Today’s Economic Realities: A Time for New Partnerships?

Lila Gracey discusses how donors and nonprofits can look for new partnerships.

By Lila Gracey | Contact    Ms. Gracey formed Grace Concepts in 2002. Among her specialties are fundraising, board development, strategic planning and leadership. Since she founded Grace Concepts she has worked with numerous organizations nationally, which include serving as the first woman director of the Gay and Lesbian Leadership Council at the Democratic National Committee. Prior to starting Grace Concepts, Ms. Gracey served as director of donor resources for the Gill Foundation and was the first Programs Director for the Women's Foundation of Colorado. From 1993 to 1995, Ms. Gracey was chief of staff to Swanee Hunt, U. S. Ambassador to Austria. Ms. Gracey served Hunt in the United States for several years as the chief of staff for Hunt's political and business activities. Her professional experience also includes directing grassroots advocacy efforts, managing high-level social policy initiatives and developing programs and direct services. For four years she was an aide to Colorado Governor Richard Lamm. Ms. Gracey served for six years in Mennonite Voluntary Service where she worked with people experiencing homelessness and major mental illness. She founded and directed a national advocacy organization aimed at reform of the criminal justice system.

These challenging economic times offer opportunities for new ways of doing business for nonprofits, within individual organizations and between or among organizations.

 

DONORS ARE CONSIDERING A RANGE OF ALTERNATIVES

> Retaining current giving levels
> Giving less to all organizations they currently fund
> Giving to fewer organizations

What many donors want to know is

> What is the financial health of the organization?
> Is there a diverse funding base? A sound investment policy and a qualified investment manager?
> Do staff/board of the organization communicate effectively and in a timely manner with me? With others?

Use the challenges of these times to reassess and rejuvenate your organization. Focus on what works, what's needed, and who can help your organization move forward. Be open to new strategic partnerships.

 

PARTNERSHIPS WITHIN ORGANIZATIONS

In nonprofits generally; major donors give money, boards of directors set the organization's course and govern, staff implement the board's directives and manage the organization, and service recipients use the programs. Lines don't cross, people know their roles and stick to them or if they do cross, it's a ‘not-so-helpful' crossing (i.e., doing someone else's job). These challenging economic times offer opportunities to forge new partnerships among these groups, to work together in untried ways, to morph into solid, strategic, and meaningful partnerships that strengthen the organization for the long term.

While the roles of donor, board, and staff are clearly different, it is assumed that each is working toward a common goal -- the mission of the organization to which they give their time and/or money. Today's challenges call for new ways of doing business. They call for effective partnerships that will help ensure a healthy and sustainable organization. Many donors have expertise, or access to expertise, that can benefit the organization.

 

DONOR/ORGANIZATIONS PARTNERSHIPS

Any solid, effective, and lasting partnership is built on a foundation of trust. Trust between nonprofit staff/ board and major donors includes, but is not limited to the following.

> All parties must check their egos at the door. The future of the organization rests on letting go of personal gain -- financial, professional, public recognition, etc. Keep the focus squarely on the mission. The only reason for a group of people who support an organization to come together is to further the mission of that organization.

> Staff and board members' openness to new ideas, suggestions, and help will determine the long-term effectiveness of any partnership.

> Donors must realize that giving money does not entitle them to set policy or implement programs. To establish a meaningful partnership donors show up with a genuine desire to move the organization forward -- in partnership.

> Staff and board must be clear about their needs beyond cash. This includes opportunities for in-kind services such as legal, programmatic, administrative (leadership, CFO, COO, HR, etc.) and/or in-kind supplies (technology, building, office, etc.).
Donors must listen to the staff/board and make sure that what they (donors) want to offer is something the organization truly needs or wants.

To maintain trust, everyone involved must be willing and able to be honest about successes and failures along the way, without negative repercussions. There must also be a culture of open discussion, including disagreement -- a culture of transparency. Once the parameters of the partnership are established and the job of building trust has begun, movement toward effective outcomes can begin.

Executives and boards are considering a range of alternatives to meet today's challenges. Donor involvement may help with the shifts the organization is undertaking. Below are some suggestions that are meant to start or enhance the conversation.

 

QUESTIONS TO ASK IF YOU ARE CONSIDERING...

