AN OPEN DIALOGUE ON CROSS SECTOR PARTNERSHIP
Following are exerpts from a Phillips Oppenheim roundtable on Cross-Sector Mobility on Cross-Sector Partnerships.
"I think that partnerships are clearly going to be fostered by the cross-sector mobility of people themselves, and that in fact its going to take people moving across the public, private and nonprofit sectors to invent new ways of communicating across three very different cultures.
"I first met Bill Donaldson when I was running the Public Management Program at Cornell University. And in those early days, the Yale School of Organization and Management (SOM), of which Bill was a founder, represented a paradigm that previously had not existed. When SOM was created, the notion in the field at the time was that there were business schools and there were public policy programs --like the Woodrow Wilson School and the Kennedy School--, and never the twain should meet. The development of SOM was literally revolutionary. And a lot of the Yale alumni were indignant that this would be done. And those on the public sector side questioned the relevance of a curriculum in the business sector to running a nonprofit enterprise, or one in the public sector. And we must remember that this unfolded only about 20 years ago, not a long period of time. So the trajectory has unfolded with quite a rapid acceleration."
"I agree. One does have to take a step back and look at these issues within the context of what is going on overall in the country, both now and in recent history. I would say that the first hints I had of this [the desire for cross-sector mobility] were when we first started the Yale School of Management 25 years ago and we had 50 initial places and 5,000 applicants. And these were applicants, half of whom could have gotten into any law, business, or public policy school in the country. What did that mean? Well, to me it said that the concept of a career with some time spent in the public sector and/or the nonprofit sector was very appealing to many people. And that even those who would seek to stay in the private sector, wanted to be prepared to work in new ways; to do some things that had not been done."
Westina Matthews Shatteen
"One of the things that strikes me is that the loyalty between employee and employer that found individuals committing to 25-30 years in one place, no longer exists in the corporate, public, or nonprofit sectors. Corporate executives are downsized during mergers and acquisitions. Career government officials face term limits. There's no longer a place for long-term assurances. This is true in the nonprofit arena as well. But in the end what stays the same is that you still bet on people. That is what you are counting on. So the leadership and talent have to be able to cross these three sectors. And I believe that is what is fundamentally changing the dynamics of these partnerships and opening up the possibilities for new and more innovative relationships."
"I also think another factor driving the prevalence of cross-sector mobility is the fact that we are living longer, and therefore have opportunities for multiple careers. We see this fact playing out with baby boomers now. This raises the question of how do you then keep these workers down on the farm in corporate structures of old.
And the answer is that you don't keep them down on the farm because the corporate pyramidal structures are breaking down. Corporate America knows they have to do something else for their people, or their people are going to go off and do something else which satisfies an inner urge."
"And we now sometimes see corporations in fact encouraging this cross-sector mobility. For example: We recently got three executives from CISCO Systems, who are wiring our last remote field offices in Rwanda and other places into our intranet. These are all people who were laid off in the latest round of staff cuts at CISCO, and CISCO has offered to provide them, and others who will be working for approved philanthropies, with half salaries, health benefits, fringe benefits and so forth. Not only does this type of partnership benefit Save the Children, and the laid-off employee, but it works for CISCO in that it shows current and future employees that CISCO is a company that is thinking about them and doing the best that it can under difficult circumstances. It's a win-win proposition for all, which is of course what successful partnerships must be about."
THE HUGE CROSS-SECTORIAL DIVIDE OVER VALUES, INCENTIVES AND CULTURES
"While I agree that cross-sector mobility is going to help bring the sectors closer together (and in fact believe that we already see it happening and should be grateful for it), I am a bit more skeptical about the ability of individuals to change institutions by themselves. There needs to be some attention paid to strategy, policy, and structure. This is where I confront some reservations about just how far along we really are."
