Giving Compass' Take:
- Here are the various ways that nonprofits and for-profits can work together to achieve social goals and advance public welfare policy.
- How can donors encourage these partnerships, and how can they make them long-lasting?
- Read more about the importance of nonprofit partnerships in social impact.
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The missions of for-profit businesses and nonprofit organizations can vary dramatically. Nonprofits typically focus on public purposes and are prohibited from distributing profits to individuals in control of organizations (what Henry Hansmann refers to as the "nondistribution constraint"). On the other hand, the ultimate goal of for-profit businesses is typically to maximize profits for shareholders.
Despite these fundamental differences, the lines between for-profit and nonprofit often get blurry. For example, within the nonprofit sector, there are many large-scale organizations (e.g., health systems, higher education institutions, etc.) that operate on a fee-for-service model and generate multi-billion dollar revenues with significant operating margins. For example, Mayo Clinic reported revenue just under $4 billion in Q2 of 2021. And while profits are a primary motivation of for-profits, busineses often make important contributions to social welfare, not only through the economic and technical aspects of their operations and activities, but also through their philanthropic endeavors.
In the United States, there is a long history of nonprofit organizations working collaboratively—which I expect will expand with the growing momentum of corporate social responsibility movements—and increasing attention to the evaluation of a firm's nonfinancial impact and environmental, social and corporate governance (ESG) reporting requirements.
This creates unique synergies across the for-profit and nonprofit worlds, where alliances and partnerships can be used to foster mutually beneficial outcomes and, more importantly, drive improvements in important social outcomes. In a world where the issues facing us are multifaceted and wide-ranging, I think it's imperative that we pool resources and work collaboratively across sectors to address our most pressing social problems.
The nature of collaborations and alliances between nonprofit and for-profit organizations can take many forms, with varying motivations and objectives, from creating partnerships around shared interests in promoting and advancing public welfare to alliances focused more squarely on increasing revenues or strategic direction for both types of organizations. Here are some of the areas I see for collaboration opportunities between nonprofits and for-profit organizations.
Read the full article about collaborative opportunities by Scott Dolan at Forbes.