Funding Collaboration
The Catalyst Fund’s Manager, Peter Kramer, explains the fund’s goal and application process for nonprofit collaborations.
Recently, I wrote an SSIR post “A New Source for Funding Nonprofit Mergers and Collaborations” about an exciting new funding source for nonprofit strategic restructuring called the SeaChange-Lodestar Fund, which has a national geographic focus. One of my readers informed me about another funding source called the Catalyst Fund, administered by Nonprofit Finance Fund. The Catalyst Fund also finances nonprofit collaborations, and although it restricts its giving to the Boston area, it believes it could be a national model for funding nonprofit collaborations by creating a replicable resource infrastructure to support nonprofit collaborations.
I recently spoke with the Catalyst Fund’s Manager Peter Kramer and asked him to explain its goal. “Ultimately, we want to see nonprofits meaningfully change the way they do business in order to further their missions.” Peter said that the Catalyst Fund began in September 2010, with a five-year commitment to invest a total of $1.725 million by four key investors: the Boston Foundation, Boston Local Initiatives Support Corporation, The Hyams Foundation, and United Way of Massachusetts Bay and Merrimack Valley. Regarding the choice of a five-year horizon, he said, “This is a new approach. We are taking an active role in providing resources for collaborations and mergers through a central vehicle and in a unified way. If this doesn’t end up working how we anticipate it will, then we want the flexibility to be able to try something else.”
Peter explained the Fund’s unified process this way. It has a simplified intake and application process, much like venture philanthropy’s iterative diligence process. It includes lots of conversations with the applicants to hone their thinking around their venture. “We try to get a good feel for where they are trying to go,” said Peter. In these early conversations, the Fund is looking for signs of “seriousness of intent” in the applicants, which according to Peter means, “Have the boards passed some type of resolution for the initiative?” Uninvolved boards are a sign to Peter that there isn’t a meaningful change in business occurring and that there may not fit with the Catalyst Fund.
The Fund also has a pool of pre-qualified technical assistance consultants. “We wanted to be able to pre-qualify consultants so we know that consultants aren’t cutting their teeth on the Fund; also we wanted to assure a level of quality going into the engagements.” The consultant pool includes various kinds of expertise including facilitation, finance, legal, and governance.
But how does the Catalyst Fund measure success? Peter explained, “We want to know: Has the actual technical assistance engagement led to real improvement, expansion, or preservation of participating nonprofits’ programs or services? And we want to know if the nonprofits have made a meaningful change in their business model. But at the end of the five years of the Fund, we want to be sure that more people know about collaboration strategies, and that collaboration is a more accessible and positive tool to nonprofit leaders, whether in good economic times or bad.”
During the past year, the Catalyst Fund has made its first round of investments in nine collaborations, totaling $280,000. It’s a diverse pool of mergers, alliances, and partnerships from a variety of nonprofits. The Catalyst Fund is underway, and I look forward to learning from its model and if it can meaningfully change the way nonprofits do business by funding collaboration.
Is there a fund to underwrite nonprofit mergers and collaborations in your community? If so, please write a note to this posting and I will try to write about it in the future.
Jean Butzen, Mission Plus Strategy consulting, specializes in mergers and alliances in the Chicago area.
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COMMENTS
BY Brian Collier, Foundation For The Carolinas
ON November 3, 2011 06:46 PM
Here in Charlotte, we’ve been running our Community Catalyst Fund since October 2009. We raised about $4M and have distributed about $3M for innovations, collaborations, mergers, sector studies, traings, etc. We’ve been lucky to work with great consulting organizations like Bridgespan, La Piana, Tides, and NFF. It’s been a terrific program, but very challenging, with lots of lessons learned along the way!
BY Cindy Cheatham, Georgia Center for Nonprofits
ON November 3, 2011 07:57 PM
Enjoyed learning more about what others are doing in collaborations and mergers as I’ve been involved as a consultant in helping a group of nonprofits collaborate on backoffice operations funded by our community foundation. Its challenging but rewarding work and definitely a great area for foundations in syndicate to fund as the nonprofits do not have the time nor the expertise or partiality to drive these processes without outside assistance.
I enjoyed learning about your experience during the panel at the Social Enterprise Alliance conference yesterday!
BY Jean Butzen, Mission + Strategy Consulting
ON November 4, 2011 11:44 AM
Brian, Thanks for letting me know about your foundation. Can you contact me so I can learn more? Cindy, I think I have heard about your Center from a few different sources in the recent past. Sounds like you are doing great work! Let me know if you’d ever like to talk.
BY BT Irwin, Habitat for Humanity of Oakland County
ON November 6, 2011 04:45 AM
Thank you, Jean, for stirring the imagination. As a director for one of six independent Habitat for Humanity organizations in the Detroit region, I believe we can achieve greater service impact as well as stronger capacity to grow good if we collaborate or even consolidate parts of our businesses. A fund to promote and support something like this could be just what boards and staffs need to overcome both fear and real organizational obstacles. I shared this piece with my networks in Detroit as well as our executive director. Let’s see where we can take it.
