Australian Corporates & NFPs "Stick Together" Through GFC

Australian Corporates and Not for Profits have ‘stuck together’ through the economic downturn in Australia with some large organisations forming much stronger partnerships with business according to Peter Shergold from the Centre for Social Impact.

Shergold describes the corporate response to dealing with NFPs during the downturn in terms of “stickiness”.

He says the amount of stickiness has been surprising, not least to the Not for Profits who were anticipating that they would be losing a more significant share of their corporate funding.

Peter Shergold’s comments come in the launch edition of the new online business journal in a partnership with the Australian School of Business at the University of New South Wales and the Knowledge@Wharton network called Knowledge@Australian School of Business.

The new journal is free and published every two weeks, and features articles on topics such as social entrepreneurship, corporate social responsibility (CSR) and the role of the Not for Profit sector.

In his interview with the journal, Peter Shergold says the ‘stickiness’ is partly due to the fact that the economic downturn in Australia has been less traumatic than that experienced overseas, but there is also a lot of evidence emerging that some of the big Not for Profits have formed much stronger partnerships with business.

He says rather than being the recipients of charity, they have worked with partners to turn that into a form of social investment and that has helped the stickiness, because commitments are made for three, four or even five years and they are based around collaborations for social benefit.

He says the relationship between the Not for Profit and the business that supports them has become tighter and, as a result, the funding has become more secure.

Part of this stickiness, Shergold acknowledges, was the longer-term contracts corporates have with Not for Profit partners, some of which were already in place when the financial crisis hit.

The online article says that in an environment of increased regulation and scrutiny, many corporates were unwilling to be seen to be reducing their commitment to corporate social responsibility. Beyond that, though, it says there’s an encouraging trend for corporates to see real value in the partnerships they are forming in the not-for-profit sector, delivering benefits to product brand, organisational reputation and helping staff recruitment and retention.

Shergold says in his interview that in some cases, the corporate funding has been turned into a real form of social investment.

He says he has no doubt that partnerships have grown and have become more long-term in their view and more driven by a sense of social and community investment.

Shergold describes the GoodStart initiative; a coalition of Mission Australia and the Brotherhood of St Laurence, with a A$15 million loan from the Australian federal government and a long-term loan from the National Australia Bank, is taking over the management of nearly 700 former ABC Learning Centres, as a “big breakthrough” for the development of social businesses in Australia, but a major impediment to growth is the lack of a genuine capital market for these kinds of organisations.

He says at this moment, they are dependent on philanthropic largesse and government grants and Australia has a very poorly developed sector for community development investment, and it is quite hard for a small social business to be able to access the levels of investment required in order to scale up and become financially sustainable.

He says if GoodStart is successful on this large scale, it will open up opportunities for other businesses: Banking and credit union sector finance will emerge and it won’t be micro-finance. It will be loans available at rates which will allow organisations to decide they can build themselves as social businesses.

The full article called ‘Corporate Social Responsibility – how it passed the acid test’ can be read at:

http://knowledge.asb.unsw.edu.au/articlepdf/1103.pdf?CFID=53672530&CFTOKEN=78171183&jsessionid=f0309c9b14e73b10f2c844144a1119a2f485