Author: Lucas Pizzutti
A recent article published by McKinsey Sustainability last month discussed the emerging concept of the Public-Private-Philanthropic Partnership (P4) in relation to sustainability efforts and projects around the world. The concept refers to the involvement of philanthropic entities, non-profits and NGO’s in traditional P3 delivery mechanisms; they bring a unique level of understanding about certain issues and stakeholders to projects that might otherwise be overlooked. As the article states, “Philanthropies can leverage their higher risk tolerance, longer time horizons, and knowledge of intergenerational and equity issues to invest in solutions that are not yet widely adopted. Philanthropies can also bring an end-to-end cross-sectoral view to enable closer collaboration across actors.” It continues:
“We now see early signs of the public, private, and philanthropic sectors—often alongside a broader range of social sector actors (including NGOs, nonprofits, think tanks, and community organizations)—embracing such partnerships to tackle systemic climate and nature challenges. These public–private–philanthropic partnerships, or 4P models, have included transactional financing, industry-targeted initiatives, and wide-ranging knowledge-sharing platforms.”
Even though the concept is new, we can see signs that the inclusion of a philanthropic arm to P3’s is gaining traction. Earlier this month at the Government P3 conference in Washington, D.C., a panel spoke about an exciting project to bring two new Veteran’s Affairs (VA) health centers in Omaha and Tulsa. This could potentially serve as a model for future P4’s around the country. Back in 2016, Congress passed the “CHIP-IN for Vets Act” that authorizes the Department of Veteran Affairs to carry out a pilot program under which it may accept donations of up to 5 projects from non-federal entities.” These entities include: 1) a state or local authority, 2) a 501(c)(3) 3) an LLC, 4) a private entity, donor or donor group, or 5) other non-federal government entity. Part of the requirements however, was that the project had to have been on the VA’s strategic capital planning list or already have funds appropriated to it. The donors, however, would be responsible for all due diligence and all funds beyond those already appropriated by Congress. In other words, the statute opened the doors for philanthropic funding of projects, thereby incorporating the fourth “P” in P4.
The results have been remarkable. The VA was able to leverage this enabling statute to deliver two new medical centers 30 - 40% quicker than with traditional delivery methods and, one of the projects came in under budget. For something like hospitals for veterans, completing a project 30 - 40% quicker than normal is a laudable feat. Moreover, the really impressive difference between these projects and traditional P3’s (and what really makes this a P4 with an emphasis on philanthropy) is that the private partner will not receive a return on investment; both projects have been completely donated, lock, stock and barrel, to the VA. There is no profit motivation, only a sense of civic duty to help veterans. All of this has only been possible due to the political will to push through legislation that allows governments to do things like this. In this case, providing needed medical care to our Veterans is obviously a worthy cause, and should serve as a great example to other governments, both state and Federal, that the P4 model can and should be used for projects with a compelling philanthropic motive.
More broadly, there a number of other reasons as to why non-profits or other philanthropic organizations can play a unique role in P4’s. As explained by an article published earlier this year on the topic, non-profits provide the following five unique benefits:
1. Commitment: Nonprofits are born out of a strong commitment to social or environmental causes. They bring a mission-driven approach that prioritizes public welfare, community development, or addressing specific societal needs, that is unparalleled.
2. Advocacy and representation: Nonprofits serve as advocates for underrepresented communities. They bring the perspectives and interests of these communities to PPPs, ensuring that their voices are heard and their needs are addressed. This helps promote equity, inclusivity, and social justice in partnerships’ overall decision-making processes.
3. Accountability and transparency: Nonprofits’ commitment to transparency and accountability enhances public trust and confidence in PPP projects.
4. Flexibility and innovation: Nonprofits are often nimble and adaptable, capable of responding to emerging needs and experimenting with innovative solutions. They bring a spirit of creativity, which can foster new approaches, pilot projects, and alternative service delivery models. This flexibility can lead to more agile and responsive solutions within the new PPP.
5. Workforce opportunities: Nonprofits capture the future of work with the younger generations who seek to work in mission-driven organizations. They provide a healthy complement to older generations with more intergenerational innovations and collaborations under PPPs.
In summary, philanthropic organizations have started being recognized as a potential new arm to the traditional P3 delivery mechanism. They bring a number of unique benefits that add tremendous value to certain projects and communities. The success of the VA in delivering two new health centers shows tangible examples on how these new P4’s can be deployed. Many states have already taken the step in passing P3 enabling statutes to give their governments the flexibility they need to accomplish their goals, but now it is time for governments to take a look at how to bring in new non-profit and philanthropic partners into projects.