10 Ways to Ensure an Effective Public-Private Partnership
By Richard Crespin and Helen Moser
As 2016 draws to a close with a new American presidential administration poised to take power, some people fear reductions in large social, environmental, and international development programs. However, a Republican administration, typically pre-disposed to let private, voluntary action take the lead over regulation and legislation, could usher in a new wave of social innovation and public-private partnership. But should it?
We decided to use this moment to take stock of the abundance of collaborative efforts that have emerged in the past decade and see what key recommendations we could find for leaders in the public, private, and civil sectors tackling tough challenges. First, some context.
For much of history, philanthropy consisted of rich people getting together to decide what they thought best for poor people. Businesses, governments, and other institutional donors joined with wealthy individuals to support a variety of concerns and causes, parks and philharmonics. Thus was born the first age of corporate philanthropy. Classical economist Milton Friedman helped end this age, telling business executives “the business of business is business,” advising they reinvest profits or distribute excess to shareholders for them to donate.
Harvard’s Michael Porter, along with FSG’s Mark Kramer, ushered in the second age of corporate philanthropy declaring that companies can engage in corporate citizenship – acting for social or environmental benefit – if it also creates “shared value” by serving long-term business interests. A wave of public-private partnerships (PPPs) and “collective impact” programs emerged, with companies, civil society, and governments collaborating to tackle big, tough problems. These approaches, however, required rethinking traditional procurement and funding processes and many used a form of “co-creation,” working with the people they wanted to help to build more effective programs. Much of the innovation that has come and will likely come in the next few years from these kinds of programs will center on and depend upon innovations in institutional funding and procurement.
Within the international development field, the U.S. Agency for International Development (USAID) borrowed the Broad Agency Announcement (BAA) process from the world of research and development to create a more flexible procurement process. The BAA allows the government to work directly with potential collaborators and beneficiaries to co-create new approaches to tackling problems facing the environment and poor and vulnerable communities. The process streamlines the traditional Requests for Proposals (RFP) mechanism and is open to all, including the private sector, educational institutions, and non-governmental organizations (NGOs). Since its first BAA convening, USAID has co-created over a dozen new approaches to challenges including combatting wildlife trafficking, improving the lives of children in institutional care, and creating more sustainable access to water, sanitation, and hygiene. The BAA also enabled USAID to establish its Grand Challenges program.
These approaches challenge traditional development models, including the rules-bound approach to managing donations, in a powerful way. Co-creation offers the opportunity to break the cycle of well-intentioned but misdirected philanthropy and thread the needle to create true shared value. Participants say that a tremendous amount of learning occurs when both beneficiaries and others who touch the problem work together. They speak about the power of developing a deep, shared understanding of problems before jumping into specific solutions, which often end up only addressing symptoms instead of underlying causes.
Co-creation offers the opportunity to break the cycle of well-intentioned but misdirected philanthropy and thread the needle to create true shared value.
At the same time, these approaches do not work for everyone. After interviewing dozens of partnership practitioners – executives from across the public, private, and civil sectors who have helped fund, implement, or manage public-private-civil collaborations, combined with our own direct experience over two decades – we have concluded that only a narrow set of problems actually warrant these kinds of collaborations. We offer the following 10 recommendations to guide potential co-creators to 1) determine whether co-creation is the right approach for the challenge at hand and 2) if so, how to get the most out of it.
1. Co-create on multi-factorial, adaptive problems. Those that have multiple, poorly understood causes, multiple possible solutions, and require multiple stakeholders to solve them. Most problems have well-understood causes, a few direct solutions, and require only the power and authority to implement them. These problems do not require co-creation to solve.
2. Get clear on terms. “Partner” and “collaborate” get thrown around a lot. Don’t confuse a customer/supplier relationship with partnership. True partners share a stake in the outcome and have real “skin in the game.” And while not all partners are equal all the time, they can operate on something of an equal footing with each other. True partnerships start with co-creation and rely on it throughout.
3. You can have too much of a good thing. If you can solve a problem alone, you should. If you need partners, involve the fewest possible to get the job done. Collaboration brings transaction costs and the more partners, the higher the costs. Remember: this is a new process for everyone, including the donor/government. Coming up this steep a learning curve costs time and money that some players may not want or be able to pay. Some will back out.
