Public-private partnerships have become all the rage. Over the last decade, many government and donor agencies have looked for more efficient ways to leverage their declining resources, and for many, these partnerships have seemed like a effective solution.
The phrase “public-private partnership,” however, is widely misused. It is often used to describe a variety of relationships that are, in fact, much more complex than the term implies. Perhaps most importantly, the term doesn’t reflect the involvement key stakeholders, particularly nonprofits.
The definition of PPPs is a contract between a public-sector agency and a business through which both parties assume substantial financial, technical and operational risk. PPPs can be a very effective tool for development; in many cases this is how drugs are developed, jobs are created, and development innovation takes place.
Whileinternational donor agencies are prioritizing partnerships that leverage the skills, resources and networks of the private sector, these agencies rarely implement the programs themselves.
Instead they provide contracts or grants to nonprofit or private development organizations to conduct efforts on their behalf, albeit with significant technical and managerial oversight. These implementers usually develop close working relationships with corporations, thus serving as the linchpin between the donor agency and the corporation.
In researching my book, Expanding the Pie: Fostering Effective NonProfit and Corporate Partnerships, I developed a clearer picture of the vital role nonprofits play in these types of partnerships.
As the figure shows below, there is often an overall agreement, often called a Memorandum of Understanding, among the three parties that outlines general expectations and key objectives (blue dotted line). The nonprofit often receives funding (green lines) from both the government agency and the business, so separate agreements are required placing greater financial and reporting requirements (purple lines) on the non-profit.
What should be clear from this picture is that the implementing nonprofit is often the vital beating heart of a partnership – a fact that is not captured in the bilateral nature of the term “public-private partnership.”
I believe these types of three-way partnerships – among a government agency, a nonprofit, and a corporation— shouldn’t be called PPPs. Rather, I classify these relationships as tri-party partnerships or multi-stakeholder initiatives.
Through researching these partnerships, I also came to see how nonprofits add significant value to these initiatives through their brand, their relationships with local stakeholders, and their technical knowledge.
In many cases, it is nonprofits themselves that have the primary relationship with the corporation; indeed, they are often the ones who introduce the corporation to the government agency. Nonprofits also bring their own financial and in-kind contributions to these relationships, which are often not captured in existing reporting frameworks.
There are two main reasons that the role of nonprofits are not fully appreciated. First, nonprofits are not proactively articulating their added value in these relationships. Second, the type of work that nonprofits undertake in many cases is often undervalued, particularly by corporations, who do not have experience as on-the-ground implementers.
For example, when companies first began to try to tap “base of the pyramid” markets, many assumed they had to lower their prices to increase sales. Generally these companies did not take the time to learn about the social or cultural factors that inhibited people, particularly women, from being their customer, sales agents, or entrepreneurs in their supply chain. As a result, they saw no reason to work with nonprofits that have expertise in these areas.
This model is changing, and companies are working together with nonprofits and governments to understand that base-of-the-pyramid business models are more complex than originally thought.
So why does it matter that nonprofits are left out of the PPP limelight?
I believe that if the development community wants to scale and replicate partnership models, we need a clear understanding of the contributions of different stakeholders. Undervaluing the role of the nonprofit implementer gives a distorted picture of how these partnerships function.
Therefore the purpose of bringing nonprofit contributions to the fore is not just to give nonprofits the credit they deserve. Rather, it will enable partners to better understand what investments (e.g. costs, staffing) are needed to design and implement successful cross-sector partnerships.
Having a total picture of the contributions that make up a successful partnership is important because, to date, there has been less attention focused on evaluating the effectiveness or “health” of different partnership models.
Given that these types of partnerships are likely to remain popular in the coming years, nonprofits should work to increase their own visibility.
To do this, nonprofits should be better able to articulate their value-add, both quantitatively and financially. This would require a nonprofit to conduct a serious assessment of their organizational assets, core competencies and comparative advantage, enabling them to develop a clear value proposition.
If we hope to realize the promise of these partnerships, then, we need to begin with an honest assessment of what each party brings to the table, and that starts with acknowledging the role of nonprofits.
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