Alliances: Strength in Numbers
The following is excerpted from the November/December 2002 issue of Advancing Philanthropy.
Corporate mergers and acquisitions--in the banking sector; by market leaders such as Exxon and Mobil, Hewlett Packard and Compaq; and now by the airlines--have been rampant since the late nineties. But while former corporate competitors are combining assets to increase revenues and operational efficiency, merger-mania does not appear to have hit full-force in the nonprofit sector, where the number of individually registered charities in North America has mushroomed in recent years to more than 950,000.
However, charities worldwide increasingly face the same two demands from donors that companies have been facing from stockholders: "Prove your value and improve your operations." Many donors question why--as the economy slowly recovers--they should support many nonprofits with highly similar missions. "Donors are really asking for more accountability and demanding measurable results," says Betty Bergstrom, CFRE, president of Bergstrom Associates and AFP's vice chair for external relations.
Some community foundations are championing greater collaboration among smaller nonprofits to help them maximize resources and minimize costs. "Foundations are playing an assertive and facilitative role in bringing together organizations to solve problems jointly," says Monica Patten, president and CEO of Community Foundations of Canada. She sees this "convening role" as a critical component of the work that community foundations do.
But participating under the umbrella of a community foundation isn't the only option for those interested in leveraging resources with other nonprofits. Whether to focus on a one-shot project or to coalesce operations for the long haul, a less formal (but still carefully conceived and planned) coalition can produce results beyond the capacity of the individual members.
How do community foundations help?
Carla Dearing, president and CEO of Community Foundations of America (CFA) in Louisville, KY, says that her organization plays its convening role by bringing funders, including private foundations and donor advisors, together with nonprofit groups that are interested in obtaining resources for specific initiatives. The focus may be on a community health problem, local or regional educational needs, or pressing socioeconomic concerns such as unemployment. The objective of such a meeting of like-minded professionals is to allow donors and nonprofits to talk freely, in hopes that they will forge alliances to take action.
CFA, which was formed to enable community foundations around the country to co-invest in new technologies, serves as a model of the very nonprofit cooperation it hopes to nurture--and that's a good thing. As Dearing says, "Community foundations are in the marketplace, attracting donors at the same time that they are giving away money. So we are conscious of the need to demonstrate our own effectiveness. One way a foundation can do this is by maximizing resources." An example of what she means is the new partnership that CFA has entered into with the Community Foundation R&D Incubator, whose committee members are scattered around the United States, and the Council on Foundations, in Washington, DC, to develop joint marketing materials, which should cut down on each group's expenses.
Out west, Arizona Republic Charities, the Valley of the Sun United Way, and Arizona Public Service joined in late 2001 to offer a one-time $30,000 grant to charities in the state that collaborated on a project. Their experience was intended to serve as a collaborative model other nonprofits could use.
Alliances take work, pay off
As donors are reevaluating their commitments, nonprofits are being driven to rethink their fundraising strategies. Bergstrom's prediction is that "agencies are going to develop some innovative collaborations," and some consolidation is taking place now. For example, in late August, two leading Parkinson's disease organizations--the National Parkinson Foundation and the Parkinson's Disease Foundation--announced their agreement to merge. The merger is expected to be completed in early 2003. Robin Elliott, CEO of the Parkinson's Disease Foundation, says that the new nonprofit will be "more of a full-service, all-purpose national organization," and annual contributions in excess of $20 million are anticipated.
Nonprofits considering forming an alliance won't find one operational model that works for everyone--and not every nonprofit would benefit equally from forming an alliance. In Collaboration: What Makes It Work (Jossey-Bass), Paul Mattessich and Barbara Monsey describe the four main collaborative models they analyze (there are many more). They explain the workings of the joint venture or partnership; the management service organization; the parent corporation umbrella; and the merger. Is your organization ripe for an alliance that "can reduce individual expenses in planning, research, training, and other development activities in the early stage of a new initiative... [and make] services more accessible and effective?" Consider experimenting with one of these three scenarios, described by Mattessich and Monsey, as it applies to your nonprofit:
1. Survival as an autonomous unit is in doubt, and an organization's leadership desires to ensure survival of all or part of its activities--believing that any productive survival is a form of success.
2. The organization's leadership sees an opportunity to build dominance or leadership in a particular service area (or market) by expanding its reach through acquisition of smaller or less well-positioned organizations.
3. The organization needs additional resources to pursue an opportunity or maintain or increase a commitment to mission-driven programming by adding a resource partner to fill in a gap in competencies, facilities, financial resources, or management expertise.
Nonprofit groups are free to explore a number of ideas along the organizational spectrum, from community partnerships for a specific project to collocating their individual charities under a single roof to outright mergers. Here are examples of different strategic routes that nonprofits have recently taken to mutual benefit--and to the benefit of their stakeholders.
Partnering across institutional and private-government boundaries. In the mid-1990s, the Edmonton Community Foundation in Alberta, Canada, joined with local public and private agencies in the region, including the United Way and the provincial health authority to establish a Success by 6 partnership. This joint prevention initiative was designed to ensure that all children in Edmonton have the child development services and support they need from conception to age 6.
The Success by 6 Council of Partners comprises representatives from 20 organizations, among them Big Sisters and Big Brothers, the Edmonton Social Planning Council, and Edmonton Public Schools. "Creating a mission statement was easy," says Doug McNally, CEO of the Edmonton Community Foundation. "The hard part was developing a vision of where we wanted to be." The Success by 6 vision: Every adult in the community can play a role in clearing a path to a productive, meaningful life for children during their first six formative years.
McNally says it took a "big struggle" to get the collaboration off the ground: "It didn't happen overnight." Building trust--a sense of freedom to speak up as one among equals--took time as the smaller grassroots organizations came to the policy table with the very same government agencies that fund them.
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