4. Government should only lead if it brings something really special to the party. Public sector donors should usually follow as a second or third round funder, not the first money in, unless their presence allows something to occur that would not occur without them.
5. Non-profit does not mean non-competitive. Non-governmental organizations can and do compete for funds. Co-creation and collaboration can occur best in fields with either numerous niche specialists who don’t directly compete with one another or with lots of competitors used to “coopetition” – having to regularly team up and combine to win work. Collaboration and partnership often fail with oligopolies – a few dominant players who jealously carve up an ever-shrinking pie of funds. Welcome partners willing to learn about the problem. Beware of partners only looking for more funding for their existing programs.
6. Form should follow function in funding and procurement. The procurement mechanism (the legal agreement among the parties) and the funding mechanism (the method by which funds flow from donor to grantee to sub-grantees) should derive from the programmatic needs – not the other way around.
7. The program and procurement officials must have a strong relationship. She who defines the programmatic needs on the part of the donor or government and he who runs the legal and procurement process must share a common understanding of the process, equally value the role of partnerships and collaboration, and feel comfortable with chaos and ambiguity.
8. The process takes work. One of the primary values of co-creation and partnership comes from the ability to get new thinking and new players to the table. This takes a lot of work. New and smaller players oftentimes need a leg up, especially if they do not understand the vagaries of government procurement. And communications are critical, especially for new players who will often not understand the “unspoken rules” or traditions of the process.
9. Find your backbone. Most people in a partnership will want to work “in” the partnership, getting down to doing the work. At the same time, someone needs to hold the center, working “on” nurturing the partnership itself. In many partnerships, and especially those with partners from different sectors, there is need for a starter/convener, facilitator, and backbone organization. The backbone takes ongoing responsibility for ensuring the partnership stays together and helping the different parts work together so they provide more value than each of them acting alone. Common data and measurement frameworks drive better work, outcomes, and sustainable impact.
10. Profit is not a four-letter word. The private sector is almost always a key stakeholder in co-creation and the ultimate sustainable solution is a market-based one. However, the public sector and NGOs often worry that a business may benefit from philanthropy. Companies should consider their involvement as long-term investments in building markets where they do not exist, and NGOs and governments should embrace the fact that a successful philanthropic program may give way to a commercial solution.
Not all problems are right for co-creation and partnership, but those that are have much to gain from the process – namely greater community buy-in and more sustainable solutions to some of the world’s trickiest challenges.
Not all problems are right for co-creation and partnership, but those that are have much to gain from the process – namely greater community buy-in and more sustainable solutions to some of the world’s trickiest challenges. Ultimately, to ensure that co-creation accomplishes its goals, potential co-creators should:
- Carefully choose problems and co-create judiciously;
- Bring potential co-creators, especially the private sector, to the table early and often;
- Be willing and able to “blow up” existing rules around procurement;
- Be transparent about the length, breadth, and cost of the total process;
- Invest in data and measurement; and
- Remember that market-based solutions are the most sustainable ones.
A version of this article was published by the Center for Strategic & International Studies.
Helen is a manager with CollaborateUp, a boutique consulting firm advising businesses and non-profits on how to work together to solve big problems. Previously, Helen was a research fellow with the international development projects at the Center for Strategic and International Studies (CSIS). There, she authored several publications with a focus on multi-stakeholder partnerships, women’s economic empowerment, and transformative innovation for international development. Prior to joining CSIS, she conducted research with the Brookings Institution on shared value approaches in the public-private partnerships of the U.S. Agency for International Development. She has also worked with the Georgetown Institute for Women, Peace, and Security; Save the Children in Sri Lanka; Vital Voices Global Partnership; and the Asian University for Women in Bangladesh. Her experience additionally includes positions in the nonprofit and public sectors in the Federated States of Micronesia, Germany, Scotland, and Taiwan. She is a Phi Beta Kappa graduate of the University of Southern California and holds a Master’s in Global Human Development from Georgetown University’s School of Foreign Service.