Business–Nonprofit Partnerships

Abstract

The objective of this research is to determine the extent to which the effects of a business–nonprofit partnership (BNPP) go beyond those associated with their traditional roles of donor and beneficiary. Specifically, the study focuses on foundations as a distinct, fast-growing type of nonprofit, and evaluates the influence of engaging in partnerships with businesses on the not-for-profit organization’s (NPO) development of innovations, capacity building, visibility, scale of operations, funding, and mission accomplishment. We propose that stable relationships based on greater perceived value, communication, lower conflict, trust, and commitment improve innovation in nonprofits and give rise to a process of capacity building and better performance indicators. Empirical research is based on a survey of a representative sample of 325 Spanish foundations. Structural equation techniques served to analyze the data. The results confirm the positive effects of this type of BNPP.

Keywords

business–nonprofit partnerships foundations innovation human resource management information and communication technology competence nonprofit performance

Introduction

Cross-sector partnerships, that is, collaborative alliances among businesses, governments, and civil societies that address social causes, have experienced rapid growth (Austin & Seitanidi, 2012a, 2012b). Four main categories are commonly distinguished (Selsky & Parker, 2005): business–nonprofit, government–business, government–nonprofit, and business–nonprofit–government. Our study focuses on business–nonprofit partnerships (BNPPs).

From the nonprofit perspective, the development of partnerships with businesses is vital because the proliferation of not-for-profit organizations (NPOs), combined with global recession and scarce public and private funding, has forced NPOs to compete for diminishing resources to ensure long-term survival (Never, 2011). Governments are facing the need to undertake extremely unpopular austerity policies, and in such situations, the provision of many social services to an increasing number of beneficiaries depends on NPOs to a greater extent. This forces them to improve their operations, innovation, managerial skills, accountability, and efficiency. Partnering with businesses is a valuable way to attain these objectives. Furthermore, corporate social responsibility (CSR) has increased the interest of businesses in these partnerships (Seitanidi & Crane, 2009), and public institutions have also encouraged BNPPs by promoting patronage and sponsorship laws given the need to outsource many of their social services.

As a result of these converging public and private interests, interactions between businesses and NPOs have grown and changed significantly, producing complex relationship models that integrate emulation, cooperation, and competition. However, these new relationships generate suspicion and distrust within the nonprofit sector. Sectoral blurring entails the introduction of businesslike instruments (Dart, 2004) and a higher number of paid professionals (Hwang & Powell, 2009), and there is an ongoing debate regarding the advantages and disadvantages of volunteering versus professionalism in the nonprofit sector (Kreutzer & Jäger, 2011). Another concern is the possibility that businesses use BNPPs only for their own marketing goals rather than contributing much to the social cause (Reed & Reed, 2009).

An exhaustive literature review conducted by Selsky and Parker (2005) highlights how previous studies have analyzed typologies of BNPPs, partners’ motivations, the drivers of partnership building and the processes involved, governance mechanisms, the effect of power balances or imbalances, and the impact of partnerships on performance, generally on the business’s results. These works—mainly based on case studies—provide an overview of BNPPs. Nevertheless, as Austin and Seitanidi (2012a) note,

[i]t is clear from the literature review that value creation through collaboration is recognized as a central goal, but it is equally clear that it has not been analyzed by researchers and practitioners to the extent or with the systematic rigor that its importance merits. Although many of the asserted benefits (and costs) of collaboration rest on strong hypotheses, there is a need for additional empirical research—quantitative and qualitative, case study and survey—to produce greater corroborating evidence. (p. 744)

Following Austin and Seitanidi’s (2012a, 2012b) suggestions, we have analyzed empirically the key enablers of movement to higher levels of collaboration, as well as how these enablers facilitate innovation, capacity development, and NPO performance. In particular, the study focuses on foundations and evaluates the influence of their perceptions of the characteristics of the BNPP on the foundation’s visibility, scale of operations, funding, and mission accomplishment, by means of encouraging the foundation’s innovation and capacity building. We attempt to offer a threefold contribution.

First, according to the Collaborative Value Creation (CVC) framework (Austin & Seitanidi, 2012a, 2012b), a “collaboration continuum” comprised of four stages, that is, philanthropic, transactional, integrative, and transformational, can be used to characterize how the relationship evolves. The most advanced collaborative stage is “transformational collaboration.” In this stage, there is shared learning about social needs and partner’s roles in meeting those needs and partners agree on their intention to encourage social innovations. This type of relationship demands what Selsky and Parker (2005) call the “social sector platform” to analyze BNPPs (Austin & Seitanidi, 2012a), based on the underlying institutional dynamics of cross-sector partnerships, including trust, power, and control (Selsky & Parker, 2005). In accordance with this perspective, we focus on the NPO’s perception of the degree of relational development of the BNPP as a means to measure the position of the NPO within the “collaboration continuum.” This evaluation uses some of the constructs that define the nature of the relationship within the “collaboration continuum” framework, that is, level of engagement (commitment), mission and strategy alignment, trust, interaction intensity (communication), perceived value, and innovation.