BY Debbie McKeon, NorthSky Nonprofit Network of Rotar
ON November 6, 2011 06:41 AM
I work for Rotary Charities, a small independent foundation in Northwest Michigan that has both a grant making arm and a capacity building arm, branded as NorthSky Nonprofit Network. We do engage in funding processes that could lead to strategic partnerships and have supported the development of management services agreements between NPOs and between NPOs-Government, mergers, creation of a management support organization, development of a network of networks, shared administration and/or shared programming and joint ventures. We invested resources to provide professional development to our region’s network of capacity building service providers, including me, resulting in the foundation deepening its knowledge to work in this space and the consulting work is now provided primarily by regional sources. We utilize a pool of pre-qualified service providers, the NorthSky Consultant Network, to carry out this work. With my background and continued professional development, I also consult on behalf of the foundation in this topic area. We host a professional development series and have done sessions on developing strategic partnerships in which I provided some introductory information regarding readiness, process and potential and facilitated a panel of NPO leaders engaged in meaningful strategic partnerships so we are now benefiting from shared learning to encourage others to create an organizational culture where these types of opportunities can be considered. Through evaluation, attendees indicate this is highly valued in helping them consider exploring a strategic partnership. I’m very interested in this work so look forward to learning more from this thread.
BY Jean Butzen, Mission + Strategy Consulting
ON November 9, 2011 12:58 PM
I am really impressed with the comments from BT Irwin and Debbie McKeon, both who hail from the great state of Michigan! I don’t get hear enough about the collaboration in your neck of the woods. BT, I would strongly urge you to go ahead and start that collaboration fund - there are lots of models out there now that you could learn from so you would not have to invent the wheel, such as your very own Rotary Charities there in NW Michigan. Perhaps you and Debbie could hook up? Debbie, I would love to hear more about your work. It sounds like you have a very sophisticated set of services and have really thought about the entire infrastructure for the strategy - training for nonprofit leaders, consultants to deliver the service, and for your foundation. Great work!
BY John Eberle, VP at the Central New York Community
ON November 23, 2011 10:51 AM
Thank you Jean -
Two years ago we started a very modest $250,000 Strategic Partnership Fund at the Community Foundation to support organizations seeking to formalize an affiliation or merger. The fund also supports post-affiliation/merger infrastructure needs. The John Ben Snow memorial Trust also contributed $50,000 to the fund.
The vision was to assist organizations seeking to preserve and enhancement nonprofit missions, while seeking innovative ways to reduce operational costs during the economic downturn. We hoped that expanded/enhanced programs and services within a new and more efficient management model would serve to strengthen and sustain vital community services and resources. We believe that how organizations are structured is open for discussion (structures and staffing models are merely vehicles for accomplishing intended outcomes), whereas the missions are much more sacred. To date we have made six grants to support everything from program expansion/regionalization into a community that lost services – to joint business planning for an affiliation – to legal costs for merging a chamber of commerce and metropolitan development association – to helping set up a unified communication system for a five council merger of the Girl Scouts. One affiliation of two entities actually saved on operating costs, built their program capacity and successfully secured additional resources for joint programming. We have recently rewritten our criteria and application to assist organizations with exploration, pre-negotiation, negotiation/planning and due diligence. Two former board members and three area funders participate in reviewing and approving grant requests.
BY Debbie McKeon, NorthSky Nonprofit Network of Rotar
ON February 4, 2012 05:47 AM
Jean-I’d enjoy sharing more about our work. I’ve been absent from this conversation for a couple of months as we have been convening conversations about “what’s next” in our work as we continue to innovate and adapt to the changing landscape to better meet the needs of our communities and benefit from grantee/client re-assessments and other evaluation results from the past five years. We were also focused intently on some projects that are seeing major results. For example, we are already seeing some tremendous social impact from work with projects that I could share in more detail at some point but, for example, include a) the collective impact of networks such as the Grand Vision, b) three sector partnerships such as the Energy Farm, Historic Barns Park and c) joint ventures of charitable organizations such as TREAT.
BT Irwin-I’d be happy to make a Michigan connection.
BY Pam Truitt
ON April 15, 2012 01:56 PM
Firstly, thanks to Peter Kramer, NFF, for sharing this thread….somehow I’d missed it! Secondly, thank you Jean for writing about the topic and calling for others in this space to share their work. I manage The Patterson Foundation (Sarasota, FL) Collaborative Restructuring Initiative that includes three broad areas: consultant development (using La Piana training/ mentoring); education locally and beyond to nonprofits and facilitators. Our funding area is 4 counties that are home to some 3000 nonprofits. Our program is fairly new—18 months. We are focused on collaborations that result in mission optimization through business model alignments.