PARTNERSHIP

A partnership can be defined as a collaborative relationship between

organizations. The purpose of this relationship is to work toward shared goals
through a division of labor that all parties agree on. Partnerships are
complex vehicles for delivering practical solutions to societal and community
issues.

Partnerships have very simple management structures. In the case of general

partnerships, partnerships are managed by the partners themselves, with
decisions ultimately resting with a majority of the percentage owners of the
partnership. Partnership-style management is often called owner
management.

Corporations, on the other hand, are typically managed by appointed or

elected officers, which is called representative management. Partnerships do
not require formal meetings like corporations do. Of course, some
partnerships elect to have periodic meetings anyway.
• Although organizations may have different structures and
approaches, they can work together toward common purposes and
achieve shared results. A partnership is a give-and-take relationship
that can strengthen organizations’ capacity for long-term cooperation
and collaboration.
Most successful partnerships contain these key components.
• Leadership:- Partnerships imply a shared leadership among respected
individuals who are recognized and empowered by their own organizations
to build consensus and resolve conflicts.
• Common Understanding:- Partners need to understand each other’s
organizational framework, culture, values, and approach. Partners also need
a clear understanding of individual members’ roles, responsibilities, and
what the partnership’s division of labor will be.
• Purpose:- Partnerships must be guided by a shared vision and purpose that
builds trust and recognizes the value and contribution of all members. Each
partner must understand and accept the importance of the agreed-upon goals.
• Culture and Values:- Shared “can-do” values, mutual understanding, and an
acceptance of differences (e.g., norms, ways of working) are essential to
successful partnerships. Partners need to discuss their organizational cultures to
identify how to work with their strengths and weaknesses.
• Learning and Development:- A healthy partnership promotes an atmosphere
of learning. This may involve monitoring and evaluation aimed at improving
members’ performance
• Communication
• Performance Management
There are barriers to achieving effective partnerships
o Hidden agendas and Limited vision or failure to inspire
o Lack of clear purpose or inconsistent understanding of purpose
o Competition between partners for the lead or domination by one
partner
o Unequal and/or unacceptable balance of power and control
o Lack of support from organizations with decision-making power in
the partnership
o Key stakeholders missing from the partnership
o Lack of commitment and unwilling participants
oDifferences in philosophies or work styles
oInadequate understanding of roles and responsibilities
oFailure to communicate and Failure to learn
oLack of evaluation or monitoring systems
oFinancial and time commitments outweigh potential
benefits
The secret to success is a deep understanding of human emotions and their subsequent
behavioral outcomes. When you unlock this secret knowledge you can accurately predict the
needs of those with whom you partner. 
1. Supportive: member needs to feel a sense of support and optimism about the collaboration.
2. Rewarding: Each member in a partnership must see the reward involved in coming together.
3. Cohesion: All partners need to know the relationship is collaborative, loyal and solid. 
4. Open: require partners who are consistently attuned to what is happening within and
outside of the relationship, and the possible impacts on the partnership. All members pay
attention with an open mind.
5. Protective: feel reassured they are in an environment that will not let them fail
6. Challenge: promote competition and reward achievement. So those are competitive crave
more challenge
7. Catalyst
8. Morale
9. Cleanse
10. Service
 Types of Partnerships
Why choose a general partnership?
 Ease of creation. No state filing is required. The partnership is created when the partners
begin business activities.
 Low cost of operation. Because general partnerships are not formed by means of a state
filing, they are not required to pay a formation filing fee, ongoing state fees or franchise
taxes. The partnership must still obtain the business licenses and permits required for
operation however.
 Few ongoing requirements. Unlike corporations, general partnerships are not required to
hold annual meetings of the owners, issue partnership interest, and keep personal asset
separate from business assets. Having a partnership agreement that outlines how the
partnership will be managed, the roles of each partner, and what events will cause the
partnership to end operations is recommended.
 at least one partner has unlimited liability—the general partner(s).
Why choose a limited partnership
 Unlimited liability for general partners only. In limited partners have limited liability,
meaning their personal assets typically cannot be used to satisfy business debts and
liabilities. The amount of their liability is limited to their investment in the LP.
 Limited partners are not involved in management.
 Short-term projects/ventures. LPs are often the business type of choice for special
situations versus true businesses.
Why choose a limited liability partnership?
 Professional service businesses. Limited liability partnerships (LLPs) can only be created
by certain types of professional service businesses, such as accountants, attorneys,
architects, dentists, doctors, and other fields treated as professionals under each state’s law.
 Personal asset protection. The personal assets of the partners in an LLP typically cannot
be used to satisfy business debts and liabilities. The LLP does not shield the partners for
liability for their personal acts. Put simply, the LLP cannot limit the liability of owners for
their own malpractice.
Forming Partnerships
When considering a potential partnership, you may have questions such as:
• What benefits can a partnership provide?
• What organizations should we consider partnering with?
• How do we get a partnership process underway?
Remember-a partnership should not be the end in itself, but, instead, a means to an end.
Therefore, establishing a partnership may not always be the appropriate decision for meeting your goals.
The first step is to define the need for a partnership
Second step is to start the process
Forming involves bringing people together to start the partnership-building process.
 It’s important to work through this storming stage so the group can be open and honest about their
perceptions.
 Norming is the stage in which the partners begin to develop protocols and reach shared agreements.
 Performing is when the partners are working together smoothly and accomplishing their objectives.
Third step is setting up and maintaining the partnership
