As philanthropy goes global, corporates find new value in NGO partnerships

Data from a new study suggests that corporations view partnerships with NGOs, especially U.S.-based nonprofits, as a smart business investment, writes Global Impact CEO Scott Jackson.

In the more than 20 years I have spent working in the international development sector, I have seen corporate giving transform from simple philanthropy to companies seeking to become true partners in addressing global challenges alongside NGOs. These corporate-nonprofit partnerships will pave the way to the future of global development.

Corporations are changing the way they are engaged in international development, adjusting their corporate social responsibility strategies to reflect business and stakeholder interests. According to data from the Hudson Institute, corporate investment in developing countries was at least an $8 billion industry as of 2010. We expect that figure to grow as more U.S. companies expand into global markets and hire more employees overseas.

As corporations become more global, so does their giving. Their corporate giving strategies reflect where their employees, customers and other stakeholders are located; global philanthropy by corporations reflects the scope and scale of foreign operations. Many corporations that are working in the global space are looking to nonprofit partners to affect change and further international development efforts.

A recent study, commissioned by Global Impact and performed by the Indiana University Lilly Family School of Philanthropy, found that a company’s financial performance in a given country is one of the key factors that influences the company’s charitable giving in that host country.

The study, titled “Giving Beyond Borders: A Study of Global Giving by U.S. Corporations,” also found that companies were moved to give to projects and communities in a host country where they saw a need.

In addition, the study proved that companies with more overseas revenue made more international gifts, and gave more to the international sector compared to companies that made less in the international market—this is something we have heard anecdotally before, but the first time hard data has been found to prove this is the case.

The study specifically examined factors that influence corporations in their decisions to invest in projects, organizations and communities outside the United States. The study addresses the nature of corporate-nonprofit partnerships, qualities that companies look for when searching for nonprofit partners and what makes partnerships successful.

“Giving Beyond Borders” showed that, when creating their giving programs, companies tend to align their business goals and the charitable passions of their stakeholders. In fact, the report explains, corporations seek nonprofit partners that align with their own philanthropic and business goals in the following categories: mission (77 percent of study participants responded this way), geographic footprint (51 percent) and focus area (40 percent).

Furthermore, the main attribute companies look for when selecting a nonprofit partner is a demonstrated record of producing effective and efficient results (68 percent of companies responded with this as their top concern). After this, corporations weigh a nonprofit’s accountability (25 percent), reputation (17 percent), and size and capacity (6 percent).

The study also found that, when giving overseas, companies demonstrate an overwhelming preference to do so through U.S.-based nonprofits (93 percent of companies responded this way). Companies also like to give via foreign organizations that are the equivalent to U.S. NGOs (63 percent of respondents used this method).

This data suggests that corporations view partnerships with NGOs, especially U.S.-based nonprofits, as a smart business investment. For charities that are suffering in the soft U.S. economy and seeing less funding from the government, the study findings imply that they would be wise to look toward forging sustainable partnerships with corporations. However, for the best chance of establishing such a partnership, charities must do their homework; before approaching corporations, charities should make sure their mission aligns with the company’s priorities. Also, charities should be prepared to use data to demonstrate their history of impact and effectiveness to establish partnerships with results-driven corporations.

Both corporations and NGOs seek support from each other. Corporations look for smart, relevant investments on the ground, while NGOs look for expertise and new resources corporations have to address local community needs. These partnerships, which seem to be mutualistic relationships, will form the basis of the future of global development; understanding what makes them successful is a vital piece of the puzzle.

It is impossible for any single group to address global issues alone; solutions to the problems our world faces (such as food security, climate change, water shortages, pandemic diseases and unemployment) are exceedingly complex. As public funding dwindles, international nonprofits must partner with businesses to address these global issues on a larger scale.

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