Long time readers will recall that a checklist for effective funding partnerships was, by far, the most requested practicum piece I have ever published. Based on my extensive experience participating in, chairing, helping to found, and teaching about these partnerships, it provided funders considering participating in funder collaboratives with very specific advice on the conditions for success, red-flags to avoid, and, very important, a way to determine if you were suited to be a collaborator. For several years, barely a week went by without a request for a copy.
That piece focused exclusively on what I call “horizontal” partnerships: Funders joining with other funders to create a new entity, support an existing nonprofit in tandem, or address an agreed upon societal ill in unison. Negotiating appropriate roles, expectations, operations, procedures, and exit strategies make all the difference in their success or failure.
In a horizontal partnership, though, there is no question on which side of the table the funders sit. They are funders: even if they create their own entity to deliver the service or address a particular question, they all start from the same side.
However, there is another kind of partnership, a “vertical partnership”. In this context, a funder and an organization with the capacity to deliver services agree on something. This is hardly a new phenomenon: very often a directive foundation will approach a nonprofit institution with an idea or a challenge or a very specific project. Their roles are clear: a funder funds, the nonprofit implements. What makes this a partnership as apposed to a traditional funder-grantee relationship is the joint planning on the goals, the path forward, the methodology, the exit strategy, and what will count as success. [It has become pc. for many foundations to refer to all of their grantees as “partners” but in truth most of those “partners” are treated like traditional grantees.] Typically, but not always, in a vertical partnership the initiative will come from the funder, but the funder recognizes that the imitative can only succeed in collaboration with the grantee.
Some funders go so far as to bypass the grantee relationship altogether. So that there is no uncertainly about whose project this will be, a funder will contract with the nonprofit. They are no longer grantees, independent organizations with primary ownership and responsibility, but rather contractors who are delivering the service to and for the funder. [While beyond the scope of this post, there are important legal implications to these distinctions, often not fully understood by either side.]
As suggested above, vertical partnerships are hardly new. Why then has there been such a preoccupation with partnerships and collaborations in the recent philanthropy literature?
The reason is that we are seeing a proliferation of a newer and more complex kind of vertical partnership. In this case, there are multiple sides and multiple players. Typically they are inter-sector [some combination of government, private philanthropy, private sector, ngo/nfp’s]. They utilize a wider variety of tools and investment strategies and can be initiated by any of the participating sectors. They are most often convened to address issues that transcend any one sector: human trafficking, food insecurity, economic disparity, global warming, preventable diseases, homelessness and poverty, etc. Each of these represents systemic issues that cross all sorts of political and intervention boundaries and borders. And none of these issues can be solved by a single entity or single sector alone.
But if normal horizontal and vertical partnerships are hard, requiring finesse and skill to succeed, these new and increasingly popular collaborations represent exponentially greater challenges. Of course there are organizational cultures, policies, and expectations to address, but in addition there are differing and sometimes competing laws, accountability, decision-making, and bottom lines. Yet they are worth the challenge if we are to seriously address those “big” items.
Some have begun writing of how to create these successful collaborations, but, in truth, we are still at the early stages. When do we use which vehicle? For example, preliminary evidence is that Social Impact Bonds will probably work in certain very specific contexts but some have begun suggesting that they will be the silver bullet for all large-scale quantifiable social challenges. I doubt it! Others have argued that the B-Corp has the ability to raise significant capital that nonprofits cannot. Maybe – but not every social problem can be formulated with a profit motive, even under B-corp rules. In addition, it is not clear who sets the agenda? Some have voiced concern that an agglomeration of money coming from government and big business could force nonprofits to adapt to priorities with which they may not concur. Yet the great demand for sustainable funding models may make it hard to resist.
There are only a few, a very few of the issues which surface in the new cross-sector collaborations. Yes, caution is called for and care must be applied before fully jumping in. But players in this realm are to be applauded for the courage to address the biggest issues of our time. We must indeed learn how to update our checklist for successful participation, but we must also recognize that we have now entered the time of a new paradigm for solving the world’s largest problems. It matters.
Richard Marker teaches and advises funders from around the world through both the NYU Academy for Grantmaking and Funder Education and the Wise Philanthropy Institute, both of which he founded. His blog can be found at Wise Philanthropy.