Second, we analyze whether the impact of BNPPs goes beyond the traditional roles of donor and recipient played by businesses and NPOs, respectively (Foster, Meinhard, Berger, & Krpan, 2009). In a donor-recipient relationship, businesses usually provide monetary or economic resources to the cause, and the nonprofits “extract resources and, if successful, graciously issue thanks but not bother the donor thereafter” (Austin, 2000, p. 73). However, as Austin (2000, p. 84) stresses, “[h]igh-performance collaborations are about much more than giving and receiving money; they are about mobilizing and combining multiple resources and distinctive capabilities to generate benefits for each partner and social value for society.” The development of capacities is essential as the “collaboration continuum” moves from the philanthropic stage to the transformational stage, and, particularly, innovation appears as a basic output of transformational collaborations. Therefore, our research analyzes the effect of BNPPs on the NPO’s development of innovations and on two other critical capacities: human resource management (HRM) and information and communication technology competence (ICTC), as well as the impact of these competencies on the NPO’s visibility, scale of operations, funding, and social mission accomplishment.

Third, we focus on foundations as a distinct, growing type of NPO. Foundations are no-member, no-owner NPOs. These features differentiate foundations from member organizations such as associations, cooperatives, and other organizations of the social economy or the third sector; and also from business organizations (Hopt et al., 2006). Three reasons explain why these organizations deserve greater research attention: (a) their growth in developed countries (e.g., it is estimated that there are approximately 110,000 foundations in Europe, collectively spending between 83 and 150 billion euros annually on projects and programs, and providing employment to up to one million Europeans; European Foundation Centre, 2013); (b) their central position within the nonprofit sector, because many of them make grants to other nonprofits (Prewitt, 2006); and (c) the increasing demands for their accountability in all Western countries (European Foundation Centre/DAFNE, 2011) because foundations are institutions that apply tax-protected resources to promote their private vision of the public good, and their nonproprietary, nonmembership nature leads to an extreme case of agency problem, as their boards are not answerable to owners (unlike businesses) or members (unlike associations or cooperatives).

We structure the remainder of this article as follows: We propose a set of hypotheses linking the BNPP to innovation, capacities, and performance. We then explain the methodology and discuss the empirical results. Finally, we draw the main conclusions and implications derived from the research.

Conceptual Framework

We depict our model in Figure 1. It is comprised of three parts: the NPO’s perception about the relational development of the BNPP, the process of knowledge transfer, and the effects on the NPO performance.

Figure 1.

Conceptual model.

Degree of Relational Development in BNPPs

Although the analysis of cross-sector partnerships, and particularly of BNPPs, entered into academic debate more than 20 years ago, interactions among the three societal sectors have changed significantly. New forms of collaboration have emerged that go beyond the mere roles of donor and beneficiary, involving stable partnerships with NPOs and generating other shared value-added resources and capabilities for the business organization, the NPO, and the society. Along these lines, the latest development of the CSR concept is “CR Innovation” (Halme & Laurila, 2009) or the “shared value” concept (Porter & Kramer, 2011), which involves business competitiveness enhancement, while simultaneously creating value for communities, through the development of new business models and relationships for solving social and environmental problems. Engaging in close partnerships with NPOs is one means for achieving this double goal. In turn, NPOs might enter BNPPs for different purposes such as the diversification of income sources, enhancement of publicity, brand improvement, or absorption of business-related skills (Al-Tabbaa, Leach, & March, 2013; Elkington & Fennell, 2000).

The typology of BNPPs includes alternatives such as corporate philanthropy, corporate foundations, licensing agreements, sponsorships, cause-related marketing, joint issue promotion, and joint ventures (Wymer & Samu, 2003). Each one entails different degrees of relational development and, as a result, there are different types of BNPPs concerning commitment and value creation, that is, philanthropic, transactional, integrative, and transformational partnerships (Austin & Seitanidi, 2012a). As the relationship moves along this continuum, its characteristics change in terms of the improvement of the level of engagement, relevance of the collaboration for the partner’s mission, magnitude of resources, type of resources (money to core competences), scope of activities, trust, interaction intensity, internal change, managerial complexity, strategic value, co-creation of value, synergistic value, innovation, and external system change.

