Entering the Age of Alliances

Collaborative relationships between nonprofits and corporations working together to contribute to society is the wave of the future—and makes excellent strategic sense. HBS Professor James E. Austin explains why in The Collaboration Challenge.
by James Austin
Book Cover: The Collaboration Challenge

The twenty-first century will be the age of alliances. In this age, collaboration between nonprofit organizations and corporations will grow in frequency and strategic importance. Collaborative relationships will increasingly migrate from the traditionally philanthropic, characterized by benevolent donor and grateful recipient, toward deeper, strategic alliances. These changes are already under way, and the changing alliance landscape is rich in variety, with businesses and nonprofits from Boston to Seattle finding new ways to work together to achieve their goals and contribute to society.

The Faces Of Collaboration

These alliances do not require grandiose strategic plans; patience and perseverance are often sufficient to turn small beginnings into significant strategic alliances. Consider, for example, the relationship between the nonprofit City Year and the outdoor boot and apparel outfitter Timberland, begun in 1989 when City Year requested from Timberland fifty pairs of boots for its urban youth service corps, founded the previous year. The service corps program organizes youths from diverse ethnic, racial, and economic backgrounds into teams to work on a wide range of community service projects such as serving as classroom aides in inner-city schools or assisting staff at neighborhood Boys and Girls Clubs. Expansion of the relationship over the ensuing decade found Timberland supplying City Year's official uniform and becoming its major corporate backer, providing about $1 million annually in cash and in-kind gifts and helping the organization to expand nationally. City Year in turn played a central role in helping Timberland develop and implement its strategy for community service and a high-engagement corporate culture. City Year also helped Timberland employees carry out community service projects, to which they gave more than twenty thousand employee hours in 1998. Each organization considers the relationship with the other to be of central strategic importance.

That these emerging strategic alliances go far beyond check writing in order to leverage the competencies of each partner and create two-way value is evidenced by, among others, the collaboration between The College Fund (UNCF) and Merck. UNCF, the largest and oldest minority educational assistance organization in the United States, and Merck, a leading global pharmaceutical company, have been collaborating for three years to increase the number of African American biologists and chemists. In 1995, they launched the UNCF Merck Science Internships. The undergraduates, doctoral students, and postdoctoral scientists who receive these internships are assigned mentors from Merck's research staff and given assignments at Merck's research facilities. Through its network of associated colleges, UNCF affords Merck access to bright minority students with an interest in science, and these students are in turn provided access to Merck's scientific talent, facilities, and work opportunities.

Even when a strategic fit is not immediately obvious, common ground can often be discovered.
—James E. Austin

Similarly, the National Science Resources Center (NSRC) a nonprofit organization created by the Smithsonian Institution and National Academy of Sciences to improve the teaching of science in K-12 education, has brought to a collaboration with Hewlett Packard (HP) high credibility and access to key curriculum decision makers in the public education system. A leading designer, manufacturer, and service provider of products and systems for measurement, computation, and communications, HP, like Merck, has a basic interest in increasing the supply of scientists. NSRC has focused on curriculum design and teacher training. HP's technical advice and the active involvement of its scientists and managers have lent a valuable perspective and competency that NSRC alone was unable to bring to the educational and developmental processes. Through this alliance, HP has enhanced its reputation in the educational community, and participating employees have enjoyed highly motivating and satisfying experiences.

Businesses and nonprofits sometimes perceive a natural strategic fit--the mutuality of interests that is central to creating strong alliances—such as the fit between the American Humane Association (AHA) and Ralston Purina Company. It was logical for the AHA, which advocates for animal causes and represents animal shelters throughout the nation, and Ralston Purina, the world's largest producer of pet foods, to join forces to create the Pets for People program, which aims to increase pet adoptions and thereby save thousands of animals that would otherwise have been euthanized for lack of homes.

A common objective, in this case the promotion of literacy, is also the basis of a strong collaboration between the Time to Read national program and media and entertainment giant Time Warner, Inc. Time to Read helps local nonprofits such as Chicago's Off the Street Club recruit children, youths, and even adults from disadvantaged areas for tutoring by Time Warner employee volunteers trained by Time to Read. Instead of financial grants, Time Warner supplies reading materials (especially magazines published by the company), classroom space, and tutors at its various offices around the country.

Even when a strategic fit is not immediately obvious, common ground can often be discovered. The alliance between The Nature Conservancy and Georgia-Pacific involved a dramatic shift from a contentious to a collaborative relationship. Historically, The Nature Conservancy (TNC), an international conservation organization and the largest private owner of nature preserves in the United States, and Georgia-Pacific Corporation, one of the world's largest forest products companies, had pursued competing agendas for common lands. The former wanted to preserve the land untouched, the latter to use it intensively. However, mounting environmental pressures on the forestry industry and growing difficulties for environmentalists in gaining control of ecosystems through land purchases led these organizations to reassess their opposing strategies. Their 1994 landmark agreement to jointly manage unique forested wetlands in North Carolina represented a substantial shift for both organizations to strategies built on partnerships to accomplish both their individual and their newly shared goals.

