Month: December 2017

In the first article of this series we discussed how flat-to-declining public sector budgets are making partnerships more attractive to government agencies. We discussed the concept of “collaborative capital” as a means for the public sector to enhance skills, funding, data, staff, and competencies that it no longer possesses.

Further, we outlined 4 distinct resource types needed by partnerships.

1. Intellectual Capital: the data, unique processes, software, and insight that is the basis of each partner’s business model. It includes the ability to confer legitimacy on any of the above.
2. Political Capital: the ability of each partner to influence public policy, regulation, law, and public budgets.
3. Labor: the staff and volunteers each partner can commit toward ongoing governance, developing solutions, and implementation.
4. Financial Capital: the actual dollar funding each partner provides toward the solution.

Each of these 4 elements of collaborative capital are generally required to solve public sector problems. Not surprisingly, financial capital is the element most often in short supply. There are 3 main reasons for this:

1. Public sector budgets are flat or have been declining for over a decade.
2. Public sector partnership members tend to be from other public sector agencies (federal, state, and local), nonprofit organizations, universities, and quasi-governmental groups like advisory councils and planning authorities. These groups generally have resource elements 1, 2 and 3, but little financial capital.
3. There is an ongoing reticence for public sector groups to partner directly with the private sector. The private sector could be a great source of financial capital, but there are concerns about:

• The private sector having different motives – profit motives. Profit motives are generally viewed by the public and nonprofit sectors as preventing altruistic funding. The common view is that few private sector entities define altruism as essential to their business model and the funding they provide has strings attached.
• The motives for partnering are as important as the goals of the partnership. Suspicion of profit oriented motives can lead to mistrust and suspicion of the private sector by other sectors. “What are they after?”, is a question we often hear.
• In the case of nonprofits, partnering with the private sector can be seen by their membership as “selling out”.
• Additionally, public sector partnering with the private sector is complicated by laws, policies, and formal oversight rules that increase the burden of compliance and administration.

It’s all about perceived risk.

There is an inherent risk that all parties in a partnership must subscribe to – mainly the risk that one’s partners will do something negative and the fallout will impact everyone’s reputation. Right or wrong, public and nonprofit sectors often perceive this risk to be higher, or more likely to occur, when working with private sector partners.

Our experience has shown partnerships that include the private sector are no riskier than partnerships between public sector entities and between the public sector and nonprofit sectors.

Partnerships within the public sector – between federal agencies, or between federal and state agencies – have all the same real and perceived risks as partnering with the private sector.