How effective partnerships can open new avenues to raising funds for charities
Raising much-needed funds is a perennial issue for the third sector. And never more so than today. Departure from the European Union, an uncertain economy, the threat of more legislative pressure and over-stretched and under-budgeted local authorities are all contributing to a dramatically changing (and challenging) charity landscape.
Effective fundraising is without doubt, the single, most difficult challenge facing the sector. An openly hostile media stoked up by stories of aggressive sales tactics and the lengths so-called ‘chuggers’ and door-to-door fundraisers go to get you to sign on the dotted line haven’t helped the cause, putting charities under more intense scrutiny than ever before.
Commercial partnerships can play a key role in helping charitable organisations to raise the cash they need but they need to be handled carefully.
Charities choosing to raise funds through strategic commercial partnerships need to recognise that it carries inherent risks.
A case in point is the huge amount of negative press Age UK received with its deal with the energy company E.ON, when customers felt they were being misled and short-changed.
The answer is to get the strategy right and to make sure you manage the risks effectively. In the words of the Charity Commission: “A successful partnership can raise both a charity’s income and profile. An unsuccessful one, where stakeholders perceive the charity to have ‘sold out’, can damage income and profile.”
The rewards are significant if charities get their strategic partnerships right. There is big money to be made from well thought out, mutually beneficial deals. For example, it has been reported[i] that Age UK raised around £40m from a range of deals including home and travel insurance in 2014/15, while Cancer Research UK raised £13.5m through a partnership with TK Maxx.
Of course, strategic partnerships are not all about generating cash. In addition to revenue generation other benefits include: gifts in kind, expansion of the donor base, influence within the partner company, improving in-house offering, increasing the charity’s brand profile and professional development opportunities for employees and volunteers.
It is certainly the case that when it comes to strategic partnerships, the rewards outweigh the risks.
But the key to mitigating any of the risks associated with strategic corporate partnerships – whether that’s reputational risks, commercial or legal – is to fully understand those risks. If you are aware of any potential issues that could arise, you can put the appropriate controls, measures and contractual protection in place.
The very real danger is that insufficient resources and time are given to understanding the potential issues before embarking on the relationship.
And that’s where good governance comes to the fore. It is vital to have robust policies and procedures in place before entering into a partnership agreement. In other words, you need to know what you are getting into. These processes need to be reviewed on a regular basis to ensure they remain relevant.
Planning and preparation is everything and it is important that part of the selection process for a partner is that they have the ability to support the charity in the monitoring and mitigation of risks.
The key is applying due diligence and then once the strategic partnership has begun charities should monitor and review its performance at regular intervals. This will help manage the expectations of the charity and the commercial partner and ensure they are being met on both sides. Significantly, any benefits gained from the agreement should not be outweighed by the costs to the charity’s reputation or otherwise.
An effective partnership governance framework should be designed to mitigate the potential risks of engaging with organisations while optimising the commercial gains.
Good governance will provide significant benefits including:
- Greater clarity on the opportunities as well as the risks that face the charity currently and in the future
- Ability to make better, more informed, robust decisions based on the facts to deliver the charity’s mission
- Clearly defined, measured outputs and outcomes which can be used to improve performance and more effectively meet the needs of beneficiaries
- An enhanced reputation to external audiences
- Improved relationships internally and with key stakeholders outside the charity
Gone are the days when charity partnerships were solely about making money. Yes, fundraising through commercial partnerships is an important source of income for many charities, opening up new avenues for raising funds for good causes.
But it is about more than this – it’s about exploring new and innovative ways of promoting a charity’s cause that not only deliver value in the short term but also creating sustainable, long-term relationships that provide a win-win strategy for all parties involved.