneurs) who need evidence to help convince colleagues of the importance of the subject;
• organizations already alive to the issues, but needing help in acquiring knowledge about best practices and best options.

    The study design systematized the benefits and drawbacks of NGO-business engagements, analysed the processes at play, collated the lessons to be learned, and proffered alternative possibilities of future engagements between the two sectors. Phase One laid out the issues concerning engagements between NGOs and the private sector and provided a basis on which to examine matters in greater depth in case studies during Phase Two. Substantial cases documented in detail a number of specific examples of NGO-business relationships for analysis and comparison relating to key research questions: What form relationships take, how and why these are changing over time; what has worked; what organisational and management issues arise; and whether there are lessons to be drawn across business/NGO sectors. For NGO-business partnerships to work, they must be rooted in very practical considerations. Anything that an NGO can do to reduce a company's business risk is a potential basis for collaboration. The publications from the project show the range of sparks, motivations, outcomes, challenges, sweat and rewards of such partnerships.

Why is NGO-Business Relations a Hot Topic?

    Globalisation and the increasingly multinational nature of business and electronic means of communication has led to a reduction in the powers of the nation-state to affect development and a rise in the powers of the business community. Transnational corporations (TNCs) account for around one quarter of the earth's gross national products and with such massive resources at their disposal there is increasing recognition that with global influence comes global responsibility, as governments and international agencies are failing to deliver meaningful steps towards the protection of the world's forests and fisheries as well as the elimination of poverty.
    Tackling issues of environmental and social concern no longer rests solely with governments but has become an obligation of the business community. Does this transfer of governmental responsibilities to the other sectors lend itself to greater levels of collaboration between the private sector and NGOs? Partnerships between business and NGOs may be contemporary solutions to pressing present-day problems. Such a changed environment has implications for the way businesses and NGOs think and work. 'It is a debate that every NGO must listen and respond to, but each will do so in a different way - some more enthusiastically and aggressively than others'.
    Most interactions between NGOs and the private sector have historically occurred either to funnel money from corporate donations to NGO projects, or to express hostility, as both sectors see each other as having mutually incompatible goals. However, increasingly the two sectors are looking beyond funding and fighting, keen for mutual benefit, to explore the sharing of expertise, resources and, most importantly, agendas.

    Relationships might move through four phases of NGO-business engagement:

1. Corporate philanthropy on an ad hoc basis without complicated negotiations, and without any deeper discussion over agendas.
2. Strategic contributions: Focused private sector donations mean there are larger donations to fewer NGOs. This raises issues of whether a particular NGO is 'comfortable', 'fashionable', in the eyes of the private sector. Should an NGO's reputation be its unique selling point?
3. Mainstream involvement, linked to more immediate operational concerns. In addition to external benefits, attention is focused internally to enhance corporate staff morale, to attract both new corporate staff and NGO members and reassure NGO existing members.
4. Accountability and inclusion: a full, open and long-term engagement with all stakeholders having an interest in its advocacy and fieldwork, for example, communities, staff, public agencies and current and future generations.

    In the past, the 4 phases of NGO-business engagement were carried out in order over time, some never progressing beyond the first stage. This is no longer the only process. Today's NGOs often do not need corporate donations to get a partnership going. 'Increasingly the focus of NGOs eyes on companies is turning away from funding in isolation towards the issue of 'humanising capitalism' - perhaps the key task of the 21st century.

The Dynamics Of NGO-business Engagements

What NGOs want and what the private sector offers:

1. Cash/Philanthropy.

A) COs altruistically donate cash or goods to an NGO.

B) Differences arise between fashionable and unfashionable cause as regards finding an NGO fit. If companies only choose 'safe' causes', their actions might generate few objections, but could also have little impact.

2. Gifts in Kind.

A) Products, equipment, premises and volunteering.

B) Employees may contribute time and caring to community initiatives or use specific skills like public relations, accounting or product development. NGOs can capitalise on the skills and expertise of the individuals involved through board participation, project development or employee volunteerism.

3. Social Marketing

A) The application of marketing tools, strategies and resources to change attitudes, beliefs and behaviour with respect to a social cause or issue.

B) For NGOs, benefits include creating a powerful campaign that will influence their target audience and leveraging money.

4. Access to networks and contacts.

By using its links with the Private Sector, NGOs can gain access to the wider business community or government.

5. Technical expertise.

A) Includes IT and telecommunications.

B) The link with a company, such as telecommunications help, can be very useful to NGOs operating within the context of a humanitarian emergency.

6. Organisational structures.

Business has outstripped both NGO and government sectors in terms of management/organisational advances. It can provide new Human Resource Management skills: an innovative, risk-taking perspective, leadership capacity, and an ability to focus on making things happen.

7. Financial Acumen and Customer Focus:

The Private Sector can assist NGOs with their finances - either by contributing to their activities or by assisting them to develop ways of earning their own income. This too, would be money well-invested, for the work these NGOs do.

What the private sector wants and what NGOs can offer:

1. A Chance to Demonstrate Corporate Philanthropy.

A) COs moving from wanting to look good to doing good.

B) Stakeholder paradigm replacing that of giving money.

2. Enhanced Reputation.

A) Businesses need to differentiate themselves in crowded markets of similar manufactures and services.

B) Building up a corporate reputation can help them stand out from the crowd.

C) But reputation is the main weapon used by campaigning NGOs against companies.

