Balancing risk and opportunity

Proportion
Categories: Blog

What’s your appetite for risk? Sharon always teases me that I’m risk averse, and my haircut hasn’t changed substantially for 10 years. Until a few weeks ago. After 80 days of Melbourne’s last ‘7 day snap lockdown’, I headed to my hair salon in desperate need of some hair TLC. What could possibly go wrong? “Trust me, I’m a professional”, he said as he wielded the clippers. In the space of 30 mins I was transformed from a shaggy Beatles mop top to a female version of Beaker in the Muppets. I went home to console myself with a packet of TimTams and cursed that I hadn’t been more assertive about what I wanted.

Everyone has a different perspective on risk. The best organisations have a risk policy to outline their approach to managing risk. For most non-profits, their biggest assets are their reputation and the goodwill they have earned among the community.  Whilst I can wait for my hair to grow back, it’s harder to rebuild after a massive loss of reputation.

How are you balancing the risk and the opportunity of corporate partnerships?

Corporate partnerships are often viewed as risky. But just as the Chinese character for crisis is composed of danger and opportunity, a sensible framework for managing risk will ensure that a non-profit doesn’t miss out on the many benefits of a corporate partnership.

Identify your no-go areas

Before you embark on prospecting for new partners, it’s wise to understand the types of organisations that are on your no-go list. It will be different for every organisation. Tobacco, armaments and gambling are the sectors that often feature in no-go areas for many non-profits. However, for Legacy Australia, armaments companies are the main contractors to the national defence program and are high on their prospect list. As a health promotion charity, VicHealth will always avoid partnerships with alcohol and junk food companies whereas others will embrace the possibilities. The key to forming a no-go list is a strong common understanding of your organisational values and priorities. Embedding this into policy that is approved at board level will go a long way to reassuring your board that corporate risk can be managed and mitigated.

Establish a clear internal decision process

If you’re going to have a robust discussion with your colleagues about a potential corporate partner, don’t do it in front of them. I recently heard about a prospecting meeting that was going nicely until one of the program people declared unilaterally that the charity didn’t really need the corporate and he wasn’t sure they were the right fit anyway.

Clarifying the decision process for selecting corporate partners and who has the final decision rights, is a step that’s continually missed. The partnership manager diligently goes prospecting but hits a wall just when the relationship is warming up. I encountered this with a children’s charity that couldn’t decide whether or not to sign up a bottled water company. The clean water message was countered with the environmental negatives of plastic bottles. It bounced around the charity for 6 months before the corporate walked away frustrated. No-one had any idea who had final decision making on the issue. Put your framework in place before you go prospecting and don’t risk burning a potentially valuable relationship.

Be prepared to act if risk issues change.

Review points and break clauses in the partnership contract are important if something material changes in the partnership. That can be a merger or change in ownership of the corporate or sudden adverse publicity that could impact on your charity’s reputation. In 2020 The Smith Family announced a partnership with BAE Systems to support STEM education, but immediately attracted criticism. A charity that supported children partnering with one of the ‘merchants of death’ whose weapons had caused suffering for children worldwide? The Smith Family later withdrew from the partnership.

Corporate partnerships can provide extraordinary benefits for your charity. But before you hire a partnership manager to get our and prospect, make sure you’ve put in place a thorough risk framework first. If I’d done the same with my hairdresser, I wouldn’t be hiding at home wearing a beanie. Your non-profit’s reputation is much more valuable and will take a lot longer to regrow than my hair. Put the basics in place and you won’t have to manage regrets later.

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