Creating Shared Value: What does it mean for the nonprofit sector?

When JS Daw & Associates announced our new role as certified Shared Value consultants, it prompted much feedback – from notes of congratulations to specific questions and queries about specialized services. But one email stood out – “What does this mean for the nonprofit sector? How will it affect fundraising? How will it affect our role in community?” These are important questions. I firmly believe that Creating Shared Value (CSV) offers exciting new opportunities for nonprofits to collaborate with companies for mutual benefit, to build truly meaningful and impactful partnerships and advance positive social change. If you plan on starting a nonprofit organization check out how to get a 501c3.

Creating deeper strategic partnerships

shared_value puzzle

c/o Jeroen de Flander

Today most nonprofits view corporations as funders. Even though many nonprofits call their funding relationships “partnerships,” they simply are not. Funding relationships are transactional exchanges in which financial support is given to fund community work. Occasionally in-kind talent and time is provided from employee volunteers. While these relationships are important and beneficial, the full value of a mutually beneficial partnership, which is based around common goals, is not realized.

Creating Shared Value is a new form of corporate community involvement. Shared value is created when companies generate economic value for themselves in a way that simultaneously produces value for society by addressing social and environmental challenges. Companies that undertake shared value initiatives need community partners to help them reconceive markets and services; build clusters; or reduce the costs in their value chain. Shared value initiatives require the expertise, experience and knowledge of the community sector. At its heart, shared value requires cross-sector collaboration and deep partnerships.

Providing new support beyond philanthropy

Shared value initiatives represent new resource development opportunities for nonprofits. However, CSV will never replace traditional philanthropy and strategic giving. The billions of dollars companies already contribute to community organizations will not be lost, nor are these contributions likely to shrink.

Shared value initiatives will be an addition to what most companies already do in community. Shared value allows companies to generate value for themselves as they identify the immense human needs that must be met, large new markets to be served, and the internal costs of social deficits—as well as the competitive advantages available from addressing them. Their nonprofit partners, vital to the success of shared value initiatives, will benefit from additional resources spent by companies to build value for themselves and the community.

Accelerating social value and impact

Shared value engages companies more deeply around social issues. It holds the promise of greater resources for the nonprofit sector and a multitude of innovations to address today’s most urgent social needs. It also accelerates and expands the potential for social impact as major corporations launch initiatives that reach millions of people at a pace and scale that have rarely been achieved by the nonprofit sector alone.

Nonprofits are a critical piece in identifying opportunities for social change, but they are often not able to scale to the appropriate size. Most NGOs are not set up to affect millions of lives. If you combine NGOs’ local knowledge with a company’s ability to scale up, you can really create value on both sides of the equation. By the same token, companies must listen to NGOs so that they take local circumstances into account, and they don’t go to the wrong places or do the wrong thing.

Seize the opportunity

Shared value is a management strategy for companies that are focused on creating measurable business value by identifying and addressing social problems that intersect with their business needs. The shared value framework creates new opportunities for companies, non-profits and governmental organizations to leverage the power of market-based competition to address social problems.

Creating Shared Value will enhance the relationship between companies and nonprofit organizations. It creates a mutual interdependence and heightened accountability for delivering results. In the end, companies are part of a broader ecosystem that contributes to creating societal value. Business must work with governments and with NGOs to build better societies and better communities.

Creating shared value is here to stay. Its growth and wide spread adoption is inevitable. Nonprofits can seize this opportunity. They can embrace the change and realize new advantages for their organizations and their communities! At the same time, shared value demands a delicate balance between social needs and corporate profitability that must be carefully monitored and challenged when necessary.

Keep an eye out for a related future blog posting on the JS Daw Blog: Can nonprofits create their own CSV initiatives?

Editor’s Note: This blog originally appeared on the JS Daw Blog. It has been reposted here with permission from the author.

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