3. Financial Benefits.

A) Companies with Community Involvement programmes can benefit in terms of image, name recognition, marketing position and profits.

B) No longer be simply a question of investment and technology; increasingly, it is ethics and values. The case for corporate involvement is based not just on doing good, but as being seen to do good.

4. Competitive Advantage.

Potential increased sales and profits through Cause-Related Marketing (RCM). Businesses' dual citizenship means market and social responsibilities. They are linked: if a community is healthier and has less crime and vandalism, the community will thrive socially and economically, and business will benefit though increased sales.

5. NGOs Provide a Much Needed External Challenge

A) An early warning system for societal concerns and a barometer of society's view of business behaviour.

B) Large corporations too often listen to themselves. External engagement can open up new voices, new options and fresh thinking. Partnerships increase trust and help companies improve risk management by ensuring stakeholder involvement in relevant decision-making.

6. NGOs Give Businesses Credibility in the Local Community

The opportunity to act in a socially responsible fashion; some companies have a policy stating their obligation to contribute to and participate in the communities in which they operate, and so requires opportunities to consolidate and protect company's investment in the community.

7. NGO Credibility with the Public on Issues Regarding Private Sector Involvement in a Particular Issue.

NGOs are repositories of knowledge on issues which the Private Sector could use. NGOs have specialist expertise, such as disability charities advising on disabled employee rights issues for employers or companies needing information about the lifestyle of older people or young black groups.

8. NGO Knowledge of, and Access to, a Geographic Community or target audience.

This will help fulfil business objectives, especially ones in which the company are investing for the first time. Given NGOs expertise in language, local issues and contact facilitation, this is surely an area which could lead to Private Sector engagement, especially with TNCs moving into new markets.

9. Human Resource Management Implications.

    Benefits of working with NGOs include opportunities for skills development and training opportunities; gain from the talent and skills of staff and volunteers; and insights into different management styles.
    Businesses and NGOs too often listen only to themselves. External engagement, however, can open up new voices and fresh thinking. Even though many have yet to realise it, they are made for each other. Companies and NGOs could do far more together than separately. While an increasing number of NGOs and businesses are seeking to work together, they are often perceived as being at opposite ends of concern on issues of poverty and development. Negative stereotypical perceptions run very deep on both sides, leading to mutual suspicion and resistance to change. Companies see NGOs as idealists and undisciplined by the reality of the market place. In turn, NGOs often see the image of the begging-bowl - with the majority of benefits going to companies. They view companies as having prospered at the expense of everyone else.
    For those NGOs already engaged with business, what do they hope to achieve by it? If some companies can be accused of partnering for PR reasons, NGOs can equally be accused of using partnership as a competitive tool to raise their profile among donors and to sensitize supporters. The perceived power of boardrooms and lunches with company directors attract some NGO staff, but less so their own NGOs' mission principles. Few NGOs have a united position regarding business except those pursuing a solely antagonistic route. Enough NGO people see business as "the capitalist enemy" to form a challenging constituency, but many skeptical NGO staff are shareholders through their pension funds.
    NGO-business relations are like a game of chess. While there are only a few pieces to move, there is an almost infinite variety of ways to play the game. The NGO's pieces include the supporters, target groups, or beneficiaries [Pawns], the NGO staff from the three departments of fund-raising, advocacy, and programs [Knights, Bishops and Castles], the Board of Trustees [Queen] and the core mission [King]. While lesser pieces can be brought into play, traded away, even sacrificed, the King must never get compromised and checkmated in the game with corporations. Are NGOs getting themselves stalemated, pursuing hopelessly lost end-games or actually pressing home their advantages to win? INTRAC's current research in this area suggests few NGOs know the rules, and even fewer are Grandmasters. Most of the latter tend towards environmentalist rather than developmentalist NGOs.
    That a company exists merely to maximize shareholders' profits is no longer a valid proposition. A company's impact on its stakeholders is an emerging benchmark of corporate performance since stakeholders are beginning to ask what companies can do for society, not what society can do for companies. Investors are increasingly interested in the risk factors associated with reputation. An enhanced public image through association with an NGO can increase corporate brand reputation.
    NGOs can mobilize their constituents into a coherent force, first, to urge business to do the right thing, and second, to get business to do the right thing right in the interests of their own NGO objectives. To do this effectively and efficiently, NGOs will need to reject the idea that business does not matter and pragmatically take on board the potential NGO role of manipulating capitalism for the global good. NGOs undervalue their powerful potentials: Their credible assets are advocacy, legitimacy, information, vision, and expertise. NGOs need to be educated in new ways, to reject stereotypes, not principles. Everyone would be better served if NGOs were to decide if and when to engage, and what they want, before approaching companies. Sleeping NGOs will find their policy of inertia as regards business increasingly troublesome and threatening to their very existence as businesses move on to traditional "NGO ground" in terms of both ideas and practical solutions.
    Trust is becoming a fundamental driver for partnerships between business and NGOs, but there are serious implications for NGOs if a corporate relationship turns sour, NGOs should not be endorsing companies, but engaging with them critically. This applies equally to corporations. Some of the best partnerships will come from those who disagree with each other. The world has spent many years debating what business can offer the NGOs, but what NGOs can offer the corporate world is a recent trend. The potential of NGO-business links are enormous. We can learn from those NGOs who have engaging business around the world, and I am here to learn from Russian experiences as well.

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