With a grounding in the Relational Exchange Theory of Macneil (1980), relationship marketing is the research area that has studied to a great extent the underlying factors that foster the development of successful relational exchanges. Recently, this approach has been extended to stakeholder marketing (Iyer & Bhattacharya, 2011), which considers that the organization’s behavior toward multiple stakeholders can be understood better in the context of relationship marketing (Grinstein & Goldman, 2011).

Relationship marketing points to trust and commitment as the basic dimensions for explaining the success of a relationship (MacMillan, Money, Money, & Downing, 2005; Morgan & Hunt, 1994). Trust comprises three dimensions (Mayer, Davis, & Schoorman, 1995): capability, which refers to the trustor’s belief that the trustee has the required skills to perform the job effectively; honesty or integrity, or the trustor’s belief that the trustee will keep its promises and adhere to a set of principles that the trustor finds acceptable; and benevolence, which pertains to the belief that the trustee is interested in the trustor’s welfare.

Commitment implies that one exchange partner believes that the relationship is “so important as to warrant maximum efforts at maintaining it” (Morgan & Hunt, 1994, p. 23). There are two basic types of commitment, calculative and affective. The former is based on a rational assessment of benefits and costs derived from a particular relationship, whereas the latter assumes an affective predisposition to maintain the relationship as a result of identification with the partner’s values. Research on BNPPs has emphasized the importance of emotional and affective bonds for a partnership’s success (Berger, Cunningham, & Drumwright, 2006), so we use the affective dimension of commitment in our study. This type of commitment is similar to what Seitanidi and Crane (2009) define as “partnership institutionalization.”

It is widely acknowledged in relationship marketing literature that trust is the major determinant of affective commitment (Palmatier, Dant, Grewal, & Evans, 2006). Similarly, BNPP literature shows that “when individuals develop a personal relationship of trust within the partnership then the level of embeddedness of the relationship becomes more evident” (Seitanidi & Crane, 2009, p. 422). Then, we posit,

Hypothesis 1 (H1): The NPO’s trust in the partner’s behavior is positively associated with the NPO’s affective commitment to the partner.

Trust depends on many variables. Communication, conflict, and perceived value of the relationship represent three of its main direct drivers. All these factors (and their determinants) interact within the collaborative context and determine the results and the success of the relationship (Corbin, 2006).

Communication is an absolute prerequisite of partnership success and trust development (Wymer & Samu, 2003). Austin (2000) notes that “[t]o realize the full benefits of a partnership, the partners need to have means of communicating effectively, efficiently, and frequently . . . Good communication appears to foster trust and vice versa” (p. 86).

Regarding conflict, Bryson, Crosby, and Middleton Stone (2006) assert that it “emerges from the differing aims and expectations that partners bring to a collaboration, from differing views about strategies and tactics, and from attempts to protect or magnify a partner’s control over the collaboration’s work or outcomes” (p. 48). In BNPPs, the potential for conflict is greater than in within-sector alliances, because partners from different sectors (sometimes with clearly adversarial origins) face contradictions between their incompatible missions, values, motives, types of constituents, and organizational characteristics (Seitanidi, Koufopoulos, & Palmer, 2010). Overall, research on partners’ motivations for entering a BNPP shows that “[t]he motives of NPOs tend to be altruistic, unlike the motives of BUSs which predominantly pursue self-interest” (Seitanidi et al., 2010, p. 142). The existence of these differences usually involves “misunderstandings; misallocation of costs and benefits; mismatches of power; lack of complementary skills, resources, and effective decision-making styles; and mismatching of time scales and mistrust” (Austin & Seitanidi, 2012b, p. 932).

These tensions are similar to the conflicts that volunteers and paid professionals find in those NPOs where both types of human resources coexist. These problems emerge from the different values associated with a “volunteer identity” and a “managerial identity” that characterize, respectively, NPOs (or volunteering) and businesses (or professionalism). Compared with the “volunteer identity,” which is linked to integration and democratic participation, managerialism is based on formalization, specialization, and efficiency (Kreutzer & Jäger, 2011). In the words of Kreutzer and Jäger (2011),

[t]he main focus of the volunteer identity lies in the services, where elements such as creativity, emotional proximity to the target group, and a readiness to help others were emphasized. By contrast, managerial identity is characterized by ideas of professional fundraising, predictability and investment concerning resources, and by structure and distance concerning the organization’s service. (p. 651)

