Let’s be honest… no matter how this new federal fiscal budget shakes out next year, non-profit organizations in the U.S. are going to be challenged financially in ways they have never experienced before. Headlines warn ‘Catastrophic Cut-Backs Loom on the Horizon’; and 25%-50% reductions for the social sector are being discussed. Many states, such as Connecticut and Mississippi, are also looking at dramatic fiscal shortfalls as well. The downstream effects of major federal and state cutbacks- as well as potential reallocations using new funding processes and mechanisms– like the new administration’s affinity toward block grants- could shake many non-profit entities to the core.
In the face of such potentially dismal news, non-profits need to do something they have not always been skilled at: play well with others. Mike Burns (partner, BWB Solutions) suggests that this has been a problem for many non-profits. “Years of fighting over scraps and building funding around their specific mission has made non-profs hyper-competitive and sometimes very insular. “ And he says, “that may be their downfall in this new environment- some, quite frankly are going to fail.” At greatest risk are smaller organizations or programs that rely predominantly upon government funding.
As a business educator observing this sector over the last decade plus, one problem I have found is that transformative leadership in the non-profit sector can create a sort of ‘Mission Narcissism’ resulting in market-based inefficiencies. This certainty that ‘only my mission best serves my community’ has resulted in market fragmentation, competitive friction that does not always best serve markets, and plenty of overlaps and gaps in community coverage.
Of course, the reality is that most communities are served by multiple entities doing somewhat similar things in the non-profit marketspace. Charitable organizations serve the greater good related to a general platform of needs. Yet working together does not always come naturally for most.
Clara Reynolds (CEO Tampa Crisis Center) knows this to be true. When she formed her first non-profit organization Success 4 Kids & Families (S4KF.org) some 15 years ago, collaboration was at the core of the mission to serve the mental health needs of children in the Tampa area. They partnered with many service agencies to provide a wraparound ‘system of care.’ But early on, Reynolds recognized they needed help with administrative support. “We were great social workers and case managers—but we needed help with our back-room payroll, insurance and HR administration…and we couldn’t afford a boutique for-profit agency that didn’t really ‘get’ our needs.” They turned to the local Healthy Start agency and created a pay for service contract.
Over the years, this alliance to share services resulted in numerous efficiencies and allowed for S4KF to grow significantly from a single grant of $300,000 to $5.7 million in annual funding with 65 employees and 50 independent contractors. Continued program sharing culminated in 2010 when S4KF became the county’s lead provider for Healthy Start- a $2 million-a-year case management partnership.
“We went full-circle with Healthy Start, from them providing us back-room support when we were a fledgling agency, to our full administration of their county case management.” “This transformed a potential competitor into our most significant partner- and the community benefited the most from this relationship.” And that’s what collaboration can do.
For some non-profits, sharing will be a stretch– but we believe we have uncovered three recommendations to help you take those first steps:
- Honest appraisal of your organization and what you do best– Don’t be afraid to ask beneficiaries, suppliers and funders what you do best. Be objective about what elements of your mission you are best at in terms of outcomes. Which clients do you serve better than any other organization? What are the services you provide that are unique in the market and have stronger measurable outcomes than other agencies? Do you service clients that would truly struggle if you were to exit from the market? Are there operational elements or capabilities that you do better than anyone else?
- Honest appraisal of what you do not do well– Don’t be afraid to look in the mirror and see the flaws. Are there markets better served by competitors? Are there some things you feel less confident about, or you believe you may not be doing as effectively or efficiently as others? Have you taken on services and clients that are not a good fit with your mission just to build funding over time?
- Honest analysis and understanding of what other organizations do better and who you may look to collaborate with—Look for those organizations (non-profit, for-profit) that share key elements of your mission, similar target markets/client bases, and those that might be able to ‘share the load’ in terms of operations and skill sets. Expand your search to include: competitors, vendors, community alliances, universities/colleges, government agencies, even for-profit firms that share key values. The end-goal is to divvy up tasks, build efficiencies, improve outcomes and sustain your organization over time.
There is a tremendous opportunity in this sector to team up to collectively impact positive community outcomes. We should celebrate the fact that we are unfettered by the demands of the profit motive and that we share a common belief system centered in mission. It should be understood that it does indeed ‘Take a Village of Providers’, working together to best serve the greater good. And for 2018, this is not just sage advice, it is a necessary strategy for survival.
Dr. Ronald Kuntze – Professor of Marketing and Director of the Non-Profit Institute, University of New Haven