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Nonprofit Management

‘Tis the Season—How the Nonprofit Sector “Shares” Itself Out of Impact

Nonprofits, government, and philanthropy need to take up better sharing practices to advance nonprofits and the communities they aim to serve.

This week I have walked into a dozen or more nonprofit organizations and have noticed that many of them have put up holiday decorations.  In admiring the work, one of the words that I saw spread across the walls and holiday flyers was “sharing”.  It is a word that makes increased appearances during the holiday season. 

I was thinking about this word as I met with several of these nonprofits and discussed the challenging financial circumstances that they are dealing with.  As we pour through their options, one of the questions I ask is how they partner with other organizations.  How do they share resources?  Almost without fail, the same speech was given from each executive.  “We partner with these organizations” and “we have been a member of this collaboration and this network” and “Let me get you that statement we used for that ABC Foundation proposal to show you how we work with others”.  I nod my head and listen but know that my next question will also probably get the same response as I ask “when we look at your financials, were do we see sharing or collaboration occurring”.  The answer usually is something like, “Oh, you don’t see our sharing here but trust me we are working and sharing with others”. 

In examining these responses, it should be fairly easy to understand the problem.  While the financial statement is not the only document that should be looked at to understand the inner-workings of a nonprofit, it is a great document to help get a good lay of the land.  The challenge is that often collaboration is discussed as a tool that reflects more of the holiday notion than one used to have real impact on the organization’s financial bottom line and/or other places within the organization’s DNA.  This is also not solely the fault of the nonprofit organization, but actually philanthropy and government have a negative impact on the real exchange of organizational resources.  Here is how:

  • Foundations—Foundations have for several years required that nonprofit organizations collaborate, possibly with the idea that there would be a resource exchange.  Also, collaboration would be a way to fund multiple groups through less actual granting.  The challenge to this is that foundations have not followed through in examining this criterion.  Nonprofit groups have ultimately been able to cut-and-paste a typical response to this question and foundations have failed to dig deeper into these responses. 
  • Government—Government sometimes looks to the philanthropic sector when it designs contracting processes.  Like in philanthropy, collaboration has become a formal requirement that exists in any government grant processes.  Government has sometimes taken it a step farther in requiring that the collaborative partners show financial involvement in the contracted project.  The challenge to this is that often those who have been successful have dominated the government contracting game and government processing can hinder true resource sharing. 
  • Nonprofits—Say the word “collaboration” to a nonprofit executive and you may get a favorable response to the idea, but you also will hear these words: “It takes so much time”.  Developing meaningful relationships with collaborative partners is very similar to developing a strong relationship with a donor.  Essentially you don’t get the wedding ring on the first date.  Nonprofits struggle with the work it takes in developing donor relationships but some understand that developing them will eventually lead to some reward.  Fewer nonprofits see the same value in developing a long-term relationship with a collaborative partner, because the financial reward is not as apparent as with the donor relationship.  Nonprofits need to find time to develop collaborative relationships with the notion that it should have a significant financial impact to the organization.

Additionally, the sector is not using the recent economic crisis to revisit successful resource sharing.  In fact, the sector is missing a real opportunity.  Here are some of the issues that are emerging:

  • Mergers—Nearly every conference I attend there is good discussion about the notion that more nonprofit organizations should merge.  Some have said nonprofits should “merge or else”.  While I agree that the merging of some nonprofit organizations should happen, the way in which it is discussed is flippant.  There is a reason why mergers don’t happen with the frequency that most might want. Mergers are hard for any sector and the qualities seen in merging are often not frequently practices in nonprofits.  If most nonprofits do not share resources enough to have meaningful change within their balance sheets, what would give anyone the idea that a merger would be that much easier? 
  • Bad Sharing Practices—Many nonprofit executives state that the time they spend in sharing is often wasted.  Those executives would be right and it is because they are in fact sharing wasted time.  From a human capital standpoint, the amount of money wasted in meetings around flawed ideas of collaboration could be large.  Joining together with nonprofits is not fully met if nonprofits only look at it as a one-time activity or strictly the exchange of information, often done through an intermediary like an association or formal network. 
  • Fund This Type of Capacity Building—There has also been more discussion in the philanthropic sector about the increased funding of capacity building.  This is a much needed development that should result in great growth for the sector.  One area that should be explored further is helping nonprofits share resources in a meaningful way.  For example, since a majority of funding is spent on people, how can funding be used to fund cooperatives of specialized roles?  I met with a large human service collaboration that was looking for over a million dollars in funding, primarily toward people.  When we began discussing how they could share existing line items and people, the request was reduced by more than two-thirds.  Philanthropy can use their increased focus toward funding capacity building by investing in developing the nonprofit sector’s ability to share. 
  • Think Community, Stupid—It is easy for organizational development professionals to be immersed in the skeleton issues of the nonprofit organization and lose site that the organization is an important part of community life.  When thinking about the sharing of resources, the lens that reveals how sharing will have a positive impact for the community is very important.  The practitioner should note that sharing for community benefit is more than being a member of community discussion. It could mean the change of business practice including, for example, the collapsing of service sites or the sharing of online space. 
  • The Competition Factor—Much of the reason for not sharing resources is that there is a competitive environment that exists among nonprofits.  Funders in many respects exacerbate this issue although I am not one to suggest that it should not be a part of the nonprofit sector dynamic.  What I will say is that often nonprofits do not get past the notion of competition, choosing to move away from a potentially beneficial partnership.  If competition is examined then the idea of sharing may become very apparent as a benefit to the parties involved more than further engaging in a competitive game.

