Professor Christyne Vachon’s article, “Scratch My Back, I’ll Scratch Yours: Scratching the Surface of the Duty of Care in Cross Sector Collaborations - Are For-profit’s Obligated to Ensure the Sustainability of their partner Nonprofits?” was recently published in the fall issue of the Hastings Business Law Journal.
Increased philanthropic need combined with the changing perspectives on corporate value have created new opportunities for for profit organizations to add value through cross sector collaborations with nonprofits. As the level of collaboration between a for profit and nonprofit increase, so too does the need for the board of directors and other management of both entities to be involved so as to properly exercise their duty of care, decision making and oversight to increase the chances of sustainability of the collaboration. This paper argues that a for profit's management's duty of care necessitates taking efforts to ensure the sustainability of the collaboration the more integrated the entities become. To ensure the sustainability of the integrated collaboration and fulfill its duty of care, the for profit management should ensure that the nonprofit management is fulfilling its duties to the nonprofit in light of the pressures of the collaboration, ensuring that the nonprofit does not abuse the tax-exempt status and maintains adequate measures in place to continue pursuit of the philanthropic mission. If steps are not taken to counter the effects of the collaboration to the culture and mission of the nonprofit, the nonprofit may fail and, therefore, so too would the collaboration.