While interning at the Ridgeview Foundation, among the many things I learned was how beneficial a partnership between a non-profit and for-profit business can be. Seeing how one of the objectives of this site is to understand the differences between these two types of organizations, I thought exploring the benefits of a partnership would be a good think to examine.
I’ll use an example throughout the blog to point out various benefits. Ridgeview Foundation holds a golf extravaganza annually, last year raising over $1 million. The event includes two golf tournaments, a bridge tournament, a “taste” of local vendors, dinner and auction/presentation open to the public.
One of the main ways that non-profits and for-profits interact beneficially is via donations. This obviously benefits the non-profit, as they can use it to fulfill their mission. However, the government rewards this support from for-profits via tax benefits. According to a journal written by Larry Weinstein and John Cook of Wright State University, on average, only 9% of organization’s funding comes from government spending. Instead, they receive support via indirect aid. In fact, for every dollar of government support a non-profit gets, the government provides about $14 in support through tax incentives. (Weinstein and Cook)
So how does this relate to our golf tournament example?
Part of my job as an intern was to compile a list of businesses within Ridgeview Medical Center’s service area. I then approached each business seeking a donation, even if it was cash. These funds enabled us to fulfill needs for the extravaganza in areas we had remaining costs. Even greater of an example of how much a cash donation can make an impact is our main benefactor for the golf tournament. One local man provided us with over one third of our $1+ million total, enabling us to provide Ridgeview Medical Center a daVinci surgical system.
In general, any type of relationship between these two types of firms benefits for-profit companies. For example, their reputation among their clientele improves when they are viewed as a company that gives back—when they fulfill their social responsibility. Social Responsibility is defined as, “actions that appear to further some social good, beyond the interests of the firm and that which is required by law” (Weinstein and Cook).
In relation to our golf extravaganza, social responsibility is a great motivator for donations. The Ridgeview Foundation realizes this is an important value for companies, and advertises their contributors via signage and pamphlets. However, there is an underlying understanding in Ridgeview’s case: the community members understand the benefits that improving technology of their hospital could potentially provide them one day, and appreciate community businesses contributing to that happening. I believe in partnership situations, there is always an underlying understanding motivating businesses to partner.
In addition to funds, non-profits also benefit from receiving in-kind donations, such as skills and services from for-profit organizations. As a result, many managers of corporations may choose to support a non-profit in another way than donations, as the benefits to their reputation don’t make as great of a social impact when other similar organizations are also donating funds. If this is the case, partnerships may include in-kind donations, such as skills and knowledge the for-profit can give. Weinstein and Cook analyze this type of partnership further, labeling it a “social alliance” (Weinstein and Cook). They state that there are two main differences between this and a “strategic alliance”, one being that one partner is a nonprofit and the second that the partnership focuses on social welfare. (Weinstein and Cook) There are many benefits that are a result of these types of partnerships. In the for-profit’s case, their reputation improves, increasing profit especially if it is a retailer. In addition, they receive internal benefit as well, as it is believed that socially responsible activities make an organization more attractive to future employees.
In our golf extravaganza example, in-kind donations played a large role. The most obvious being our use of an extremely nice golf course. For an at-cost expense, we were able to rent the courses facility for the day. The foundation received the benefit of a nice course located just minutes from the medical center, and the golf course gained the benefit of a strengthened relationship with the Foundation. Even more important, the extravaganza drew executives and surgeons to the course for the golf tournament, giving the golf course the opportunity to gain clientele for future visits.
Weinstein, Larry, and John Cook. "The Benefits of Collaboration Between For-Profit Businesses and Nonprofit Arts-or culture-Orientated Organizations ." AM Advanced Management Journal . (2011): n. page. Web. 18 Feb. 2012.
RSS Feed