With the recent announcement of the SDGs, there is an opportunity for a new focus on collaborative efforts to tackle big issues, and global corporations are already stepping up to play a greater role. However, how and who they collaborate with to meet these ambitious goals may be changing.
Corporations, NGOs and governments have been partnering for a long time, and the pioneering work of USAID’s Global Development Alliances and others have shown tremendous promise.
However, the future of corporate partnerships will extend beyond the traditional relationships that have formed between corporations, governments and NGOs and will involve a whole new category of institution, the social enterprise. Though the term can mean different things to different people, at its heart, a social enterprise is a business that is driven to achieve social impact while creating economic value for stakeholders, from investors to employees and, often, consumers.
The Benefits of Corporate and Social Enterprise Partnership
Though social enterprises are far smaller than global corporations, and tend to be severelyunder-resourced, they offer access to a world of innovations and insights related to new markets, the behavior of underserved market segments, and break-throughs to meeting critical social needs in ways that can be far more financially sustainable than traditional philanthropic or CSR models. Corporations are starting to recognize that these social enterprises can be their best allies in taking complex global challenges head-on.
For the past three years, Acumen has had the opportunity to work with large corporations to engage in the work of building sustainable and scalable social enterprises that focus on the problems of poverty. This work has shown us both the opportunities and the challenges involved in working directly with large corporations, and in facilitating their direct engagement with social enterprises.
In October, we launched our first report on the topic – Collaborating for Growth with Impact – in partnership with Business Fights Poverty. In the report, we identified three models ofpartnership that we have observed in our work with dozens of corporations and social enterprises, as well as some of the key lessons on how to make these collaborations work. The three models of partnership we identified are:
- Skills partnerships, where corporations share skills, expertise and human resources with fastgrowing social enterprises to help them scale;
- Channel partnerships, where global corporations work with social enterprises to both source materials for their supply chain, and distribute products to reach hardto serve markets; and
- Venture partnerships, in which corporations coinvest in social enterprises or actually help create new enterprises to tackle shared business opportunities and social objectives.
In each of these, the success of the partnership often depends on engagement from additional stakeholders and allies from the public sector, civil society, and organizations specifically focused on strengthening the capacity of social organizations.
The Challenges of Corporate and Social Enterprise Collaboration
Despite the potential of these varied forms of partnership, there are also real challenges to making these partnerships successful. The time frames that are required for corporate decision making can deter social enterprises from engaging in partnerships. The risk tolerance of corporations is lower, yet ironically, they may have less at stake compared to early stage businesses that face severe cash constraints. And ultimately, while a social enterprise places impact at the center of many of its business decisions, a large corporation, especially a publicly held one, has a fiduciary responsibility to prioritize it’s nearterm profitability.
Despite these challenges, leading corporations from across industries are actively seeking outways to engage with social enterprises to drive change. It’s an exciting frontier, but still a time of experimentation. Even after 15 years of investing in these pioneering social enterprises, Acumen continues to observe new patterns and new approaches to overcoming barriers.
As this week’s focus on entrepreneurship has shown, it is truly an ecosystem approach that isneeded, with the right models of finance, measurement, capacity building and collaboration that can yield lasting changes, at scale. Meeting the challenges of our time will take all of us, and the contributors to this week’s series represent the kinds of leaders who see collaboration with entrepreneurs as the path forward. Just this week, President Obama announced the 2016 Global Entrepreneurship Summit, to be held in Silicon Valley in June, where undoubtedly, the pioneering role of social entrepreneurs will feature heavily.
The question is: what role do corporations play in this movement? The true promise of entrepreneurship is the introduction of powerful innovations – in products, services, and business models – that create whole new markets and show possibility where there has only been failure. However, these innovations will only reach the mainstream, and address the needs of the billions that remain dramatically underserved, when corporations and social enterprises join forces.
Photo credit: USAID | Cambodia HARVEST