There is a “notable gap” between businesses and their non-profit partners when it comes to expectations of non-earmarked funding as new due diligence requirements take effect, a new report has found.

The consultancy C&E Advisory’s 2024 Corporate–Non-Profit Partnerships Barometer report has found that, as new due diligence regulations are due to come into force in 2025, enforced by the EU Corporate Sustainability Reporting Directive, there is a “significant disparity” in between companies and their non–profit partners relating to expectations of non-earmarked funding provision.

The annual research, which was based on responses to an online survey in July with122 UK-based companies and charities engaged in partnerships, found that 56 per cent of charities believed it was likely or highly likely that companies would provide un-earmarked funding to their charity partners after the introduction of the CSRD requirements.

But of the companies consulted, only one-fifth believed this would be likely, with 80 per cent saying this would be unlikely or highly unlikely.

The report, which is in its 15th year, says this highlights a “significant dissonance in expectations”, adding: “Non-profits may need to either encourage their corporate partners to approach this issue differently or adjust their own expectations accordingly.”

Manny Amadi, chief executive of C&E Advisory, described this “notable gap” as “concerning”, saying: “I think charities need to engage with their partners and have really informed discussions.

“They need to help their corporate partners see that unrestricted funding actually brings value, because in a sense that means companies will be pooling their funding and driving down the cost of transaction.”

He said that charities should either focus on making a business case for the provision of non-earmarked funding or, alternatively, better manage their own expectations.

Both corporate and voluntary sector respondents overall agreed that the introduction of the CSRD requirements would affect their partnerships, with 88 per cent of charities and 85 per cent of corporates anticipating significant changes in their strategic partnerships.

The report also found that the majority of respondents believed cross-sector partnerships will grow in the future, with 84 per cent of corporates and 85 per cent of charities saying that partnerships will become more important over the next three years.

Both companies and charities agreed that a key driver behind this growth was the pressure on companies to demonstrate societal consideration in their business practices, with about 80 per cent of each group agreeing.

But charities were more likely to say that the need for charities to raise funds in a difficult economic climate was a factor, with 84 per cent of charities agreeing with this compared to just 30 per cent of the companies asked.

When it came to plans for future investment in partnerships, both groups believed that their investment will increase over the next three years, with 73 per cent of corporates and 75 per cent of charities saying so.

But only 13 per cent of charities said they foresaw a “significant” increase in this investment, compared with 33 per cent of companies.

The report found that one-third of all respondents expected artificial intelligence to be applied in their partnership activities in the coming year, up from 20 per cent last year.

It highlights that AI is seen to play an important role in partnership impact and reporting, with 60 per cent of respondents saying so. A further 56 per cent believe AI will play an important role in research.

C&E Advisory co-wrote the report using the generative AI ChatGPT-4o and found that while it was able to quickly analyse data sets and sped up the initial stages of the report’s preparation, this came with several challenges.

This included a risk of fabrication of information, which necessitated “rigorous fact-checking and validation”, the report says.

The report also includes a retrospective section, which analyses trends over the barometer’s 15-year history and identifies trends likely to shape the future of corporate-NGO partnerships.

These include deeper environmental, social and governance integration, a focus on resilience and sustainability, a focus on transparency, multi-stakeholder collaborations and an increased use of technology.