When you are forming partnership different kinds of Partners that are found in Partnership Firms are
1. Active or managing partner:
A person who takes active interest in the conduct and management of the business of the firm is known as active or
managing partner
2. Sleeping or dormant partner:
A sleeping partner is a partner who ‘sleeps’, that is, he does not take active part in the management of the business.
3. Nominal or ostensible partner:
A nominal partner is one who does not have any real interest in the business but lends his name to the firm, without
any capital contributions, and doesn’t share the profits of the business.
4. Partner by estoppel or holding out:
The person who thus becomes liable to third parties to pay the debts of the firm is known as a holding out partner.
5. Partner in profits only:
When a partner agrees with the others that he would only share the profits of the firm and would not be liable for its
losses, he is in own as partner in profits only.
6. Minor as a partner:
A partnership is created by an agreement. And if a partner is incapable of entering into a contract, he cannot become
a partner.
7. Other partners:
In partnership firms, several other types of partners are also found, namely, secret partner who does not want to
disclose his relationship with the firm to the general public. Outgoing partner, who retires voluntarily without causing
dissolution of the firm, limited partner who is liable only up to the value of his capital contributions in the firm, and
the like.
All partnerships should have a written partnership agreement that spells out the rules and regulations of the
business.
Significance
It should describe the rights, responsibilities and duties of the partners. The agreement acts as the partnership's
governing document. Without a written partnership agreement, a partnership must adhere to the default rules of the
state. A partnership agreement needs to contain the name and location of the business, and the purpose for forming
the company.
Financials
It must contain the name and address of each partner and his contribution to the business. Contributions may consist
of cash, property and services. The agreement must detail how the partners intend to allocate the company's profits
and losses. And include when they have to divide profits and losses according to their ownership interest in the
business. The partnership agreement should describe when and how profits are distributed to partners.
Departures
The buy-sell section of the partnership agreement must detail how and when departing partners are compensated.
The agreement must describe the amount of compensation due to a partner who withdraws from the business.
Details should be provided that describe the process for buying a departing partner's interest in the business.
Considerations
The agreement must state the authority of each partner in respect to managing the company's affairs. Partnership
agreements should communicate if one partner can bind the business, or if the consent of multiple partners is
needed to enter into a contractual arrangement. The name and address of each partner who has access to the
partnership's bank account must appear in the partnership agreement. A description of the process used to resolve
deadlocked votes must appear in a partnership agreement
Key Aspects to Consider in a Partnership Contract:
 Partners are mutual agents
 Agreements can be written or oral.  
 Sharing of profits is necessary.
 Mutual Agency is the real test of partnership.
 Every partner has the right to participate in business.
 Partners are Jointly and Severally Liable for Acts of
 Rights of minor
 Dissolution of firm
 Dissolution of Partnership and Dissolution of Firm
 Though optional, registration of the firm is recommended.
Norms and Communication Structures
Partnerships are governed by the law of the state in which they are organized and by the rules set out by the
partners themselves. Typically, partners set forth the governing rules in a partnership agreement.
Norms are informal agreements about how group members will behave and work together. For example,
partners can set expectations for members’ behavior at meetings.
Communication structures are practical guidelines and frameworks that help individuals and groups hold
productive discussions, manage conflict, and reach decisions.
Successful partnerships are managed by people who recognize the importance of cultivating healthy working
relationships. In a large partnership comprised of many relationships, it’s essential to establish guidelines on
how partnership members will work together. Creating and following partnership norms is an effective way to
maintain healthy working relationships.
These four steps will help you implement partnership norms.
A. Identify the shared values of the group.
B. Document partnership norms and make them easily accessible.
C. Communicate the norms regularly.
D. Update the norms as needed.
E. Use communication structures to facilitate open discussion.
Managing the Partnership with Work Plans and Technology
Monitoring is a continuing function undertaken by partners, which uses systematic collection
of data to provide management and the main stakeholders of ongoing project or program with
early indications of success or lack thereof, against the progress in the use of allocated
resources.
Evaluation is the periodic assessment of either completed or ongoing project or program to
determine the extent to which they are achieving stated objectives, or the extent to which
change (success or failure) in the targeted results can be attributed to its interventions.
Monitoring and evaluation enable all key stakeholders of a project or a program to use the
evidence to influence future decisions.
1. Good work plans have the following characteristics:
 Establish buy-in
 Are realistic
 Have measurable outcomes
 Hold people accountable
Some of these technology platforms can help you manage your partnerships.
Technology platforms that support online collaboration vary in terms of the
depth of collaboration their systems allow. These platform categories include:
 Methods for distributing information, such as websites and electronic newsletters
 Systems for collaborating, such as electronic mailing lists and document sharing
 Systems for real-time interaction, such as Internet forums and online meetings
 Systems for managing the project, such as web-based project management tools
Summary
Pros:
 Owners can start partnerships relatively easily and inexpensively.
 Partnerships do not require annual meetings and require few ongoing formalities.
 Partnerships offer favorable taxation to smaller businesses.
 Partnerships often do not have to pay minimum taxes that are required of LLCs and
corporations.
Cons:
 All owners are subject to unlimited personal liability for the debts, losses and liabilities of
the business (except in cases of limited partnerships and limited liablity partnerships).
 Individual partners bear responsibility for the actions of other partners.
 Poorly organized partnerships and oral partnerships can lead to disputes among owners.