• 01 Oct 2001
  • Research & Ideas

Connecting With Nonprofits

Nonprofits and business have a long history of collaboration, and the benefits run both ways. In this excerpt from HBS professor James Austin's latest working paper, three levels of collaboration are detailed. Plus: Austin Q&A.
by James Austin

In his recent Working Paper, "Marketing's Role in Cross-Sector Collaboration," HBS professor James Austin outlines three stages of collaboration between businesses and nonprofits—philanthropic, transactional, and integrative collaborations—and examines the related role of institutional and cause-related marketing. This excerpt focuses on the collaborative stages.

Collaborations between businesses and nonprofit organizations are becoming more prevalent, important, and complicated. Marketing plays an increasingly significant role in these cross-sector relationships. This article will first set forth a framework for understanding alliances between companies and nonprofits. It will then examine how such cross-sector collaborations relate to four strategic and interrelated marketing areas: institutional marketing, cause-related marketing, market development, and internal organizational marketing.

Understanding Cross-sector Collaboration

My field-based research on collaborations between businesses and nonprofits, encompassing a wide range of industries and social sectors, revealed a distinctive pattern in the types and evolution of relationships. As an analytical framework, I conceptualize these as the Cross-Sector Collaboration Continuum along which there are three types and stages of relationships (see Figure 1):

  • Philanthropic Stage. This is the most common type of relationship between businesses and nonprofits. It largely consists of annual corporate donations of money or goods made in response to requests from nonprofits. The level of engagement and resources is relatively low, infrequent, simple, and nonstrategic. It is basically a check-writing relationship. The giver has a charity mindset and the recipient a grateful attitude. The relationship is valuable as part of an effort to market the company as a caring, responsible institution and even to market the nonprofit as a credible organization meriting support.
  • Transactional Stage. Significant numbers of firms and nonprofits are migrating into this second stage, in which the interaction tends to focus on more specific activities in which there is a significant two-way value exchange. The organizations' core capabilities begin to be deployed and the partnership is more important to each other's missions and strategies. It is no longer simply a transfer of funds. This stage would encompass such activities as cause-related marketing programs, event sponsorships, special projects, and employee volunteer services.
  • Integrative Stage. A smaller but growing number of collaborations evolve into strategic alliances that involve deep mission mesh, strategy synchronization, and values compatibility. People begin to interact with greater frequency and many more kinds of joint activities are undertaken. The types and levels of institutional resources used multiply. Core competencies are not simply deployed but combined to create unique and high value combinations. The degree of organizational integration begins to take on the appearance of a joint venture, and in some instances the partners have actually created new, jointly governed entities to carry out their collaboration. This stage of collaboration sometimes involves market development and also internal organizational marketing.

As depicted in Figure 1, as one moves along the Continuum the level of engagement deepens, mission relevance becomes more central, resource deployment expands, activities broaden, interaction intensifies, and managerial complexity magnifies, but so, too, does the strategic value.

“ ... the more effective collaborations are characterized by clear purpose, mission congruency, high and mutually balanced value creation, effective communication, and deep reciprocal commitment."
—James Austin

It is important to note that progression along the continuum is not automatic; it is the result of explicit decisions and actions by the partners. And regression and exit are always possible. The Collaboration Continuum is particularly useful in mapping the type of relationships a business or a nonprofit has in terms of the stages. Generally, businesses and nonprofits have multiple relationships, so the Continuum can be used as an instrument for managing their "Partnering Portfolios." Not only can one ascertain the current nature of the existing relationships, but also begin to strategize as to the ideal mix of relationship types one might want to have and assess the organizational and strategic implications for attaining that. For example, within their portfolios, businesses and nonprofits might wish to continue to have several philanthropic relationships as relatively low maintenance engagements that serve useful albeit not critical functions. For another set of relationships there may be opportunities to enter into higher engagement and higher value transactional collaborations. And, for a smaller, highly selective set, the partners might create the more intensive and demanding but higher payoff strategic integrative alliances.

Collaborative relationships are multifaceted. Figure 2 provides additional characteristics of the relationships in each of the three stages. The evolution of these various dimensions does not necessarily take place simultaneously. Consequently, a particular relationship might have some aspects that fall into one stage and others that are in another, thus creating hybrids of different stages.

Figure 2. Collaboration Continuum: Partnership Characteristics

  Philanthropic Transactional Integrative
Collaboration Mindset
  • Gratefulness and charity syndromes
  • Partnering mindset
  • Increased understanding and trust
  • "We" mentality replaces "versus them"
Strategic Alignment
  • Minimal fit required, beyond a shared interest in a particular issue area
  • Overlap in mission and values
  • Relationship as strategic tool
  • High "mission mesh"
  • Shared values
Collaboration Value
  • Generic resource transfer
  • Typically unequal exchange of resources
  • Core competency transfer
  • More equal exchange of resources
  • Joint value creation
  • Need for value renewal
Relationship Management
  • Corporate contact usually in community affairs or foundation; nonprofit contact usually in development
  • Minimal personal connection to cause
  • Project progress typically communicated via paper status report
  • Expanded personal relationships throughout the organization
  • Strong personal connection at leadership level
  • Emerging infrastructure, including relationship managers, communication channels/vehicles
  • Expanded opportunities for direct employee involvement in relationships
  • Deep personal relationship across organization
  • Culture of each organization influenced by the other
  • Partner Relationship Managers
  • Explicit internal and external communication strategies and processes
Collaboration Definition and Performance
  • Minimal collaboration in defining activities
  • Foundation guidelines often determine types of projects or corporations respond to specific requests from nonprofits
  • Miminal performance ecpectations
  • Shared visioning at top of organization
  • Projects of limited scope and risk that demonstrate success
  • Explicit performance expectations
  • Informal learning
  • Projects identified and developed at all levels within the organization, with leadership support
  • Broad scope of activitiesof strategic significance
  • Organizational integration in execution, including shared resources
  • Incentive systems encourage partnerships
  • Active learning process
  • High mutual expectations and accountability

Source: J. Austin, The Collaboration Challenge, (San Francisco:Jossey-Bass, 2000)

My research reveals that the more effective collaborations are characterized by clear purpose, mission congruency, high and mutually balanced value creation, effective communication, and deep reciprocal commitment.

About the Author

James E. Austin is a professor at Harvard Business School.