Strategic Alliances

By Austin, James | Stanford Social Innovation Review, Summer 2003 | Go to article overview

Strategic Alliances

Austin, James, Stanford Social Innovation Review

Managing the Collaboration Portfolio

IT WAS NO RUN-OF-THE-MILL WOMEN'S SHOE PROMOTION. Last June, under the direction of City Year, a national youth service organization, more than 50 employees of Timberland, the New Hampshire-based footwear and apparel company, painted bathrooms, installed smoke detectors and garbage receptacles, and stained fences and outdoor furniture at Inwood House. Inwood House, a nonprofit in New York City, provides education and counseling to prevent teen pregnancy. This initiative was part of a larger effort to make Timberland's footwear line resonate with female consumers. "It's important to address not only a woman's footwear needs, but also the issues that are relevant to her as a woman," said Timberland's global director of women's casual footwear.1

Companies have historically tended to keep their philanthropic giving somewhat separate from their business operations. But Timberland and a growing number of like-minded businesses have begun integrating these activities into their strategies and operations. Consider just a few examples. Bell Atlantic deployed its technological expertise in a partnership with a Union City, N.J., school to transform the educational process. Ralston Purina joined the American Humane Association to promote the adoption of abandoned animals. Citibank worked with ACCION International to promote microcredit lending in Latin America. Strategic collaborations are proliferating.

Forces Promoting Collaboration

The emergence of these more strategic alliances reflects, in part, a rethinking on the part of companies about the role of their charitable activities and their interactions with nonprofit organizations. Two motivations appear to be propelling companies' shift toward integrating philanthropic activities into their strategies and operations. First, companies are recognizing that how they interact with communities and with social issues can directly affect positively or negatively their business success. Generating social value can be an important source of business value in many ways. The burgeoning cause-related marketing collaborations is a clear reflection of this, with such arrangements often being funded out of marketing department budgets rather than from corporate giving offices. For example, American Express partnered for three years with Share Our Strength, an anti-hunger and poverty organization, to mount the Charge Against Hunger campaign, whereby the company donated to the nonprofit 3 cents of every dollar cardholders charged during the November-December holiday season. This generated $21 million for the cause and noticeably increased card usage.

Companies have also become more concerned about the social returns of their philanthropic relationships. The focus is shifting from being charitable donors to strategic social investors. Former IBM CEO and Chairman Lou Gerstner, for instance, has focused the company's social investments predominantly on improving public education in order to increase the impact of its social sector engagement, rather than spreading its resources more thinly among a broad array of social needs.

For nonprofit managers, collaboration with other organizations is becoming increasingly central to achieving their missions. Economic, social, and political forces propel this trend. Shrinking donor pools and rising competition for scarce philanthropic funds pushes nonprofits to work with others in order to cut costs and achieve efficiencies. The growing complexity and magnitude of the socioeconomic problems nonprofits seek to solve often exceed the capacity of single organizations. Multiple competencies and new combinations of resources are needed to tackle problems effectively. Furthermore, the traditional large role of government as the solver of social ills has been shrinking. These responsibilities have shifted more toward the nonprofit and business sectors.

Nonprofits are finding new ways to join forces with other nonprofits to consolidate assets, combine activities, or share resources to operate more efficiently and effectively by eliminating wasteful duplication or providing superior services. …

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