Particularly, the existence of conflict related to ethics can be boosted by partners’ different motivations. Although the implementation of CSR initiatives has encouraged businesses’ responsible decision-making and ethical behaviors regarding all stakeholders, one of the potential risks for NPOs derived from professionalization and/or partnering with a for-profit organization is the existence of goal displacement and unresponsiveness associated with the self-interest emphasis of for-profit organizations (Tucker & Sommerfeld, 2006). Furthermore, as Wymer and Samu (2003) note,

[s]ome members of advocacy groups may be idealistic or hold extreme positions, viewing pragmatic cooperation with business as a total defeat instead of a partial victory. Other advocacy groups may feel the partnering nonprofit is compromising its values and integrity. (p. 16)

Greater perceived value in terms of greater benefits and/or lower costs should also foster the NPO’s trust. According to Austin and Seitanidi (2012b), value creation can involve three levels of analysis, that is, meso (organizations), micro (individuals), and macro (society). Our research focuses on the meso level of analysis. At this level, partnering generates different types of potential benefits for NPOs and businesses. Concerning NPOs, these benefits are linked to associational value (higher visibility, credibility, increased public awareness of the social issue), transferred value (financial support, increased volunteer capital, complementary and organization-specific assets), interaction value (opportunities for learning, development of unique capacities and knowledge creation, access to networks, improved relations with the profit sector, etc.), and synergistic value (innovation, positive organization change, sharing leadership, increased long-term value potential, etc.).

Regarding the negative dimensions of perceived value, potential costs include the decrease in donations due to the visibility of a wealthy partner, an increased need for resource allocation and skills, internal and external skepticism ranging from a decrease in volunteer and trustee support to reputational costs, increased costs derived from the unforeseen exit of the partner, or legitimization of the “greenwashing” mechanism (Austin & Seitanidi, 2012b). Perhaps the most significant cost for a NPO is the potential damage to its reputation or image due to scandals, frauds, or inappropriate business behaviors. The NPOs’ public-benefit mission renders them even more susceptible to public scrutiny than for-profit organizations. Losing reputation means damage to the nonprofit’s capacity to attract donors, volunteers, and employees, so its survival may be threatened (Seitanidi et al., 2010). And even if there is no unethical business behavior, the public perception of the NPO’s goal displacement or its loss of independence as a consequence of the self-interest motivations of its for-profit partner can harm the NPO’s reputation.

Considering the aforementioned comments, we posit that,

Hypothesis 2 (H2): The NPO’s trust in the partner’s behavior is

Positively affected by the existence of effective communication between the partner and the NPO.

Negatively affected by the existence of conflict between the partner and the NPO.

Positively affected by the NPO’s perception of partnership benefits.

Negatively affected by the NPO’s perception of reputation damage risk.

Previous research also highlights the important role of mission and strategy alignment with the partner in reducing the negative conditioning factors of trust. An appropriate partner selection process determines the value creation potential of the partnership and is vital to reduce the conflict derived from the different partners’ motivations. Linked interests regarding the social problem, complementary resources, directionality of resource flows across the partners (not only unilateral but also bilateral and conjoined), and organizational fit (mission, motivations, targets, geographical areas, products, and/or services, etc.) are basic factors for conducting an appropriate selection process (Austin & Seitanidi, 2012a, 2012b). Research usually links misalignment and unfamiliarity to increased conflict and displeasing feelings (Seitanidi et al., 2010). Moreover, if the NPO perceives cultural differences, the level of uncertainty increases. Therefore, it should be more likely that the partner’s behaviors arouse the NPO’s suspicions of inappropriate behaviors. Therefore,

Hypothesis 3 (H3): The NPO’s perception of mission and strategy alignment with the partner is negatively associated with (a) the level of conflict in the relationship and (b) the level of perceived reputation damage risk.

The negative effect of reputation damage risk on trust can be indirect, through conflict, generation of arguments, or disagreements between partners. We therefore expect,

Hypothesis 4 (H4): The NPO’s perception of reputation damage risk is positively associated with the level of conflict between organizations.

Knowledge Transfer

Close relationships can give rise to a bilateral process of knowledge transfer and capacity building (Bennett, Mousley, & Ali-Choudhury, 2008). Particularly, a greater degree of professionalism in NPOs seems to be especially relevant in support functions, such as administration, finance, information and communication technology (ICT), public relations/media, marketing, and human resources (Hurrell, Warhurst & Nickson, 2011). We focus on two of these areas, HRM and ICTC.

