Using Corporate Expertise to Make a Real Difference

Gina Anderson, Philanthropy Fellow at the Centre for Social Impact, looks at how Not for Profits can draw on the expertise of the corporate sector. This article is from the CSI blog.  

OPINION: In his keynote speech to the Give2Asia’s 10th Anniversary Forum in October 2012, Dr Gururaj “Desh” Deshpande, a venture capitalist, entrepreneur and philanthropist, noted that the Not-For-Profit (NFP) world operates with greater impact when for-profit techniques and dynamics are introduced.

He observed that, in the NFP world, people in great need will take what is given to them and the project could thereafter be called a success; however, the question of whether the project has real, lasting, and beneficial impact is often unknown or unsought.

When applying for-profit principles of transparency, scaling, fluid management, and efficiency, among others, Dr Deshpande challenges charitable projects to perform like the most successful companies and products in today’s international markets—with the measure of success being the lasting impact on the targeted community.

Too often this type of statement is interpreted as “NFPs should become more like business”. In my experience this is not what philanthropists, funders and social investors want.

They understand that NFPs are mission-based and have a very different and important role to play in society. However, they are asking NFPs to put in place disciplines learned in the market-place.

At the recent Social Finance Forum in September 2012 in Sydney, we heard leaders from a couple of large sophisticated NFPs discuss honestly some of challenges they faced working with social investors and financial advisors in developing Social Benefit Bonds.

The investors and advisors focussed the NFPs on the measurement of outputs and impacts to a far greater degree and with more detailed analysis than the NFPs had ever before undertaken.

With a lazer-like focus funders made the NFPs drill right down into their business model, zeroing in on their costs and their impact.

By asking questions, funders challenged the NFPs to confront really difficult decisions. For example, in questioning the level of unit costs one NFP was asked if they were given an extra $1,000 per person, based on professional judgement, what difference would it make and how would they measure it?

In the for-profit world, this type of analysis is what separates a profitable concern from one that goes broke. As difficult as it is, this is the sort of market discipline philanthropists, donors and social investors are encouraging.

There is a corollary, of course. It should always to be remembered that NFP organisations are mission-based organisations.

There are some decisions, particularly those involving the welfare of those people being assisted, that must always be independent of funding decisions and mechanisms.

However, although often costly and time-consuming, the value of data immersion in defining target groups, outcomes, successes and failures is invaluable. For it is this detailed data analysis that really informs the commissioning process (of the project, function, or direction), identifies operational inefficiencies and enables the measurement of impact.

Information becomes a tool and it provides significant transparency for the NFP, philanthropists, donors, social investors and the wider community.

Business mentors, advisors and volunteers can play a very important role supporting NFP leaders. As Phil Buchanan, the President of the USA Centre for Philanthropy notes, NFPs are routinely castigated for their unwillingness to make a hard-nosed assessment of their impact.

However Buchanan continues, “when we actually stop and listen to nonprofits a very different picture emerges. The 177 nonprofit leaders we surveyed overwhelmingly care about measuring their impact. What they need is help—financial and practical help from their funders.”

Corporate Australia has a great opportunity to support their NFP partners in creating meaningful social impact. By providing a safe environment in which NFP leaders can be challenged on the really difficult questions of measuring their organisation’s impact, corporates can provide the expertise and resources to assist and support these NFP leaders on which measures are important and how best to undertake those measurements. This will go a long way to supporting our NFPs make significant lasting social impact for the whole community.