If you look at culture and vocabulary across the sectors, the incentives that drive people to do things are articulated very differently. On the extreme side of the nonprofit sector, you have notions of justice that really drive people to do the work that they do. On the side of the corporate or entrepreneur-type entity you are dealing with profitability as the major driver. These divides are huge. Even the notion of time, delivery, and evaluation are extremely diverse, and often conflicting, from sector to sector."
"Henry is making an important point. I think sometimes the fact that each sector has each picked up on the other sectors' language papers over the fundamental values differences and tremendous distrust that exists between the sectors. On the international stage there is a visceral fear and distrust about globalization, about the value divide being too great between the "corporate sector"--characterized by some as only interested in money--and the "values-driven sector", which says, "We care about poverty reduction, and you don't." So there is a schism here. This, as a backdrop for building partnerships, is a very sobering one."
"It's also true, however, that the nonprofit sector often doesn't give value to the fact, or recognize as legitimate, that for-profit companies are out there to make money. And while the nonprofit company has to make sure that in these partnerships it is not being used for private benefit, it does perhaps have to help find ways to redefine the concept of win-win. This way, while the for-profit goes about its business of making money, it can do so in a way that encompasses some of the nonprofit's values, and helps address critical social issues."
"Until the bottom line is agreed upon, the partnership is pretty well doomed."
"I believe this is why, at the Conference Board, we are seeing such an increase in 'strategic philanthropy', which aligns a for-profit company's philanthropic experience with its business strategy. Beyond the notion of good corporate citizenship, these corporations derive many benefits from partnering with the nonprofit and public sectors, such as employee retention (which has been mentioned) and management training. We have seen companies like UPS send their managers out for long periods to lend their talents to nonprofits, hoping they come back with a sense of how to deal with diverse publics. Companies go into communities in which they are not typically engaged and form partnerships with local community development corporations. This helps them develop their reputation in the community, while building a market share there. These are strategic partnerships beyond the traditional philanthropic endeavor."
"But when you talk about 'strategic philanthropy' both from the corporate perspective, and that of the private foundation, you're really talking about these entities making strategic choices in selecting the market and client with whom they will partner. Because strategic philanthropy, in a larger sense, is about saying no to all of the good things that you 'could' be doing but that you choose not to do. And among those things that you choose to do, assessing whether you've made an impact. That's when you find out whether or not it was strategic. Did you make a difference and were the tactics that you chose effective in meeting your objectives?"
Nonprofits, Therefore Must be Equally Strategic in Articulating their Value and Careful in Choosing their Partners. Finding the Right Match is Crucial.
"I believe that often nonprofits underestimate their value, and in so doing then have a hard time articulating that value to the corporate or public entity with whom they seek to partner. If you understand what you have on the table that will benefit the potential partner, without qualifying your values, then I think it is much easier for you to go forward and work out a sound partnership deal. American Express, for instance, spent $7 million of their own money to advertise us, because they saw the value in it for them.
So when you're thinking about a partnership, you must take a strategic look at what you have and what they have, and how you can find mutual benefit for each other. And when I've found that connection, I have not found corporations wanting to destroy my or their value in the process."
"I have heard people talk about the 'hedgehog theory': the tendency of nonprofits to run wherever the money is, forgetting their focus. This is unfortunate and dangerous. The corporation becomes the tail wagging the dog."
"However, I'd like to add some understanding of that one from the other side as well. Big mistakes are often made when some nonprofit believes that they really have something of value for XYZ company, and XYZ company doesn't think so at all. Of course all nonprofits believe they've got something special. But they have to match themselves with the right partner. It's about getting inside your potential partner's head, and looking at it from their point of view."
"In terms of process, we scan thousands of companies and hundreds of foundations and then select those where we think there is a win-win proposition. But before we go to anybody, we try to think through what's in it for them, and obviously what's in it for us. They are looking for customers, visibility, access, cost reduction. They are looking for the same things we are. So we don't just go say, 'We are a good cause, please support us.' We say, 'We can help you increase the longevity of your staff, or get access to a new market segment you didn't have before or solve some other problem.' This must be the way a partnership works, or it's not going to go far."
