Mercy Corps: Sustainable Innovation through Corporate Partnerships

Abstract

Mercy Corps was known for its gutsy approach to disasters. While other relief and development organizations were scrambling to plan a response, Mercy Corps would already be on the ground with aid and skilled field workers. In addition to performing emergency relief, the agency had also developed strong programs in economic development using a “community mobilization” approach that emphasized local control and sponsorship of projects. Although it was a relatively new player in the non-governmental organization (NGO) world, by the late 1990s Mercy Corps had developed a reputation as a nimble, decentralized organization that was not afraid to take risks.

There were many advantages to this decentralized structure. It meant that Mercy Corps was skilled at crafting innovative solutions to a diverse range of local problems. It meant that Mercy Corps was “field-driven” and able to respond quickly to changing conditions without getting approval for every decision from headquarters. It meant that Mercy Corps could intervene in the most remote and strife-torn regions, where other organizations might fear to go.

But several developments at the turn of the century revealed limitations to the status quo. A series of natural disasters and wars resulted in the organization's rapid expansion. As Mercy Corps was increasingly awarded multi-million-dollar government aid awards, it came to be seen less as a niche player and more as a major NGO in the same league as Care or Save the Children or World Vision. These changes were all to the good, but Mercy Corps was also wondering how to apply its creative, field-driven approach on a large scale.

At the same time, opportunities for new ways of doing relief and development work began to emerge. Prodded by the sobering realities of September 11th and the collapse of Enron, private companies began to expand their corporate social responsibility departments. In response to the disasters of the Indian Ocean tsunami, hurricane Katrina, and other crises, corporations donated to Mercy Corps at unprecedented levels. And as markets and workforces became increasingly globalized, many corporations were on the lookout for ways to expand their businesses in developing countries.

A new form of private–non-profit collaboration, the corporate partnership, seemed to offer advantages to both sides. During the first several years of the new century, Mercy Corps began to seek ways to develop deeper relationships with private companies, and by 2007 it had formed several significant corporate partnerships. As it cultivated these new affiliations, Mercy Corps was also asking a number of questions. What kinds of partnerships were ideal? How deeply should Mercy Corps become engaged with a private enterprise? And how could it adjust its organizational structure to build corporate partnerships more effectively?

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

Resources

Exhibit 1: The World of Mercy Corps

Ongoing Worldwide Programs, 2005
Africa
  • Eritrea
  • Ethiopia
  • Liberia
  • Niger
  • Somalia
  • Sudan
  • Uganda
  • Zimbabwe
Americas
  • Colombia
  • Guatemala
  • Guyana
  • Honduras
  • Nicaragua
  • United States
  • Venezuela
Balkans
  • Bosnia and Herzegovina
  • Kosovo
  • Macedonia
  • Serbia and Montenegro
Caucasus/Central Asia
  • Armenia
  • Azerbaijan
  • Georgia
  • Kazakhstan
  • Kyrgyzstan
  • Tajikistan
  • Uzbekistan
Middle East
  • Iran
  • Iraq
  • Jordan
  • Lebanon
  • West Bank and Gaza
South, East & Southeast Asia
  • Afghanistan
  • China
  • East Timor
  • India
  • Indonesia
  • Kiribati
  • Mongolia
  • Nepal
  • North Korea
  • Pakistan
  • Sri Lanka

Source: Mercy Corps 2005 Annual Report.

Exhibit 2: Mercy Corps Financials, 1997–2005

Condensed Summary of Support, Revenue and Expenditures

SUPPORT & REVENUE

FY 2005

FY 2004

FY 2003

FY 2002

FY 2001

FY 2000

FY 1999*

FY 1998*

FY 1997*

Government and Organizational Support:

Government Grants

$77,125,488

$86,832,551

$84,535,704

$62,660,683

$40,588,411

$41,813,948

$29,957,649

$13,873,324

$10,654,709

International Organization Grants

3,273,954

7,793,232

1,878,838

2,562,159

2,224,727

8,799,185

3,649,257

1,906,033

2,328,587

Material Aid

21,682,209

11,420,173

15,355,833

17,531,549

14,795,944

36,521,260

37,723,799

24,537,110

13,831,225

Subtotal: Government & Organizational Support

102,081,651

106,045,956

101,770,375

82,754,391

57,609,082

87,134,393

Private Support:

Contributions

22,189,581

6,922,117

7,305,522

7,566,822

6,259,134

6,049,692

4,379,568

2,636,298

2,271,301

Grants

10,501,085

4,007,137

2,584,596

4,200,494

2,298,531

3,740,511

Gifts in Kind

30,505,681

22,052,014

5,098,010

10,435,595

8,565,904

16,432,631

Other Revenue

3,198,338

1,981,614

873,850

1,253,374

1,547,028

382,528

682,468

609,257

2,161,323

Subtotal: Private Support

66,394,685

34,962,882

15,861,978

23,456,285

18,670,597

26,605,362

TOTAL SUPPORT AND REVENUE

168,476,336

141,008,838

117,632,353

106,210,676

76,279,679

113,739,755

76,392,741

43,562,022

31,247,145

EXPENDITURES

Program:

Project Expenditures

95,325,071

95,730,846

86,589,153

68,660,528

45,350,883

54,408,437

32,495,145

15,020,349

14,331,454

Material Aid

52,187,890

33,472,187

20,453,843

27,967,144

23,361,848

52,953,891

37,723,799

24,537,110

13,831,225

Subtotal: Program

147,512,961

129,203,033

107,042,996

96,627,672

68,712,731

107,362,328

70,218,944

39,557,459

28,162,679

Support Services:

General & Administration

11,093,797

8,146,587

7,040,107

5,132,557

4,283,812

3,993,475

2,733,634

2,370,025

1,840,185

Resource Development

7,250,100

3,718,933

3,323,317

2,900,946

2,557,043

2,161,253

2,421,643

1,221,120

1,118,715

Subtotal: Support Services

18,343,897

11,865,520

10,363,420

8,033,503

6,840,855

6,154,728

5,155,277

3,591,145

2,958,900

TOTAL EXPENDITURES

165,856,858

141,068,553

117,406,420

104,661,175

75,553,586

113,517,056

75,374,221

43,148,604

31,121,579

NET

2,619,478

(59,715)

225,933

1,549,501

726,093

222,699

1,018,520

413,418

125,566

*Material Aid includes both governmental commodities and private gifts in kind. Therefore the line items are not comparable with other years.

Exhibit 3: Mercy Corps–Tazo Tea Partnership Logo

Figure

Exhibit 4: Mercy Corps Simplified Organizational Chart, 2007

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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