Partnering is foundational to the social sector. Strategic alliances can be formed between a variety of sector actors – charities and service providers, social enterprises, philanthropists, corporates, government – in order to ultimately create social value in some form. Although there are a variety of reasons behind partnerships, from streamlining operations to diversifying income streams, there are certain principles that can be applied to any partnership, regardless of its nature. A crucial step when deliberating any type of partnership is a comprehensive due diligence in order to ensure strategic alignment between your organisation and a potential partner.

It is also worth mentioning that, as partnerships are becoming more widely adopted in the social sector, there is an increasing imperative to be proactive rather than reactive in identifying potential partners. For Voluntary, Community & Social Enterprise organisations, this has particularly become the case with organisations becoming more focused (or more restricted) in what they do. In the current landscape there is a growing need for organisations to focus on what they are good at. This consolidation of activities means that there will consequently be gaps in service provision, as the organisation in question cannot excel at everything. Therefore, partnerships are required to bring in the additional skill and expertise required to successfully deliver services.

To illustrate this drive to adopt a more proactive approach to partnerships, consider the example of a large children’s services charity. The organisation found that it was only considering partnerships when responding to bids, which meant that sudden and intensive identifications of potential partners had to take place ad hoc. By embedding partnering into their strategic process, the charity was able to conduct analyses of potential partners at all levels of the organisation during each strategic review. As a result, it had a down-selected list of potential partners, complete with areas of expertise and strengths/weaknesses, that it was able to use in the bidding process throughout the year.

Considerations before conducting partnership due diligence

Due diligence involves reviewing the partner situation in a number of areas and assessing if partnership is the right option. Before conducting due diligence, it is essential that the organisation in question has a clear idea of what it wants to achieve from the partnership. Any form of collaboration should offer strategic benefits that can only be achieved through a partnership, and as such it is a prerequisite that key stakeholders determine the type and purpose of partnership envisage. Similarly, due diligence should only happen when sufficient initial screening has been done to pre-select suitable organisations. Initial considerations should cover matters such as:

  • the nature and reputation of proposed partner;
  • compatibility of culture and mission;
  • legal and financial status of the potential partner;
  • current experience in the area of interest;
  • management/measurement of the potential partner’s social impact.

Conducting due diligence

Successful due diligence is dependent upon the quality of information and analysis. The information used needs to come not just from the potential partner itself, but also from organisations working or dealing with it. It is fundamental to have an outside perspective to arrive at a comprehensive understanding of the potential partner. This means gathering information from the public domain, visiting their sites and, more importantly, talking to stakeholders of the partner organisation.

For partnerships that require higher levels of integration (e.g. sharing of premises, assets, people, knowhow, contracts) or complexity (e.g. multiple sites, complex services), the due diligence accordingly needs to be more profound. Below is a framework to guide you through the process:

Partnership process

Typical timeline and activities

Although timing for due diligence will vary by complexity and the level of integration of the partnership, our experience suggests that it is wise to allow 4-8 weeks for the whole process. A typical timeline will involve the following activities:

  1. Set up – set team up and establish due diligence objective, approach and planning.
  2. Issue of requirement/plan to potential partner(s) – provide potential partner(s) with a clear view of the process and information required.
  3. Data collection – desktop research about the organisation and analysis of data received and collected including interviews with staff, ex-employees, and other stakeholders.
  4. Analysis & internal reviews – there will be interim reviews throughout the process. The final review presents all findings and agrees the position of the organisation with regards to the potential partner, and potentially acts as preparation for further discussions with the partner about findings.
  5. Q&A with potential partner based on internal review – if required, set up a meeting with the potential partner to discuss specific findings. The decision on whether to proceed with the partnership is now made.

As a final consideration in the partnership process, there should be a clear mechanism to ensure accountability for all partners involved. For example, in service delivery partnerships, this can be achieved through “mirroring” or “back-to-back” agreements, in which the terms signed between the main contractor and the commissioning organisation are mirrored in the terms agreed with the other partner organisations. This will ensure openness in terms of accountability, and will also incentivise collective delivery of the agreed outputs or outcomes.