How can nonprofits help businesses create win-win relationships with communities? A new Ford Foundation report by Michele Kahane, Special Projects Director at The Center for Corporate Citizenship at Boston College, and John Weiser, founding partner of Brody•Weiser•Burns, provides clear guidance — and the answers may not be what you’d expect. 
 
 The report, Part of the Solution: Leveraging Business and Markets for Low Income People, is based on seven years of grant-making and research that the Ford Foundation conducted through its Corporate Involvement Initiative. This initiative provided over $45 million in grants and loans to help create win-win relationships between businesses and low-income communities. The experiences of the grantees provided a wealth of case studies showing specific ways in which nonprofits worked with business to generate competitive advantage for business and gains in income, assets and wealth for low-income people.
 
Here are three examples:

Financial Services: Fannie Mae:
Fannie Mae Corporation, in partnership with Self-Help (a nonprofit community development lender), agreed to purchase innovative and flexible mortgage products that enabled low-income individuals to purchase homes. The purchases led to the issuance of more than $2 billion in affordable mortgages to over 30,000 low-income families who previously would not have qualified for conventional mortgages. This activity enabled these new borrowers to acquire their own homes, one of the principal means of building financial assets in America. It also opened up a new group of profitable customers for banks serving the mortgage market.

Temporary Employment Services: Manpower:
Manpower Corporation developed its TechReach program in partnership with local nonprofit workforce development organizations in each of its key market areas. This program provides Manpower with a new source of work-ready skilled technical workers while offering a gateway to high-wage technical careers to the unemployed and underemployed. Manpower is now placing approximately 2,000 individuals per year into jobs through this program. As a result, low-income individuals are gaining marketable and highly transportable skills and increasing their income and employment security and Manpower can tap a new source of workers to help serve its 400,000 business clients world-wide.

Specialty Coffee: Green Mountain Coffee:
Green Mountain Coffee Roasters (GMCR) is a Vermont-based wholesale coffee company that roasts more than 90 high-quality arabica coffees. In an effort to capture new customers, Green Mountain added “Fair Trade” certified coffees to its product line. Coffee that meets the “Fair Trade” standard is purchased under prices and terms that enable farmers in underserved markets to earn a sustainable livelihood and produce a high-quality bean.

TransFair USA partners with Green Mountain Coffee and other coffee roasters and retailers to certify that their coffee meets Fair Trade standards, and also to help drive retail demand. Due in part to TransFair’s efforts, more than 40 articles per month were published about Fair Trade in 2004, in publications—including Time Magazine, the New York Times, the Wall Street Journal, and dozens of leading food- and beverage-industry trade publications—that reached a combined readership of more than 98 million people across North America.

The Fair Trade and Organic certified line is now Green Mountain’s fastest growing product line, accounting for approximately 16% of its sales in FY 2004. And this year, Green Mountain Coffee has announced its goal of having 35% of its coffee sales be Fair Trade and Organic certified by the end of FY2008. These sales both create increased profits for Green Mountain, and also help to create a sustainable livelihood for small family-owned farms in developing countries.

How can nonprofits help businesses accomplish these results? The report shows that the key task that nonprofits must accomplish is to address market barriers that hold businesses back from being able to create win-win relationships with low-income communities. In many cases, businesses are interested in doing more with low-income communities, but find that market barriers create poor alignment between strategies that make profits, and strategies that help build income and assets for low-income individuals. These market barriers include:

• Lack of adequate information about low-income markets
• High costs for serving low-income markets
• Lack of market mechanisms to enable product differentiation
• Cultural biases and prejudices towards low-income and minority communities
• Poor business operating conditions (political instability, lack of infrastructure, poor factors of production)

The report shows that there are five key strategies that nonprofits can pursue to remove market barriers and enable businesses to work more productively with low-income communities:

1. Create awareness, interest and leadership within the business sector
2. Develop new information, products and networks
3. Address organizational and cultural barriers with management tools and change strategies
4. Create new market mechanisms
5. Organize for collective action and public policy

Each of these strategies is reviewed in depth in the report. For an electronic copy of the report which you can use in your business or give to potential nonprofit partners, go to the e-library at www.fordfound.org or click here.