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The Nonprofit Strategist

What’s All the Noise About Shared Value, Anyway?

We frequently recommend that our nonprofit clients encourage discussion of the potential for shared value investment with their corporate supporters. So what is shared value, and why does it matter?

First articulated by Mark Kramer and Michael Porter (FSG), the concept of shared value has grown into a movement with hundreds (if not thousands) of companies involved, an annual conference (of course!), a seemingly inevitable flood of TED talks and more. The basic idea is simple: for-profit companies should invest in developing products for underserved communities that meet social needs, or in economic development--and they will make money in the process.  In reality, this is not a new phenomenon. In effect, they have re-branded a component of ethical corporate behavior, and reminded companies that investing in products for underserved people is both the "right thing to do" and potentially profitable.

My own view is that Kramer and Porter have done the corporate world a favor by pointing out what should be obvious. So I’m glad their Shared Value Initiative is thriving, and that dozens of companies are implementing strategies. The principle works, because I saw it in action in my international eye care work with Orbis International and Alcon Laboratories back in the early aughts, long before they published their paper.

More recently, I encountered what shared value can mean when meeting with Gary Cohen, Executive Vice President at BD. He described BD’s incredible story as an American Cancer Society team (of which I was a member) was working through a list of potential cross-sector projects with BD.

During the early stages of Africa’s HIV crisis, BD and big pharma were coming in for heavy criticism for not doing enough. BD decided to respond. One solution might have been to subsidize blood testing using the existing, very limited urban network, perhaps through philanthropy. Instead, BD developed a very low cost test that could be easily used by rural nurses and health aides--places that were days from a blood lab. They also partnered with government and nonprofits to ensure training, distribution, treatment, etc. were in place when the technology was deployed. Millions of people have ultimately benefited, and BD helped contribute to better management of the crisis. BD has since pursued that same strategy in many different arenas, realizing that social impact and profit are not immutably opposed. Quite the opposite. In fact, 25% of BD’s 2014 revenue of $8 billion was attributable to shared value projects.

So what’s in it for you? Better corporate relationships, simply put. And maybe you’re thinking that your nonprofit can encourage for-profit companies in helping you solve a social problem not just through philanthropy, but by investing in product development, ethical supply chain management or in economic development. 

My basic advice is that while developing and executing relationships like these can be complex, you’ll never get anywhere without starting conversations. So what to do?

  1. Learn more. Read up on shared value. You can start with the Initiative.  

  2. Think about what shared value initiatives might look like in relation to your mission. This will help you determine what kind of companies you’d like to engage (obviously, it depends on the mission). 

  3. Set up a discovery conversation with your corporate supporters. It’ll be fun. You won’t be there to ask for money. You’ll instead be learning about what they think their social purpose happens to be, and how they see it working in practical terms.

Here’s the bottom line: Your corporate partners may or may not be interested in a shared value project that touches your nonprofit’s mission. If they are, great!  If not, they will be grateful that you took an interest in their business and its purpose, and the result will be an improved and better relationship--and possibly increased financial support. In fact, it is my firm belief that this kind of conversation almost always leads to deeper and more committed long-term relationships, because I’ve seen it happen.