The emergence of the private sector as a development actor is a potentially game-changing trend. The reason for its emergence is clear: Official development assistance to the least developed countries continues to decrease and international human development is increasingly becoming part of the core business of corporations. But what remains open for debate is the scope of the private-sector involvement in global human development and whether corporate money should play a role in global development at all.
Partnerships between nonprofits and businesses already exist. They range from corporate philanthropy, to corporate social responsibility, to shared value partnerships. Over the past several years, USAID has established an office for transformational partnerships as part of its Global Development Lab, while organizations such as the U.K. Department for International Development have taken an approach that focuses on poverty reduction through market development and catalyzing private enterprise.
Many large nonprofits are heavily dependent on one donor stream. This means that their systems, processes and tools are geared toward providing services to their largest client, making it potentially difficult to adapt to other partners.
However, a diversified funding base can make an organization more secure, flexible and responsive. The private sector has expertise that can be leveraged to increase the impact of development programs.