Public Private Partnerships are an interesting tool in the revenue chest.  They can be equally useful as a cost containment tool as well.

Usually a 3P involves the participation of a public or NFP sector organization in a partnership with a private sector company.  These can be a great win-win in some situations especially when its focus is not part of the public or NFP's organization's core business.

An example might be an organization allowing their new partner to build a commercial building on land they own then using office space in the building.  They gain ongoing income, reduce expenses and perhaps have a lucrative equity stake in the building.  The private company is able to utilize the real estate and make money on leasing the building.  Neither organization steps outside of their area of expertise, the rules of the partnership are clear and they both profit.

Another might be a private contractor offering programing that the NFP thinks is too risky or complicated to offer on its own.  In this case they may well, eventually, move the operation in-house once it has been proven.

All too often though the reverse is true.  Everyone is so eager to rush into the partnership that they gloss over contract details, set vague targets and are assumed to possess expertise that they don't

The same rules apply to these types of partnerships as they do to others.

  • Be clear about each partner's responsibilities.  Negotiate all the details upfront.  It will be much more difficult to sort things out if the deal goes sideways later.
  • Be clear on what each partner will take away if the project is successful - and what they will contribute if it isn't.
  • Stay within each partner's area of expertise.  Make sure that neither side promises to deliver something they have no experience with delivering.
  • Evaluate the compatibility between what the deal covers (i.e. land rental) and your corporate values.
  • Evaluate the compatibility between your partner's history and your own.  Their past actions will eventually reflect on your organization.
  • Make sure that the private partner is aware of the timelines and methods needed for approvals.  (This is frequently a problem with 3Ps.)
  • Before you actually sign the contract make sure you have evaluated if it really will be worth all the effort.

Having been involved in a number of 3P projects we can say that they are certainly not a cure all but they can be very effective in addressing specific needs or situations.  Let us help you evaluate the pros and cons of your project and suggest some ways forward. 

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