> Staff furloughs or layoffs
Do any of the donors to the organization have human resources experience or have access to professionals in the HR field? Consider bringing them in to assist with decisions and discussions with staff. Outside expertise is often helpful in effectively maneuvering through these emotionally charged efforts.

> Reorganizing
Do any of the donors to the organization have expertise in reorganizing companies or in retraining individuals? It can be helpful to look to successful entrepreneurs who support your organization. Many of them have experience in organizing for effective outcomes. Don't hesitate to ask for their input.

> Cost reduction partnerships and/or mergers
If your organization is considering a partnership with another organization to reduce costs or to merge, invite select donors into the discussion from the beginning. Be clear about the parameters of their participation.

Keep volunteers and the recipients of your services in mind as changes happen. They may be able to help fill in, increase volunteer hours where helpful, and/or offer assistance in ways not realized previously. In order to utilize these groups most effectively it's important to know what the specific needs are -- skills required, time needed, benefits (non-monetary) of volunteering, etc.

 

INVOLVE DONORS IN PARTNERSHIPS BETWEEN / AMONG ORGANIZATIONS

> Program cuts -- invite select major donors into the conversation from the beginning
Are other organizations offering similar programs and can your clients'/participants' needs be met there?
Are donors willing to financially support services being offered to your clients by another organization - at least for a discrete period of time?
Can your organization contract to offer these services through another organization? Will donors support such a contract?

> Partnering with other organizations
What opportunities are there, within your geographic area, to share costs with other organizations? Can you order supplies in bulk at a reduced rate? Can you get health or other insurance at a reduced rate if there are larger numbers? If you use a payroll service, can organizations combine for reduced rate? Can you outsource to another nonprofit for accounting or other services? Talk with select donors for their input and contacts.

> Merging
Merging is not a solution for organizations in acute financial crisis. It is an option that demands strategic planning by both entities in order to be successful. If your organization is serious about merging or acquiring an organization through merger, invite your key major donors into the conversation early for their financial buy-in, expertise, and contacts. Things to consider:

Why are you considering a merger and with what organization?

• Is funding driving this merger? Expansion? Board/staff exhaustion? Something else?
• Will your organization become part of another organization or vise versa?
• Is there adequate mission overlap between the two organizations? It is important for the acquiring organization to focus on their mission no matter the seeming benefits of a merger. Mission drives all decisions.

What do both organizations want and how will you measure outcomes?

• Name retention for merged organization?
• Program oversight by merged organization staff/board in advisory capacity?
• Increased revenues for the remaining entity? How much? By when?
• Do you have any overlapping donors? Other funding sources? (These will frequently not remain at the combined total level.)
• Increased services? How much and for whom?
• Additional programs? Which ones? By when?

Will the merger involve staff?

• Will people be laid off?
• Will staff be assimilated into the new organization? How?
• Will you incorporate volunteers of the merged organization? How?

Will board members of the merged organization be incorporated?

• Onto the governing board? Advisory boards?

What cultural differences exist between the two organizations and how will you address them? Staff? Board? Donors? Recipients? Volunteers? Administration?

 

> Filing for Bankruptcy -- bring select major donors into the conversation from the beginning

Chapter 11 - reorganization

• An organization doesn't arrive at this point overnight nor will it successfully recover quickly.
• Make sure you have a new governance board in place and/or new staff to ensure that you aren't trying to ameliorate the situation with the same thinking that lead the organization to this point in the first place.
• If you've arrived at the point of bankruptcy, it's difficult to regain trust of potential donors. How will you establish that trust?

Chapter 7 -- going out of business

• It's as important to know when stop doing something as it is to know when to start. How do you determine if the time has come for your organization to close its doors?
• Is there a need in the community?
• What is your funding base? What was it when the organization was doing well? What happened that lead to this point?
• It's critical to have very honest and open conversations with representatives from all stakeholder groups - including donors.
• If the decision is made to close the doors - make sure communication to staff, donors, volunteers, recipients, and the community at large is clear, concise, and timely. It is not appropriate for internal debates to become public discussion.

Volunteers and recipients of services have experiences, insights, and perceptions of the organization that can be very helpful during change. Use them strategically.

Organizations that involved their donors in conversations about the current realities and invite participation in addressing challenges are more likely to retain the donor's support.

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