Nonprofit Policies for Alliances with Businesses

It is important that each nonprofit board of directors determines the organization’s position on policy issues commonly raised when participating in alliances with businesses. Developing strategic alliances with businesses often brings to the surface ethical questions regarding conflicts of interest, product endorsements,and acceptable business partners. These and other issues require consideration and the development of policy guidelines for prudent and timely organizational decision making.

This appendix presents nine policy areas related to alliances and a sample policy statement. The Drucker Foundation Web site [drucker.org/collaboration/]provides additional policy resources including links to sample policy statements.

The information following is provided solely for educational purposes and doesnot constitute legal advice. Your organization should seek legal counsel or other professionaladvice before adopting policies.

1. Mission and ethics: policies that address the nonprofit’s position on thedegree to which alliances must be congruent with mission and values. Also policies that address conflicts of interest.

Sample policy: Values Congruence

[Nonprofit] will have alliances involving only businesses, products, and services consistent with the values, principles, standards, and guidelines of [nonprofit]. Upon periodic review,the board of directors may prohibit [nonprofit] from entering into alliances with specific types of organizations engaged in activities judged to be harmful to the health or welfare of[nonprofit’s] customers or otherwise in conflict with [nonprofit’s] mission or values.

Other potential policies:
Mission congruence
Conflict of interest

2. Legal and liability protections: policies that ensure alliance activities willcomply with public disclosure requirements, will not violate any legal constraintson nonprofit-business relationships, will not endanger tax-exemptstatus, and will not expose the organization to undue liability. May requireformal alliance agreements with exit clauses.

Potential policies:

Public disclosure
Liability protection
Terms of agreement

3. Name and reputation protection: policies that require formal permission andset standards for use of the nonprofit’s name, logo, service marks, and otheridentifying marks or messages. Will constrain relationships that could bejudged to create negative perceptions of the organization or its cause.

Potential policy:
Name and brand protection

4. Endorsements: policies that establish whether the nonprofit will, explicitlyor by conferring any certifications, endorse any businesses or their productsor services and, if so, under what specific conditions.

Potential policy:
Endorsements

5. Exclusivity: policies that establish whether, and under what circumstances, anonprofit will grant exclusivity in its alliance relationships with businesses.

Potential policy:
Exclusivity

6. Privacy and confidentiality: policies that outline privacy protections for thenonprofit’s customers and confidentiality protections for the nonprofit andits alliance partners.

Potential policy:
Privacy and confidentiality

7. Due diligence: policies that establish the scope and requirements forresearch, cost-benefit analysis, and risk assessment regarding alliances.Defines authority and approval processes for making alliance agreements.

Potential policy:
Advance review and approval

8. Relationship management and appraisal: policies that define requirementsand protocols for managing and evaluating alliances with businesses.

Potential policy:
Management and appraisal

9. Coordination with affiliates: policies for national, international, or other federatedorganizations that define the degree to which decisions regardingalliances with businesses are centralized or at the discretion of individual affiliatesand how alliances will be managed across the organization.

Potential policy:
Coordination with affiliates