‘Put your best foot forward ~’ Browning
Your Response to Change
Over the past several years, non-profit organizations have faced a growing number of challenges: rapid expansion; increased demands for service; difficulty recruiting enough volunteers; funding cuts; increased costs; and competition for raising funds. These challenges have grown faster and bigger in proportion to the increasing efforts to remain stable and sustainable.
Some organizations have dealt with these challenges more effectively than others. Generally speaking, successful organizations have strong leadership, a clear vision and direction and a good understanding of their purpose. they have flexibility and are adaptable to rapid change. they have strong, focused communicators and staff who deliver high quality programs and services to their clients/consumers.
For the less successful organizations, both large and small, the challenges of the past decade have not resulted in growth or in positive changes. In response, a few courageous boards of directors have explored the relevance and possibility of an alliance.
There are many forces that can drive an organization toward a strategic alliance. And there are many issues that encourage or compel them to examine how they can continue to deliver quality services and maintain standards required by donors and funding agencies. the truth of the matter is often simply this: how can they afford to keep their doors open?
Organizations affected by some of the above challenges may have entered a downward spiral that is difficult to reverse. their situation may be further aggravated when some volunteers and staff talk openly about how difficult the work now seems to be; how being involved is not as rewarding or as satisfying as it was in the past. Board members may be frustrated by meetings that seem to go nowhere, and by plans and decisions that don’t yield the desired results.
Some more knowledgeable and performance-based funders are taking note of these situations and are now becoming more proactive in suggesting or forcing these organizations to examine the possibilities of strategic alliances or mergers.
Given the present environment, organizations would be well-advised to consider their options and take control of the search for new alliances. this will ensure that any new partnerships or alliances formed will be respectful and representative of their organization’s values, clients and services. the leadership must be willing to get involved and commit to making the necessary changes.
Waiting for a funder to force a merger, takeover or other types of alliance could mean that an organization will not have the possibility of choosing their own partner or controlling their own destiny
Why Contemplate any Type of Alliance?
Considering all of your options also includes some objective thinking about the benefits and drawbacks to any form of alliance. Weighing potential benefits against potential drawbacks is imperative in the preliminary stages of any analysis. It is important to keep in mind that some organizations don’t need to merge to enjoy certain benefits which would be available from any type of alliance. Why would you consider it otherwise? The benefits you expect to receive should be paramount in driving the structural/legal options to be considered.
Potential Benefits to consider include:
Improved organizational efficiency – savings in purchasing, access to enhanced hardware and software, acquiring the latest information technology systems
More effective customer services – offering a more complete continuum of service and/or improved prospects for offering new services
Greater financial stability and flexibility – creating operational efficiencies and expanding the fundraising base in the face of increasing competition
Greater organizational stability through aligning weaker with stronger organizations
Increased market potential – in new geographic territories; brand name rights
Enhanced community image – through careful planning and communications
Non-financial strengthening of the organization – acquiring intangible assets, such as experienced board members
And improved conditions for staff – more varied career options, a potential change in compensation.
Efficiencies in overhead costs can be achieved whether organizations simply share space for one or all of their programs. this is possible whether or not there is a complete merger or take over of programs.
One organization reported that prior to the merger their administrative services represented 17% of their total budget. In the post-merger organization this was reduced to 12%. they also stated that a wider range of support services became available to all their programs. Information technology support increased and hardware and software were upgraded.
An expanded human resources department enhanced the quality of their personnel "les, benefits administration, etc., providing more effective and efficient internal services.
Efficiencies in service delivery can also be achieved, particularly when a well-established large organization takes over a program or even all the services of a smaller organization with few or no staff. More efficiencies in customer intake can be achieved with more experienced staff, thereby moving people into services more quickly. In the case where larger organizations who have correspondingly larger staff groups with more expertise take on greater numbers of clients, this will either reduce wait lists (in certain sectors) or give the new organization the ability to conduct outreach for more clients.
Other forms of alliance can offer many advantages to the non-profit seeking the benefits of collaboration without giving up control. In fact, many organizations have already experienced some alliances without realizing it. they may have written a joint funding proposal to offer a pilot program for a specific period of time. In one case a group of agencies formed a network to submit a funding proposal for a new model of service and went on to form the governing committee. these types of alliances other great flexibility plus the power to bring the combined weight of two or more similar organizations in the service of finding a solution to problems, which can be as simple as purchasing commodities more cheaply. They also other a means of involving staff at all levels in productive, non-threatening collaboration.
Management service organizations are a more sophisticated form of these economic-based alliances that are still less intrusive or permanent than mergers. Benefits include sharing information and bidding jointly for grants or contracts, particularly if one organization has the expertise to write successful applications, or if one of the partners is not incorporated, or does not have a registered charitable number.
A recent example is that of two local charities in close proximity. The smaller of the two had one half time staff person. When she decided to retire the board did not replace her. They approached their neighboring charity for administrative support. They signed an administrative service agreement for six months, which was subsequently renewed for another six months before they began discussing a more serious permanent relationship, which culminated in an amalgamation early in 2007.
A simple and cost-effective way of integrating nonprofits without a merger is to share staff, particularly at the management level. Most often this occurs at higher professional levels, such as the chief financial offcer, program director or, in the case of mental health agencies, the clinical director. these positions usually require more education and/or expertise and therefore command higher salaries. Part-time roles for these high-level staff can still be an effective way to gain their expertise at an affordable price.