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#COVID19 has amplified the challenges facing the third sector. Could a new form of partnership help? Better Together, a new report by Nesta and Save the Children, shows that by collaborating with startups, the third sector can increase their impact. Dr Charlotte Reypens, senior policy researcher at Nesta, outlines key takeaways from the report.
One way to boost innovation and digitalisation in the third sector is by working with startups. While the private sector has seen a vast increase in the number of collaborations with startups in the past decade – such as through corporate accelerators, investment and acquisitions, startup collaboration in the third sector is rare.
This is partly because setting up collaborations with startups is more complex in the third sector than in the private sector. Greater financial and legal restrictions, for example, make it more difficult to invest in for-profit startups. The private sector’s portfolio approach to risk-taking is hard to mimic in the third sector because failure is more likely to be scrutinised. A lack of aligned incentives and language differences between the third sector and startups can further obstruct collaboration.
How working with startups can benefit the third sector
Despite these barriers, third sector organisations are beginning to experiment with similar collaboration models than the private sector. Our research conducted with third sector innovation managers and startups revealed that the collaborative benefits can outweigh the barriers if both parties come to the collaboration prepared. By collaborating with startups, third sector organisations can:
- Increase their reach. Collaborations can lead to greater impact for your organisation’s beneficiaries and can help you explore novel impact and funding opportunities. For example, Alzheimer’s Society runs an accelerator programme to help startups develop user-friendly solutions in partnership so they will have the biggest impact on people affected by dementia.
- Access novel expertise and resources. Your organisation can gain exposure to startups’ digital, technical and innovation expertise. By collaborating new solutions can also be adopted faster than if they were developed in-house. For example, the UNICEF Innovation Fund was set up to help UNICEF innovate with emerging technologies. The fund finances early-stage, open-source technologies that can benefit children worldwide.
- Improve internal processes. Your organisation can learn from startups agile ways of working and business development methods. For example, by setting up a co-working space for tech startups, Friends of the Earth was able to adopt the startups’ approaches to project management, research and social impact monitoring.
What charity leaders can do to support startup collaboration
To reap these benefits, both parties need to adjust their behaviors and practices. By analysing cases of startup collaboration, we distilled three lessons for how charity leaders can encourage startup collaboration:
- Understand the role of startups in delivering innovation and digitalisation strategy. Too often, innovation and digitalisation are still viewed as internal activities, but they can be delivered more efficiently in partnership with startups. Be proactive and make partnerships with startups an explicit part of your organisation’s strategy. Carry out an organisation-wide scan to identify opportunities to work with startups.
- Create a single entry point for startups with decision-making and budget power. Promising opportunities to work with startups can get lost because there are no resources and employee’s time dedicated to working with startups. Make an explicit commitment to working with startups by allocating an internal champion with a dedicated budget and decision power.
- Learn as you go. Working with startups involves going through a learning curve. As you gain experience, demonstrate learnings to the wider organisation. This way, you can gradually build internal capabilities to work with startups and develop a culture of innovation, entrepreneurship and risk-taking.
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- Understand whether working with startups is right for you.
- Evaluate and select suitable collaboration modes, e.g. co-working spaces, accelerators, investment.
- Identify the necessary steps to prepare for, design and carry out the collaboration – and the key challenges to anticipate.
- Learn from the experience of other third sector organisations that have set up collaborations with startups.
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