Doing Business with Business, NGOs & the Corporate sector

15 May

Originally posted at my blog spin.off , while working on the book.

Doing Business with Business, Development NGOs interacting with the Corporate sector, by Willem Elbers, Radboud Universiteit Nijmegen, December 2004.

Elbers’ research, is a first explorative study of NGO-business relationships departing from an NGO-perspective, published in the Netherlands recently (written in English). Elbers notices a change in NGO-thought: from business ‘as a part of the problem’ (e.g. exploitative capitalism), to business ‘as a part of the solution’ (using companies as a instrument for development and poverty reduction).

This study offers key insights into how NGOs make strategic and operational decisions about their relationships with business. Based on an extensive review of international literature, interviews with Non Governmental Development Organizations (NGDO’s) representatives in the Netherlands and a additional survey Elbers discusses three main types of NGDO- business relationships: relationships with the aim of getting corporate funding, with the aim of promoting responsible business behaviour and finally relationships aimed at contributing to development objectives.

The level of interaction between NGDOs and companies in the Netherlands has greatly increased during the past few years. Roughly half of the 35 NGDOs that participated in the study is currently working on new policies regarding the private sector. However, at the same time, the findings of this research clearly show that many NGDOs in the Netherlands do not have a coherent view regarding business at all.

Currently more than half of the Dutch NGDOs does not have a worked-out policy for corporate relationships. Furthermore, many NGDOs that do mention the private sector in their policy-documents only make broad and vague statements which are far removed from concrete activities. Moreover, within organizations (even those with concrete private sector strategies) it appears there is hardly a unanimous view of the private sector. This is particularly the case between different departments, leading to the point where, for instance, the campaigning department of an NGDO has a different perspective on companies than the fund raising department does. (Elbers, 2004, p19)

This can sometimes cause organizational tensions as activities of one department can undermine those of another. For instance when one NGDO-department campaigns against a company for its unsustainable practices, while another department of the same organisation approaches the same company for fund-raising purposes (Heap, 2000).

Elbers warns that NGDOs should be well aware that companies use partnerships (both philanthropic and strategic) to publicly demonstrate responsible entrepreneurship. Although this is not necessarily a bad thing, problems may arise if a business partner is associated with irresponsible practices. Reputation is one of NGOs greatest assets. Partnering with a company that does not have a favourable reputation could seriously damage the NGO’s reputation. It is therefore a matter of great concern that the survey results show that the actual criteria that most NGDO’s use in selecting their partner, are rather general and vague in nature. (Elbers, 2004, p48).

Furthermore, Elbers concludes, civil regulation is not the ultimate solution for addressing corporate malpractices. The fact that civil regulation might be seen as a substitute for legislation and binding international agreements and thus reduce the pressure to increase governmental regulation is perhaps one of its major weaknesses. (Elbers, 2004, p59)

I would like to take these concerns one step further.

The lack of a coherent view and clear criteria offers opportunities for those companies who do happen to have smart strategies for approaching NGOs. Internal conflicting opinions could be used to company’s advantage. Settling for civil regulation could be a strategic goal in order to prevent binding rules, while partnerships with NGOs legitimise this option. It is therefore essential for NGOs to have a clear view on their position in the present shift in governance. By choosing to work with business, NGOs may accept and therefore further legitimise the current neo-liberal paradigm, while undermining challenges to this model. With Elbers, I would like to stress that NGOs should never forget that partnerships are always a means to an end, and not an end in itself.

Full text of the research available in .pdf at the Evert Vermeer Foundation website