Legal Issues in Cross-Sector Partnership with Ngo
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Legal Issues in Cross-Sector Partnership with NGO
Introduction
The twenty-first century has brought about global growth in wealth and finances. Not only have individuals and corporations been exposed to an exponential growth in their daily businesses, but governments and multi-national bodies have encountered a bursting global economy.
This globalization has also brought along complex business problems. Primordially, the problems that affect financial expansion the most are issues with market expansion, product development, and ignorance of cultures and practices. Single-sector entities are unable to easily and efficiently overcome these issues, and thus, cross-sector partnerships are formed. Cross-sector partnerships combine the unique capabilities of private, public, and non-governmental, non-profit organizations. This combination allows for efficient solutions to otherwise crippling problems. However, the perfect marriage of such entities may also cause legal issues that must be conquered. I will explore some of these issues and how they can be solved in a hypothetical scenario, wherein United Coffee Roasters forms a cross-sector partnership with Greenpeace, in an effort to change the market positioning of its brand.
Background
United Coffee Roasters (hereinafter “UCR”) is a fictitious corporation that imports and roasts coffee beans. UCR obtains its coffee beans fresh from farmers in Latin American countries. The beans are then either, roasted locally by Latin American roasters, or UCR roasts them post-importation. UCR then distributes its beans to coffee chains around the United States, and it also offers beans in bulk, directly to end-consumers. This forms UCR’s distribution chain. UCR has recently met stiff competition from other coffee roasters, who market their brand as an environmentally friendly product. Additionally, UCR has faced criticism after an audit revealed
that the workers employed by UCR did not receive compensation that was equivalent to a living wage.
Greenpeace is a real-world organization that was funded in 1971, and touts itself as being an independent entity that finds solutions to global environmental problems (Greenpeace – Frequently asked questions, 2017).
Although a real-world partnership would between UCR and Greenpeace would be unlikely (Greenpeace strives to maintain its independent status), a hypothetical cross-sector partnership between UCR and Greenpeace would be a perfect match. UCR would be able to closely learn and understand the cultural difference among the individuals it encounters during its product development and its distribution chain. This knowledge would translate into better treatment of the coffee workers and the environment. Most importantly for UCR, their knowledge and equitable treatment of the laborers would help it acquire a “green” status among its customers. This would ultimately help UCR change the market positioning of its brand, and would place it an even playing field among its competitors.
On the other hand, Greenpeace would benefit from having an established brand, such as UCR, change its practices. More specifically, Greenpeace’s mission goal of solving environmental problems falls directly in line with the type of problems that UCR has developed. After partnering with UCR, Greenpeace could potentially be approached many other coffee developers, and Greenpeace would benefit from these exchanges tremendously, as it will promote the sustainable marketing of coffee.
Legal Issues
As stated previously, Cross-sector partnerships allow entities to exchange their knowledge and benefit mutually from each other. However, this type of symbiotic relationship can only be
possible with a merger of the entities, and unfortunately, there are a host of potential legal issues that are created that need to be considered prior to the entities merging with one another. The legal issues are numerous and incredibly complex. In the interest of brevity and for lack of a better forum, this paper will only explore the basic legal issues that the partnership may encounter.
Firstly, it is imperative that the merger be thoroughly examined by an attorney or group of attorneys who specialize in the local requirements of where the merger will take place. This will reduce UCR’s and Greenpeace’s liability, and will greatly ease the transition period. An attorney will not only examine the merger for legality, but can also assist in the preparation of all of the merger documents.
Secondly, and perhaps the most basic of all of the legal issues, is that the principals to the merger from both UCR and Greenpeace must be familiarized with each other and must each perform its due diligence in clearing any questions or concerns. Moreover, they both need to have a deep understanding of their respective company’s structure. In the case of UCR, the ownership type is important. UCR must know if and how its shareholder will be affected. Similarly, Greenpeace should be aware of any and all local and international laws that restrict what types of organizations may merge with each other. There are laws that prevent non-profit organizations from engaging in fraudulent and or misleading business dealings in order