I grew up in a community where over 200 organizations were aimed at helping me and my poor neighbors move out of poverty and each year my neighborhood became poorer and poorer.  How could this happen when more and more people aimed to alleviating this problem? There are many reasons for this but three of the main reasons relate to the organizations involved and the dynamics between them. 

The first is that their internal capacity to tackle the problem, the second is the dynamic between the nonprofits, often “rules” they created, prevented real resource sharing to occur and finally, the service delivery matrix became overwhelming for those living in poverty to understand and use.  This matrix is obviously not being created with the community in mind but created because of the competitive environment between nonprofits which dominated the narrative.

As the sector moves into 2011, one of the areas that should be explored is the wonderful notion of sharing and whether nonprofits, government and philanthropy are expanding the current bad sharing practices or are they ready to embrace a sharing that advances our nonprofits and the communities they aim to serve.

Read more stories by John Brothers.

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COMMENTS

  • BY Pam Truitt

    ON December 16, 2010 04:32 PM

    Thank you for laying it out.  The Patterson Foundation is developing the Collaborative Restructuring Initiative to allow nonprofits and civic entities to think about what ‘could be’. We are in the early stages and are interested in knowing what conditions need to be in place for nonprofits to feel comfortable enough to ‘just have a conversation’ with a 3rd party facilitator.  I’m very interested in learning from others.

  • BY Richard Kennair

    ON December 16, 2010 05:58 PM

    I recall about a decade ago a study was funded by the Muttart Foundation in Edmonton, Canada, regarding a group of service NGOs in Saskatoon who collaborated and developed a “one-stop shop” allowing for a reduction in service duplication, groups accessing a greater base of clients, and better services offered to clients. There’s no doubt there’s a LOT of challenges in developing such a thing.

  • BY Sheila Marsh

    ON December 17, 2010 07:18 AM

    The solutions to problems that beset nonprofit collaboration often require a skill set that is foreign to most nonprofits.  Dealing with the conflicts inherent in collaboration, learning to assess the value of the collaboration, and developing methods to ensure the nonprofit gets the benefit it expects from collaboration all require the same skills that businesses use in successful partnerships.  I have posted several resources that offer specific suggestions on how nonprofits can deal with these issues at http://www.peppergrasspartnerships.com

  • Like Pam above,I’m struggling to grasp a way to bet existing non-profits to work with a third party. My wife and I are foster parents, and have been working to help the caregivers or parents of children with emotional or physical special needs. Instead of starting another direct organization, we realized one of the best things we could do is help parents navigate the broad range of existing government and non profit agencies to ensure they can get the existing help available for them and their child. My fear is that individual honorifics will see this as interfering on their turf, and be less than cooperative. Secondly, coordination efforts don’t fit well into grant makers funding boxes.
    Do you think non-profits will ever be able to adopt a collaborative culture, or will third party groups be able to rise up and fill that gap?

  • I hate auto spell check. Obviously honorifics above should be nonprofits, though my IPads spell check thinks otherwise.

    If anyone can help me navigate the obstacles to forming an organization whose primary purpose is coordinating the delivery of existing services, please contact me .(JavaScript must be enabled to view this email address).

  • BY Mike O'Brien

    ON December 21, 2010 08:19 AM

    Mergers are appealing but difficult to pull off, and made much more so by the lack of ‘ownership’ in the nonprofit sector.  In the for profit world, the buyer makes the decisions regarding outcome & structure. Those decisions are difficult even in the scenario where lines of authority are clear - the winning bidder makes the rules.  I envision ‘collaboration’ on a merger that yields a single organization as its outcome would be very difficult.

    I believe Shared Services through 3rd party service providers can be a means to eliminate much redundancy of back office functions. The model has been proven in the commercial sector, there are countless examples of ‘Shared Service Centers’ - e.g. the NY Times, Bank of America, BP, etc.  7-11 does not have an executive, an HR Director, and a bookkeeper at each store. 
    Leveraging third parties, using clearly defined Service Level Agreements, can yield significant efficiencies in the sector while allowing organizations to retain their unique culture and allows small nonprofits to maintain their position as incubators of innovation in the sector.

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