Collaboration Tandem
Will loose interdependence survive the test of time?

In a tandem collaboration structure, sometimes referred to as a “brother-sister” structure, the nonprofit neither controls the for-profit, nor is it considered the for-profit’s “founder.”

What is a collaboration tandem?

The tandem collaboration structure involves a for-profit and a non-profit working loosely together. The arrangements between the two are governed by a set of rules and contracts such as licensing, service agreements, and resource sharing contracts.

What are the benefits of a collaboration tandem?

In the tandem collaboration structure, both organizations have their own boards and executive management. The employees of the for-profit can be compensated without worrying about the “excess benefit” rules, which reduces concerns around incentives and equitable compensation

What are the constraints of a collaboration tandem?

The arm's-length rule requires very limited (or no) overlap between the decision makers of the nonprofit and the for-profit, which can make mission alignment and incentive alignment difficult. In addition, the for-profit must pay the nonprofit at fair-market value for anything of value received. As a result, a tandem collaboration structure typically involves a series of agreements between the for-profit and the nonprofit, negotiated on an arm's-length, fair-market value basis. The collaboration tandem has the highest potential for the two sides to separate over differences in focus, given the weakness of the linkages.


Click on the links below to learn more about each of the seven factors in the Nonprofit structure.

Collaboration Tandem Mission: In a collaboration tandem, mission alignment between the nonprofit and for-profit entities can be complex, particularly for multi-year collaborations.

Collaboration Tandem Earned Revenue: Collaboration tandems can pursue earned revenue according to the limitations within the nonprofit and for-profit entities, and abiding by ‘excess benefit’ and ‘arm’s length’ rules can more straightforward.

Collaboration Tandem External Funding: Both entities in a collaboration tandem should be able to raise funds as they would individually, but many funders resist complicated legal designs.

Collaboration Tandem Incentives: In a collaboration tandem, both entities are free to use financial and intrinsic incentives in order to attract talent, but aligning motivations can be hard.

Collaboration Tandem Scaling Impact: The combined effort of the two entities in a collaboration tandem theoretically drives impact, but there are many challenges.

Collaboration Tandem Governance: Separate governance provides a degree of independence between the two entities in a collaboration tandem, but contract management and interpretation will require effort.

Collaboration Tandem Costs: Collaboration tandems double the work, double the cost, and double the legal counsel required when designing legal agreements and fulfilling ongoing reporting requirements.