Skip navigation

Corporate–Nonprofit Partnerships: What to Do in a Crisis

January 28, 2011 at 1:29 PM by Research & Insights

The Global Fund to Fight AIDS, Malaria and Tuberculosis in Africa is under fire after revealing “grave misuse of funds” in four countries where it operates. The Fund released its report last year, but an Associated Press story brought renewed attention to the situation this week, revealing the Global Fund is demanding the recovery of $34 million in grants out of $13 billion.


 
In the U.S., the development fund may be better known as the NGO behind the (PRODUCT)RED cause brand. (RED) is backed by a house of iconic brands, including Starbucks, Apple, NIKE and American Express, who have successfully helped generate more than $160 million for the Fund through a unique licensing agreement to sell (RED)-branded merchandise. For these or any companies facing donation fraud or other crises within their cause partnerships, we recommend the following short-term measures to help protect the cause brand and retain consumer trust:
  1. Review existing NGO/cause partnerships to confirm whether credible auditing is in place and whether audit results are accessible to the company and its stakeholders.

  2. If any doubt exists, make a formal request to partners for information and escrow further donations until such auditing and results are confirmed.

  3. Prepare a reactive public statement to this effect, for use in the event of media or consumer inquiries. Make sure appropriate employees – from customer service representatives to store managers – are armed with this statement to respond to questions in real time.

  4. For major ongoing product-based partnerships such as (PRODUCT)RED, post the statement on the media page of the company’s website. Encourage consumers to continue supporting the cause, but assure them their money is safeguarded until it will have the social impact the company desires.

  5. Keep consumers informed of any changes in how their money will be directed as things progress.
Even the most successful and celebrated brands can face immense challenges with the complexities of on-the-ground activation. The situations faced by programs such as (PRODUCT)RED and Pepsi Refresh (which has also experienced its share of controversy) should reinforce to all companies the importance of ongoing cause brand management and transparency to maintain consumer trust.


Visit our website for Cone’s full POV on the Global Fund crisis.

 

 

Posts under the Knowledge Leadership byline come from Knowledge Leadership team members Sarah Kerkian and Casey Brennan. Follow us on Twitter: @ConeLLC, @SarahKerkian, @CaseyB



Tags: employee corporatepartnerships causebranding global nonprofitcausebranding crisis

Did you like this post? Please share it:
Share on Twitter


Email Post

Comments


 StephanieB February 3, 2011 10:25 AM
When we started (RED), we knew that there had to be clear accountability for the millions of dollars our partners would contribute to the fight against AIDS. That’s why we chose to work with the Global Fund. It is the best at turning dollars into lives saved, while taking a no tolerance approach to corruption and fraud.

Unfortunately, the Associated Press took some facts out of context from a report issued last year by the Fund itself. The Fund had discovered and reported about four instances of fraud in certain grants. The AP chose to run the story as ‘new’ news. Despite the fact that it was old news, the story has gotten around and has been sensationalized along the way.

Here are the facts:

- None of this involves any (RED) money.

- The Fund has best-in-class practices in place to root out corruption and publicly reports on any issues found so that immediate action can be taken. It was the Fund itself that discovered and reported these episodes of corruption - as its best practices mechanisms require

- The instances involve $34 million out of the $13 billion that the Global Fund has at work in the world. This is less than 1% of all the money at work through the Global Fund

- The fund has already taken measures to address these issues – halting grants, demanding repayment of money and pursuing legal action against those involved.

Corruption happens in all parts of the world. That’s why the Global Fund Inspector process is so important. It aggressively seeks to surface it and stop it. Also, be aware that the Global Fund’s Inspector General represent one of five levels of financial controls over Global Fund grants. Every dollar in every grant is audited, including those grants managed by UNDP. At the first sign of misuse of funds, the Global Fund takes rapid, corrective steps.

In addition, to provide added confidence to supporters, The Global Fund itself is
 StephanieB February 3, 2011 10:29 AM
(continuation of above comment...)

creating an independent, international panel of highly respected experts to review its procedures, validate that they are of the highest standards and potentially suggest ways to strengthen them further. The Global Fund wants to reassure donors and the public that its systems and procedures to prevent, detect and clamp down on misuse are solid.

-Stephanie @ (RED)
  



< back