HRM represents a critical function in a service organization. This relevance has produced substantial research focused on developing an “internal marketing” approach for managing human resources in for-profit companies (Gounaris, 2006; Lings, 2004) and NPOs (Bennett & Barkensjo, 2005). Internal marketing comprises three dimensions: Internal market intelligence generation (e.g., collecting information about employees/volunteers), internal intelligence dissemination (communication between supervisors and employees/volunteers), and responses to internal intelligence (e.g., designing jobs or training programs that meet employee/volunteer needs). These activities are especially important for NPOs, because volunteers are key to their operations, for whom associational advantages from feeling connected to others, the perceived importance of volunteer work, the perceived support provided by the organization, and satisfaction and identification with the nonprofit’s values are critical forms of motivation (Garner & Garner, 2011). Moreover, to address the tensions arising from the co-existence of volunteers and paid employees, communication, training, clear objectives, and trust are basic necessities (Kreutzer & Jäger, 2011).

ICTC is the extent to which an organization is knowledgeable about and effectively uses ICTs to manage internal information (Tippins & Sohi, 2003). Few studies address the influence of ICTs on NPOs (Burt & Taylor, 2003), but it seems that despite the availability of these technologies, most NPOs fail to take advantage of them (Brainard & Brinkerhoff, 2004). NPOs can adopt and use these new technologies to improve their efficiency and effectiveness, and to support their campaigning, provision of user services, and quality assurance (Burt & Taylor, 2003).

Therefore, as important capacities for NPOs, it is relevant to identify the potential drivers of internal marketing and ICTC. Higher level BNPPs (integrative and, especially, transformational collaborations) might constitute one such facilitator. The mediator between the degree of relational development and capacity building is the existence of a learning process and the NPO’s development of innovations (McDonald, 2007). The objective (and the consequence) of higher level collaborations is “to create disruptive social innovations” (Austin & Seitanidi, 2012a, p. 743). Organizational learning literature identifies several characteristics of a learning culture (Conner & Clawson, 2004), mostly associated with interpersonal trust and commitment. In the specific context of BNPPs, Bennett et al. (2008) identify the determinants of effective knowledge transfer, as being the extent to which the source is seen as expert, reputable, and trustworthy. Therefore,

Hypothesis 5 (H5): The NPO’s commitment to the partnership is positively associated with the extent to which the NPO develops innovations as a result of the collaboration.

This global innovation capacity can be translated into different types of more specific innovations. Following the Oslo Manual (Organisation for Economic Co-Operation and Development [OECD]/Eurostat, 2005), four types of innovation can be distinguished, namely, product, process, marketing, and organizational innovations. Particularly, an organizational innovation is “the implementation of a new organizational method in the firm’s business practices, workplace organization or external relations” (OECD/Eurostat, 2005, p. 51). The development of an internal marketing strategy and ICTCs represent two examples of organizational innovations. So, we expect that,

Hypothesis 6 (H6): The NPO’s development of innovations as a result of the collaboration is positively associated with (a) its implementation of an internal marketing approach and (b) its ICTC.

We posit that HRM and ICTC are related. Information technologies are embedded in working practice and without the appropriate human interaction with these systems, the returns on investments are at risk (Sabherwal, Jeyaraj, & Chowa, 2006). Then,

Hypothesis 7 (H7): The NPO’s implementation of an internal marketing approach is positively associated with its ICTC.

NPO Performance

Measuring NPO performance is a complex task. The ultimate NPO performance indicator is the extent to which the organization accomplishes its social mission (McDonald, 2007), but this final goal depends on other intermediate performance measures. Despite the vast number of available NPO performance indicators (LeRoux & Wright, 2010; Sowa, Coleman Selden, & Sandfort, 2004), and considering the critical challenges for NPOs in terms of access to funding, the need to increase their size and scale of operations, and their desire for greater visibility, we include three related outcomes in our research. We also measure the extent to which the NPO believes that it has accomplished its mission and satisfied the expectations of beneficiaries and donors as the measure of the ultimate NPO performance indicator.

Because internal marketing increases personnel satisfaction, reduces their propensity to leave the organization, and improves their service orientation and alignment with the organizational objectives (Bennett & Barkensjo, 2005), employees and/or volunteers should be more willing to undertake a greater number of fundraising activities (funding), increase the number of activities, and/or provide the NPO’s services to more people (scale of operations). Moreover, an internal marketing strategy is a responsible approach for managing human resources, so we expect that it positively affects the perception of mission accomplishment. Consequently,

Hypothesis 8 (H8): The NPO’s implementation of an internal marketing approach is positively associated with its (a) funding, (b) scale of operations (number of activities and/or beneficiaries), and (c) mission accomplishment.

