Too many entrepreneurs with a social conscience truly believe that they want to launch a non-profit organization to enhance their business. Aligning with a nonprofit organization potentially enhances the business’ branding because of the good feelings attached to their perceived social awareness. The strategy creates better storytelling as it connects with their audience. Undoubtedly, non-profit organizations have an explicit purpose. That structure provides specific accounting advantages in accomplishing that explicit purpose. Having the ability to beg for money and only answer to hand-picked cronies is clearly not the explicit purpose. In fact, fundraising is hard work which often takes leadership’s focus away from delivering maximum value to customers. So, should non-profit and for-profit organizations work together?
Organizations who wish to operate values-driven businesses with a social conscious have assorted options for business structures. The most essential component is navigating the ability to deliver tangible value to a target market, as opposed to begging for money to run a social program. To execute an effective business model with feel-good outcomes, collaboration between organizations with explicit and complimentary missions is a winning tactic. Connecting two complimentary organizations with aligned goals allows both organizations to accomplish more together. They also can meet the individual goals of their stakeholders.
The story that both organizations present to the marketplace must be aligned from a marketing perspective. Beyond showing up at press events hand-in-hand, their combined messaging, target markets, and services has to be intentionally coordinated. Equally important, identifying opportunities to leverage resources maximize the joint contribution. Particularly concerning marketing efforts, communicating more broadly toward two separate, yet aligned audiences, grow opportunities to increase awareness for both entities. For example, if both organizations involve education, then combining for-profit services that improve students’ academic performance along with philanthropic advocacy for parental rights creates synergy that builds family values in a community.
In some cases, a specific joint structure, like a formal partnership may be the best solution. A nonprofit organization that receives funding based on the quantity of people they serve, can reasonably sub-contract with a for-profit, service providing partner to deliver the service efficiently. Considering that the non-profit may need to pay taxes and benefits for having in-house resources, the outsourced partner can be positioned to offset many other operating costs. Furthermore, the for-profit entity may be designed to drive increased awareness leading to more individuals receiving the services. Cost effectively delivering more services is clearly a win-win.
Key to effective partnering is recognizing that a non-profit organization is a tax status, not a business model. From a partnering perspective, non-profits can contribute built-in advantages with regards to storytelling. Successful nonprofit organizations understand that with respect to contributors, they cannot pull the purse strings until they tug at the heartstrings. The emotional connection in operating with their mission at the forefront, reflects another advantage. A sense of community results among clients from the feel-good perspective of working with a non-profit. This belief offsets the typical assumption that only profits drive conventional business activities. Optimally, the joint businesses both prioritize delivering cost effective service within their operations. The non-profit partnership allows the message to be accepted more easily.
Ultimately, the customers’ perspective prevails! The benefit of the collaboration’s nonprofit piece is the operation’s inherent emotional connection. From a marketing perspective, better storytelling directly links to effective fund-raising, in addition to attracting customers for the organizations’ services. Combining warm feelings in messaging with a for-profit partner delivering great results allows both entities to maximize each other’s strengths. Fundamentally, bringing the two structures together intentionally to maximize value is the goal! Combining individual strengths in terms of storytelling, branding, and operations achieves the goal most powerfully. The profit or non-profit business model becomes less relevant when the customer is best served and more value benefits the organizations, customers and community.
By Glenn W Hunter
Managing Director of Hunter And Beyond, LLC