A similar incongruity seemed to exist between Reading Is Fundamental (RIF) and Visa International. RIF is a national nonprofit that works through local volunteer programs in thousands of communities throughout the United States to inspire young people to read. Visa operates the world's leading consumer credit card payment system. Although there is no obvious connection between the credit card business and literacy promotion, research that revealed that this social cause was viewed positively by Visa cardholders became the basis for a cause-related marketing collaboration in which Visa donates to RIF a percentage of charges during certain periods when the reading program is promoted.

Another unexpected fit is that between the human rights advocacy organization Amnesty International and sports shoe manufacturer Reebok International Ltd. Reebok's CEO, seeing a connection between the cause of human rights and the underlying values that he wanted to foster in Reebok's corporate culture, sponsored a celebrity concert world tour that Amnesty International had organized to promote the fortieth anniversary of the Universal Declaration of Human Rights. Reebok has since engaged in other activities with Amnesty International, and human rights has become a core value in the company.

Before strategic fit can be explored, a potential partner must be found. That task can be particularly daunting when cross-sector alliances are sought because information about the availability and suitability of partners is not readily available. Sometimes serendipity appears to play a role. The idea of forming an alliance with Starbucks Corporation came to a CARE manager as he was drinking a cup of Starbucks coffee. A systematic getting-acquainted process began formally in 1991, when Starbucks was a young, $20 million coffee retailer and CARE was a well-known, forty-five-year old international relief and development institution with annual revenues of approximately $300 million, some ten thousand employees, and operations throughout the world, and it evolved into an. increasingly deep partnership. By 1998, Starbucks had boomed into a global company with sales of almost $1 billion and was CARE's largest corporate donor. CARE president Peter Bell has referred to the alliance as "having more richness to it than other relationships."' And Starbucks chairman and CEO Howard Schultz illustrated the importance of the partnership to Starbucks when he said: "We have to weigh what's affordable against what we think is right. That's why we keep giving to CARE even when profits are tight."

Alliances can take many different forms. Some, such as the arrangement between the Bidwell Training Center and the Bayer Corporation, come to involve multiple partners in an effort to assemble more abundant resources and more powerful combinations of competencies. Bidwell, which trains disadvantaged inner-city youths and unemployed adults of southwestern Pennsylvania for jobs in high-tech, culinary, and medical fields, partnered with Bayer, a major pharmaceutical and chemical company, to develop a chemical technician training program. Then the two partners incorporated other chemical companies and government actors into the alliance in order to bring in more capabilities and resources and expand job placement opportunities.

Similarly, MCI WorldCom, a major communications technology company, has partnered with the National Geographic Society to create the MarcoPolo geography Web site to promote Internet content integration in the K-12 curriculum and is simultaneously partnering with the National Endowment for the Humanities, the Council of Great City Schools, National Council on Economic Education, National Council of Teachers of Mathematics, and the American Association for the Advancement of Science to create analogous Web sites in other disciplines. The resulting coalition creates an educational program that none of the partners could have developed alone.

Family-owned businesses also engage in cross-sector alliances, as illustrated by the relationship between the Jimmy Fund and the Perini Corporation. Initiated in 1948 by Louis Perini, second-generation CEO of a family-owned, Boston-based construction company, and Sidney Farber, M.D., a pioneer in cancer treatment, this collaboration came to include the then-league champion Boston baseball team, also owned by Perini at that time. The team became a major sponsor of the Jimmy Fund, helping raise money for the treatment of children with cancer. Although the Jimmy Fund has mobilized a multitude of other major support sources, its partnership with the Perini family, the family corporation, and the Boston Red Sox continues to this day.

Nordstrom, a leading clothing retailer predominantly owned and run by the Nordstrom family and headquartered in Seattle, was an early and major supporter of its local United Way, the seventh largest in the United States. The two organizations interact in a variety of ways, including serving as mutual technical advisers. Thus even the United Way, among the most well established, traditional philanthropic vehicles, is also engaging in strategic alliances that encompass much more than a check-writing relationship.

These and the other alliances researched for this book reveal considerable diversity in the types of businesses and social sector organizations involved and in their forms of collaboration. Each of the alliances that we visit in the subsequent chapters has distinctive characteristics, yet their collective experiences yield important lessons about the dynamics, management, and payoffs from strategic cross-sector collaboration.

About the Author

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