Similarly, ICTC fosters fundraising capabilities (Brainard & Brinkerhoff, 2004), enables the organization to operate at a greater scale (Skloot, 2000), and improves service quality (Burt & Taylor, 2003), which in turn should improve beneficiary and donor satisfaction. Furthermore, considering the great advantages of ITs in terms of information dissemination (Brainard & Brinkerhoff, 2004), visibility should be increased. Therefore,

Hypothesis 9 (H9): The NPO’s ICTC is positively associated with its (a) funding, (b) scale of operations, (c) mission accomplishment, and (d) visibility.

Previous NPO research (Modi & Mishra, 2010; Vázquez, Álvarez, & Santos, 2002) shows that greater financial resources should help the NPO increase the scale of its operations and visibility, and the increase of operations should contribute to improving the perceptions of the mission’s accomplishment, as well as the NPO’s visibility. So, we expect that,

Hypothesis 10 (H10): The NPO’s funding is positively associated with (a) the scale of its operations and (b) its visibility.

Hypothesis 11 (H11): The scale of the NPO’s operations is positively associated with (a) perceptions of its mission accomplishment and (b) its visibility.

Method

Data Collection and Sample Description

We conducted a survey with a representative sample of 325 Spanish foundations. The analysis of Spanish foundations is interesting as a case study because Spain has a highly institutionalized foundation sector and one of the highest numbers of registered public-benefit foundations in the European Union. According to the Spanish Institute for Strategic Analysis of Foundations, INAEF (Rey García & Álvarez González, 2011), the number of active foundations in Spain at the end of the past decade was 9,050, and the annual rate of new foundation creation was 458. Compared with associations (the alternative legal formula for NPOs recognized by the Spanish law), the relevance of foundations is significantly greater: On average, each foundation creates 4 times more jobs than an association, and almost quadruplicates its contribution to the gross domestic product (GDP). Furthermore, the INAEF (the INAEF is an applied research initiative launched in 2009 by the Spanish Association of Foundations) highlights that the obtaining of funding from businesses remains limited within the Spanish foundation sector, but Spain is a country that is suffering severely from the current economic recession, and this context has produced a drastic reduction of traditional governmental financial support and traditional philanthropic income sources. Consequently, partnering with businesses is becoming critical for ensuring the survival of Spanish foundations.

We randomly selected 525 foundations from the global census of 9,050 Spanish foundations identified by the INAEF. To guarantee that this initial sample was representative of the sector in terms of key descriptors, that is, age, geographical scope, type of foundation, founders, model and types of activities, beneficiaries, and size, we considered the global description of the sector provided by the INAEF (Rey García & Álvarez González, 2011), as well as information available in foundation registries and other public sources. Within each of the categories identified by the INAEF, we randomly selected the corresponding number of foundations. An emailed questionnaire was completed by the person in charge of the daily activities and decisions of the foundation. The data collection took place from September 1 to December 31, 2011. We obtained 375 questionnaires (71.4%), although 50 were eliminated because they were incomplete and/or they presented reliability concerns.

Table 1 provides a comparison between the global Spanish foundation sector and the final sample of 325 foundations. The sample error is ±5.34% at a 95% confidence level. In the questionnaire, we asked respondents whether their foundation had collaborated at any time in the past 3 years with any business organization to achieve the foundation’s social aims. If they answered in the affirmative, we asked them to evaluate the characteristics of the relationship (trust, commitment, communication, etc.). Of the 325 foundations, 185 (56.92%) indicated that they maintained or had maintained a collaborative partnership with a for-profit organization (see Table 1). The questionnaire also collected information about innovation development as a result of the BNPP, internal marketing policies, ICTC, and the foundation’s performance during the past year.

Table 1.

Sample Description.

Descriptors	Spanish foundation sector (n = 9,050)^a	Sample (n = 325)	Partnerships (n = 185)
Year of legal constitution^b
Until 1994	34.7%	31.6%	27.0%
Between 1995 and 2002	31.5	34.8	37.8
After 2002	33.8	33.5	35.1
Administrative registry
National registry	29.2	32.9	36.8
Autonomic registry	70.8	67.1	63.2
Foundation of public initiative
Yes	9.2	12.6	15.1
Founders
Natural persons	52.6	45.9	45.4
Public legal persons	31.3	31.3	31.6
Private legal persons	55.3	55.3	58.2
Geographic scope of activities
Local-provincial	28.3	24.9	17.9
Autonomic	34.7	35.4	37.8
National	23.3	24.9	25.9
International	13.6	14.8	18.4
International Classification of Non-profit Organizations (ICNPO)
Culture and recreation	46.5	42.9	44.9
Education and research	52.0	54.9	56.8
Health	21.0	24.7	23.2
Social services	35.3	36.1	33.5
Environment	13.5	12.7	13.5
Development and housing	27.7	31.8	35.1
Law, advocacy, and polities	6.2	8.0	9.2
International	12.7	18.2	21.1
Religion	3.7	2.8	1.1
Business and professional associations, unions	1.6	3.4	5.4
Main model of activity
Grant making	31.9	33.1	28.8
Operating their own programs or projects	74.6	78.6	84.8
Social mobilization	18.6	18.0	20.7
Operating their own establishments	15.3	18.6	17.4
Type of beneficiaries
Legal persons	54.2	57.4	62.7
Natural persons	96.0	96.6	96.8
Size of the foundation
Revenue <2,400,000 euros	88.4	83.1	79.0
Revenue >2,400,000 euros	11.6	16.9	21.0

