Even if your nonprofit organization is financially healthy, you’d do well to keep an eye on the future. We live in an environment of ever-increasing demands on resources; you need to be on the lookout for new ways to ensure long-term sustainability.
Strategic alliances — anything from sharing back office expenses to merging — may provide both the financial stability and expanded options to serve your clients.
Ed Wiertel, long-time Board Chair of the Chicago Youth Centers (CYC) saw that funding for the well-regarded, high-performing nonprofit was continually contracting so he did what other nonprofits would be wise to emulate: He formed an in-house team to evaluate ways in which the organization could uncover savings and build a more secure path to the future by thinking outside the box.
CYC had made all the “inside the building” cuts it could without cutting into the heart of its programs. That meant it had to look outside, to new ways of ensuring CYC’s sustainability. Often, nonprofits attempt to carry on in the face of funding cuts, tightening their belts, cutting programs and, unfortunately, sometimes even reducing quality. By planning ahead, when still healthy and vital, a nonprofit like CYC can become more financially sustainable.
CYC’s solution was to look for a financially solid strategic ally with whom to partner in a way that would benefit both organizations by sharing infrastructure and administrative costs while strengthening their programs. It sounds idealistic but it wasn’t; it was pragmatic. The first step was establishing the criteria needed in a partner. For CYC, these included mission compatibility, similar motivation for a partnership, non-competitive funding sources, financial health, and leadership it could work with, among others. CYC identified 13 potential nonprofit partners, whittled that list down to six, and, after talking with those six, found its partner, Family Focus (FF).
CYC provides services to children from age 3 through their school years; FF provides services in the same area to children from birth to age 3. By working together, they provide a solid continuum of services to families, which is better for their clients and better for both organizations.
At an initial planning meeting, facilitated by FMA and Mission + Strategy, individuals at both organizations were skeptical about finding savings or benefits from the collaboration. Some worried that collaboration would mean more cuts in staffing.. But, by the end of that first session, the problem shifted to choosing among the bounty of options for collaboration that had been identified. The group chose to first implement options that enhanced program and reduced administrative expenses. The other options are still on the table. Now that a long-term, trusting, collaboration has been established, the door is open to exploring the top and many other ideas to work together.
Initially, the group determined that both organizations could save money through joint purchasing; shared use of transportation; and shared expenses for facility rental. The group recognized the potential for future savings in development and IT. The program for FF clients was enhanced by extending the continuum of care from birth through school years
Article written by:
Andrea T. Mills, MBA, CPA, CCSA®, CGMA Director, FMA
Patrick Donohue, MBA, MSW