An Evolving Relationship between NGOs and Private Businesses

By Sam Worthington, President & CEO, InterAction

An Evolving Relationship between NGOs and Businesses

A common misperception regarding NGO-private sector relations is one based on mutual distrust and occasional confrontation, or with the advent of corporate social responsibility funding, one solely based on donor-recipient transactions. With the international development landscape rapidly evolving, some historical and present-day assumptions are simply inaccurate.

The following statements are NOT true of operational U.S. NGOs:

  1. They are generally uncomfortable partnering with companies seeking new markets or profits
  2. As advocates they only critique private sector practices or push for increased regulation
  3. Their positive interactions with corporations are solely linked to charitable donations
  4. They are not helpful in establishing public-private partnerships

These stereotypes are fundamentally flawed. In fact, over the past decades, U.S. NGOs have moved far beyond simply investigating and critiquing the behaviour of corporations. Concurrently, changing business interests and concepts of a triple bottom line or shared value have led to converging interests between the two sectors.

Within this landscape U.S. NGOs have increasingly turned their business models upside down. In many cases, large NGOs that 20 years ago were primarily funded by the U.S. government are now centered on private resources; raising the vast majority of their funding from individual donations, private foundations, corporations, and multi-stakeholder partnerships even as they continue their partnership with the U.S. government. Over 80% of InterAction members now partner with the private sector and these partnerships include over 800 major corporations.

While U.S. NGOs do continue to critique the practices and behaviours of select private companies – often for good reasons – they are increasingly focused on cultivating deep partnerships in order to generate inclusive growth in areas such as health, education, empowerment of women, technological innovation, and most importantly job creation. Private companies and U.S. NGOs operating around the world are beginning to explore shared-values and form partnerships, which increasingly display real potential.

Some NGOs are helping corporations gain access to new markets and corporations are themselves exploring new sustainable models. For instance, Heifer International, with the assistance of the Bill and Melinda Gates Foundation, launched The East African Dairy Development (EADD) programme; an innovative farm-to-market initiative that boosted milk production and incomes of small-scale farmers. EADD will assist over 200,000 farmers gain greater access to dairy markets and increase the financial independence and social equality of small farming communities. Another U.S. NGO, Plan International USA, signed a $75 million strategic alliance with Microsoft to extend digital access to classrooms in African countries. As part of this strategic alliance, Plan will administer on-the-ground trainings to schools and facilitate multi-sector dialogue on integrating information technology into national education plans and policies. Microsoft, Plan, and national governments will collaborate to ensure students develop critical technological skills necessary to gain greater economic opportunities. These examples are no longer atypical as new partnership are forged or deepened across sectors. In many developing countries, large operational NGOs are increasingly viewed as important partners by private and public agencies. They bridge the skills, knowledge, relationship, and resource gaps between multinational companies and local governments. U.S. NGOs are often the glue that effectively seals public-private partnerships.

NGO and private sector partnerships are here to stay and are rapidly evolving as both parties find ways to further align their objectives in areas of sustainability, access to markets and job creation. Aligned with private companies that are not solely focused on short-term growth, NGOs bring skills that link marginalised populations to markets. This shift in favour of financial inclusion and sustainable growth, with major corporations such as Unilever and its Sustainable Living Plan, is encouraging. The future of NGO-private sector partnerships is closely linked to the evolution of the private sector as it responds to consumer demand, its employees and visionary leadership.

Not all corporations have made this transition. Civil society must continue to monitor business practices and advocate for greater transparency and accountability. At the same time many NGOs are identifying mutual objectives and cultivating partnerships with the private sector. The age-old perception that nonprofits only operate as watchdogs and confront private corporations when they detect bad behaviour is rapidly evolving. Today’s new norm for InterAction members is one of NGOs, corporations, and governments working together, using cutting-edge tools to implement projects for large-scale and sustainable growth.

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