Source. Rey García and Álvarez González (2011), foundation registries, and other public sources.

These thresholds correspond to two Spanish laws: the first Spanish Foundation Law of 1994, and the current Spanish Foundation Law of 2002 (Law 50/2002 of 26th December, on Foundations).

Measuring Model Variables

We used multi-item scales derived from previous research. The variable measures use reflective indicators, and all items use 7-point Likert-type scales (see the appendix). The BNPP-related scales are grounded in relationship marketing literature and research on BNPPs. The items for measuring an internal marketing approach originate from Gounaris (2006). For the ICTC measure, we used a five-item scale, adapted from Tippins and Sohi (2003). We used, as a proxy for the transfer of knowledge, the extent to which the foundation perceived that the development of innovations turned out to be a result of the BNPP. For the foundation’s global result scales, we asked respondents to evaluate the extent to which they believed the objectives established for a set of performance indicators had been achieved in the past year (Modi & Mishra, 2010; Vázquez et al., 2002).

To evaluate the possible magnitude of the common method variance, we performed Harman’s single-factor test. An underlying structure of 15 factors emerged from the exploratory factor analysis, and the main factor comprised only 19.06% of the total variance, so this type of bias was not a problem in this research.

Results

A confirmatory factor analysis, using EQS 6.2 for Windows, supports the reliability and validity of the model scales (Steenkamp & Trip, 1991). In Table 2, we provide the results of the causal model estimation using structural equation modeling (SEM) with EQS 6.2 for Windows.

Table 2.

Effects of the Relational Development of the Business–Nonprofit Partnership.

Causal relationships	Standardized coefficients
H1: Trust → Affective commitment	0.49***
H2a: Communication → Trust	0.28***
H2b: Conflict → Trust	−0.26*
H2c: Partnership benefits → Trust	0.33***
H2d: Reputation damage risk → Trust	−0.09
H3a: Mission and strategy alignment → Conflict	−0.07
H3b: Alignment → Reputation damage risk	−0.54***
H4: Reputation damage risk → Conflict	0.50***
H5: Commitment → Innovation development	0.29***
H6a: Innovation development → Internal marketing	0.27***
H6b: Innovation development → ICTC	0.21***
H7: Internal marketing → ICTC	0.23***
H8a: Internal marketing → Funding	0.19**
H8b: Internal marketing → Scale of operations	0.23***
H8c: Internal marketing → Mission	0.21**
H9a: ICT competence → Funding	0.24***
H9b: ICT competence → Scale of operations	0.03
H9c: ICT competence → Mission	0.01
H9d: ICT competence → Visibility	0.32***
H10a: Funding → Scale of operations	0.64***
H10b: Funding → Visibility	0.26**
H11a: Scale of operations → Mission	0.48***
H11b: Scale of operations → Visibility	0.21*
Goodness-of-fit measures Satorra-Bentler Chi-Square (S-B χ²) = 879.32 (p = .00); S-Bχ²/df = 1.44; Bentler-Bonett Non-Normed Fit Index (BBNNFI) = 0.90; Comparative Fit Index (CFI) = 0.91; Root Mean Square Error of Approximation (RMSEA) = 0.05

Note. ICTC = information and communication technology competence; ICT = information and communication technology.

*p < .1. **p < .05. ***p < .01.

Trust is positively associated with affective commitment (p < .01), in support of H1. We also find support for H2a (p < .01), H2b (p < .1), H2c (p < .01), H3b (p < .01), and H4 (p < .01).

Affective commitment relates positively to the development of innovations (p < .01), which in turn links to internal marketing (p < .01) and ICTC (p < .01). Moreover, ICTC is boosted by internal marketing (p < .01). Thus, we find support for H5, H6a, H6b, and H7.