But How are These Partnerships Best Initiated? Who Takes the Lead?
West ina Matthews Shatteen
"The old rule use to be the Golden Rule: 'He who has the gold, makes the rules.' As a corporation, you would sit at the table and say, 'OK it's my money.' But a real partnership for systemic change has to be about sitting down at the table as equals and saying, 'This is our business approach. This is what we value. What do you value? A nonprofit should never have to change its mission or compromise its integrity for the sake of corporate interest. Systemic change must be about a long investment over time, and it has to be so flexible along the way to take in all the things that will happen over time: world events, local events, changes within the corporation and nonprofit."
"I think with some of the examples that I have sited, one would be hard put to say whether the initiative was corporate, government or nonprofit in nature. But I'd just like to emphasize the obvious point that not all nonprofits are the same, and not all corporations are the same. Save the Children is a large world-wide nonprofit with brand recognition, access to celebrities, and so forth, and so we have ways of relating to corporations that allow us to identify all kinds of win-win propositions. These options, however, are often not available to our community partners who may have a $6,000 budget and on and on. So I think one issue that hasn't been put on the table is that it is much more difficult for small struggling community organizations that don't have the same opportunity to help a corporation with their challenges. How will those partnerships work in this reallocation of markets?"
"I see most of the initiatives from the large corporations being initiated by the corporations themselves. The nonprofit can come knocking on the door, but I don't know very many partnership proposals of any real substance that get started by a nonprofit making a proposition to a corporation. It's more likely that the corporation has a sense of what they want to accomplish in the marketplace and then they go and find the appropriate partners. However, it is true that sometimes there will be an organization that a particular corporation likes-- their basic mission and philosophy--and will sit down with them and say, 'OK, where do we overlap.' So I do think there is a room for entrepreneurship in the actual process of developing partnerships."
"Like Susan, my observation in recent years has been that I see the funders driving the partnerships. I certainly think this is so in the private foundation community more than ever. You increasingly see major resources dedicated to initiatives that are really by 'invitation only.' There really is no such thing anymore as competition of best innovation. I think this is extremely unhealthy, but I do see it as the prevailing mode of doing business. It's often a closed shop."
"I think that this is with foundations more, however, not with corporations."
"I actually think it's becoming a hybrid. There are issues that arise that we just cannot ignore. They are on everyone's radar screen. Aids in Africa is a perfect example. That is simply an issue-driven occurrence where foundations and corporations have got to step up to the plate because its becoming a global security issue, and we all know it. And if we care about global security we're going to start putting money into aids in Africa, and looking at what we can do to prevent its transmission. Issues like the digital divide and the disparities of wealth, I don't think that those are so much about strategic philanthropy or 'who ever has the gold makes the rules.' I do agree that that rule applied in the earlier days of philanthropy. But the severity of issues to which we have to respond if we are going to look like we have some responsibility--particularly in corporate America--is changing the way we operate." Here at the Duke Foundation, we have to look at where do 'we' think we can make a difference."
Westina Matthews Shatteen
"And in the end, that is, of course what the partnerships should be about, solving problems. Philanthropy at its core is about making a difference in people's lives. Sometimes I think we forget that."
" Westina, I think it's an important distinction when you say make a difference vs. make a contribution. And it seems to me that many of the large foundations are trying to begin to move into multiyear programs where they can really make a difference. While on the surface that may be good, it can also have the effect of freezing out the new entrepreneurial visions on the side. Where does the entrepreneur go to get the money to try something new, something innovative?"
"But it's not a mutually exclusive deal. Yes, particularly among foundations there is a trend to do multiyear grants as opposed to single-year grants so that the nonprofit organization is not continually forced to come back year after year for their funding. A foundation should want to give their grantees real legs to stand on so that they can do their work and make a difference over time. But that doesn't necessarily mean that you pre-commit all of your money up front so that you can't still continually entertain new ideas and find new partners."