The extent to which the foundation develops an internal marketing strategy is positively and significantly associated with the achievement of the three performance measures, in support of H8a (p < .05), H8b (p < .01), and H8c (p < .05). Regarding the effects of ICTC, this relates to funding (H9a) and visibility (H9d), which is also linked to funding (H10b, p < .05) and scale of operations (H11b, p < .1). Finally, our results support the strong connections between funding and scale of operations (H10a) and between scale of operations and mission accomplishment (H11a).

Conclusions and Implications

The main conclusion of this research is that BNPPs based on greater perceived value, communication, lower conflict, mission and strategy alignment, trust, and commitment generate other potential benefits for NPOs apart from those associated with the mere provision of funding.

First, perhaps the most relevant finding refers to the positive empirical connection between some of the basic underlying constructs of the CVC conceptual framework proposed by Austin and Seitanidi (2012a, 2012b) and the NPO’s development of innovations and key capabilities. Previous research has provided the basic concepts and the analytical vehicles to analyze BNPPs, but there is “a need for field-based research that documents specific value creation paths” (Austin & Seitanidi, 2012a, p. 744). We have attempted to contribute to filling this empirical gap.

One important implication of this result for BNPP management is that although cash support is usually the predominant company contribution, businesses (and NPOs) should realize that if their strategic goals include the development of real social innovations and a transformational change, the BNPP does not have to be based only on the mere provision of money but also on other more specialized resources and capabilities that help the partners improve knowledge sharing. Furthermore, the managers of NPOs and businesses should pay particular attention to the climate of trust and commitment. To encourage trust and commitment (and their drivers), they should establish a team in which members from both organizations work together to implement the partnership, encourage the physical proximity of team members, ensure team member stability, use training and seminar sessions to develop understanding, and encourage temporal personnel mobility among groups.

Second, our findings suggest that human resource policies constitute outstanding capacities for NPOs. We recommend that NPO managers direct their efforts toward the development of an “internal marketing” strategy. This type of approach means that NPO managers should provide financial support for carrying out regular evaluations of personnel satisfaction. This support also means that top managers should provide employees/volunteers with encouragement and help them to overcome problems, foster cross-functional cooperation and communication, and promote formal and informal communication flows between employees/volunteers and their supervisors. Other highly relevant activities involve the careful design of jobs, taking into account the skills and professional development of personnel, or the promotion of training programs.

Similarly, ICTCs should be encouraged. To improve them, managers should budget appropriate funds for adopting new ICT hardware and software, develop training programs in ICTs, hire qualified personnel, and foster the application of these technologies throughout the different areas of the NPO.

Third, our analysis of the consequences of partnerships from the NPO perspective is a significant academic improvement. In the nonprofit sector, there is substantial controversy about the desirability of maintaining relationships with businesses and/or adopting professional management styles. Our findings confirm some important advantages of NPO professionalization, needed to accomplish its mission. We also identify the BNPP as a means for encouraging this professionalization and suggest that NPO managers should be receptive to the development of cooperation agreements with appropriate businesses.

Footnotes

Appendix

Likert-type scales, 1 = completely disagree; 7 = completely agree (N = 185).

Mission and strategy alignment (reverse scored)

“We had to face the need to change the culture and strategy of our organization”

(M = 1.99; SD = 1.52)

Reputation damage risk

“Loss of reputation due to unethical behaviors undertaken by this firm or by other similar ones”

(M = 1.43; SD = 1.18)

Innovation development

The extent to which the partnership had given rise to the development of innovations within the foundation (M = 4.79; SD = 1.55)

Acknowledgements

The authors acknowledge the Spanish Association of Foundations (AEF) for endorsing the research project “Foundations as a key factor of Spanish firms’ corporate social responsibility strategy. Bi-directional analysis of the foundation-firm relationship following a marketing approach.”

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The authors acknowledge funding provided by the Spanish Ministry of Economy and Competitiveness, as part of its R&D Plan (2009-2011), for the project titled “Foundations as a key factor of Spanish firms’ corporate social responsibility strategy. Bi-directional analysis of the foundation-firm relationship following a marketing approach” (MICINN-09-ECO2009-11377).

Author Biographies

María José Sanzo is a professor of marketing at the University of Oviedo (Spain), whose research works are mainly related to relationship marketing and nonprofit management.

Luis I. Álvarez is an associate professor of marketing at the University of Oviedo (Spain). His research interests focus on non-profit-management-related topics.

Marta Rey is an associate professor of marketing at the Universidade da Coruña (Spain) and has an extensive experience in nonprofit management. She has been in charge of the Spanish Institute for Strategic Analysis of Foundations (INAEF). Accordingly, her academic research is focused on foundation management.

Nuria García is an associate professor of marketing at the University of Oviedo (Spain). Her research includes internal marketing and new product development.

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