Neutral Conveners are Important in Furthering the Dialogue About New Partnerships
"I still believe that there somehow needs to be attention paid to some of the structural barriers that inhibit the closing of the divides between the sectors. I think that we lack sufficient enabling structures or enabling phenomena to this end. Bill Donaldson talked about the innovation at Yale in developing the School of Management. This is a really stellar example of a type of institution that we don't see very broadly represented throughout our culture, that brings people together in an interdisciplinary context with a sort of affirmative dedication to closing the lines, to breaking down those old structures that keep people in silos."
Westina Matthews Shatteen
"I think what's needed more so than ever before is the neutral convener-- whoever that is, whether it's the university or the foundation-- without an apparent self interest. We need visible conveners to reach across sectoral lines and bring people together around the table, to have discussions about sector differences, increase awareness about partnership potential and then to act."
"I think an important part of this should be found in our university and academic system, because that is in its best (and maybe this sounds too idealistic) seen as neutral. The academic arena is where people start from and return to get retooled. Given that there are uncertainties and distrust across the sectors, and people are going to move across sectors, it could be exciting if our universities were taking this into account in terms not just of what they teach, but in looking at how some of these partnerships can better be fostered. They have to be a part of the answer."
"I also sense a dearth of real knowledge and information on what are the lessons that we can glean from the partnership success stories that we have spoken of even in this conversation. What are the winning strategies? What are the best practices? I think without the institutional venues like the schools of management, without the dedication to information generation that tells us what works and why, and what doesn't and why not, I don't know that we will ever cut through these other cultural and structural divides."
Real Challenges were Acknowledged, but Balanced by Real Hope
"I guess I'm a little bit pessimistic listening to many of you from the nonprofit sector and the foundation side of things. During the Reagan administration there was a certain shift to placing the burden for social initiative on the private sector. And it seems to me that corporate America never really accepted that responsibility per se. And I would prophesy that in a time now, when we are back to an administration nationally that is more in tuned with Reaganomics, coupled with a bad market-- which is kind of an unusual congruence-- that we are going to find that the managers of corporate America are going to be more and more short-term oriented, looking at their quarterly results. And I think you will find people simply saying "What's in it for me", and making partnerships on that basis. And I am not sure that they will be addressing global issues and policy issues and accepting that responsibility."
"It's true that we have experienced a down turn in the economy that is causing some challenges to some of the forms of partnership innovation. I think, however, that it is only a pause for regrouping. I think we are into new ways of relating that will keep on going.
"Last week I was in California, where I went to see something that has just opened it doors. It is a philanthropy incubator, which is seeking to apply the same concepts that have worked for nurturing small businesses and to philanthropy. They are hoping this will allow the new foundations to innovate at a greater rate.
"I find that what is happening on the West Coast, the approach being taken by people coming into philanthropy (often from the high tech industry) is opening up new partnerships across the sector, and new ways of working within the sector. And the philanthropy on the West Coast in many respects bears very little resemblance to the approach that has historically been taken by major foundations on the East Coast."
"I'm sure that all of you have read about the demise of the Flatiron Foundation before it probably made $50,000 worth of grants. That's been a disappointing thing for everybody because there was such a major launch. We went to a big meeting with Bob Rubin (???) where he gave a kind of inspirational talk to all of the venture capitalists and the young entrepreneurs about what they could do to effect change in this society. This was just a year ago. And here, a year later, these same venture capitalists don't have the resources to contribute philanthropically, and most of them, if they are still alive are struggling to stay so. But I agree with Jan. I think that the trajectory that was started, and the spirit of what was started, will keep going.
"The sectors have a real opportunity to learn from each other. The corporate and financial communities have traditionally been transaction oriented; and nonprofits have been more process oriented towards systemic change. I believe that there will be a lot of room at the table for creativity and new models going forward."