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Voices from the field: lessons on collaboration

By Lynn Sygiel, editor, Charitable Advisors

Partnership, collaboration and merger are terms often bandied around in the nonprofit world. And while the concept of collaboration isn’t new, it has become a hot topic as a way to reduce duplication, increase coordination and contribute to collective impact.

According to a 2014 Bridgespan survey of nonprofits and funders, the overwhelming majority of nonprofit and foundation CEO respondents had taken part in one or more forms of collaboration. The survey found that 91 percent of CEOs have engaged in one of four common forms — associations, joint programs, shared support functions and mergers.

While nonprofits reported the most activity in the less integrated forms, 55 percent of foundations wanted to see more mergers, and 76 percent of nonprofits wanted to see more shared support functions.

In early May, Charitable Advisors partnered with Charitable Allies to host a forum. Six local nonprofit leaders took part and shared experiences and the lessons learned for an audience of nonprofit professionals.

The panelists were: Stephen McCaffrey, president and CEO at Mental Health America of Indiana; David Westenberger, CEO of Indiana Youth Services Association; Jim Morris, president and CEO at Greater Indy Habitat for Humanity; Kendra Belden, operations director, Lutherwood Residential; Janice Hicks-Slaughter, director of partnerships and outreach at the School of Education and Exercise Science, Marian University; and Kim Donaghue, senior consultant, Newgrange Consulting.

As the director of agency services at United Way of Central Center Indiana for over 12 years before her retirement in December, one of Donaghue’s primary functions was building capacity, and in this role she facilitated six or seven mergers. There was one merger she deemed perfect.

“It was an excellent agency that did wonderful work, they were smart in looking far ahead. They weren’t in financial trouble at the time, but they knew that they weren’t sustainable. Instead of waiting until they were in trouble, they decided to be proactive and began looking around at what their options were,” Donaghue said.

Most difficult, according to Donaghue, was identifying potential partners.

“Truthfully they had already identified three possible partners. They really only looked at options that were culturally and mission-appropriate,” she said.

With United Way’s financial help, the agency hired a consultant to help exam its options, and later help pay for merger legal fees.

She thinks the reason this one was successful was because the two nonprofits had complementary programs, and the agency looking to merge had programs that the other didn’t have. In addition, the partnering agency was not only able to hire the entire staff, but hired the former executive director as its development director.

“It was the most perfect marriage, I’ve ever seen,” Donoghue said. “They also absorbed some board members.”

Critical, too, were the separate meetings the consultant convened with the nonprofit’s executives and board members, giving both the chance to talk candidly and think objectively.

“It’s hard work and you need people to think big picture and from their professional selves perspective more than the personal.”

Donaghue believes most funders are receptive to support an agency exploring combinations, but are not as receptive to organizations that are failing and looking for any lifeline.

“From a funder’s perspective, we like to see an agency being proactive about its situation and really look at itself and see what they have to offer another organization,” she said. “If an agency is in dire financial straits, let’s face it, it’s going to be real tough to find a merger partner. There are not going to be a lot of agencies out there that are going to want to absorb someone in financial trouble.”

Not all consolidations are successful. Morris, who became the president of the Greater Indy Habitat for Humanity in 2011, shared an anecdote to illustrate when a conversation can take an unexpected turn.

Over the course of a year, two area Indiana Habitat affiliates discussed merging, and had all but signed the agreement. In the 11th hour, Morris received a call offering a deviation from the original plan. Rather than merging, it wanted to hand over the retail operation to Indianapolis, and keep its executive director at the helm of the local Habitat affiliate. For Morris and his board, this would have been a money-losing proposition.

“It was kind of frustrating. I really struggled with when there is an opportunity to meet a greater demand, and we have an opportunity to be more effective and efficient, but I understand that the humanness of who we are,” said Morris. In the end, the affiliate exec didn’t want to lose her position.

Ultimately, the panelists agreed, relationships are the foundation of successful collaborations.

Belden said a partnership between Community Health Network and Lutherwood Child and Family Services in 2013 led to establishing a relationship with an organization with a specific expertise.

Lutherwood, a locked secure treatment facility for youth who are placed there through the courts, through DCS and probation, has therapists and doctors on staff. The center’s staff witnessed new challenges for some of the residents: They were survivors of human trafficking. To the extent they could help, the Department of Child Services was involved, but didn’t have the expertise to offer programs for these girls.

The facility’s CEO had worked with Megan Jessup, the COO of Ascent 121, a program that provides long-term trauma recovery for teen survivors of trafficking. What if Ascent 121 could provide the much-needed programming and lend its expertise to the situation? The Impact Program, which provides residential care for teen survivors ages 12-18, was designed and Lutherwood entered into a contractual partnership with the Carmel-based organization to deliver this service.

“It goes back to relationships that we already had. Communication was a whole lot easier because we knew her, she knew us,” said Belden.

That relationship allowed open communication and to reach a consensus about programming which has continued. There are weekly partner meetings with both staffs. As an example, Belden shared how Ascent 121’s close working relationship with the FBI affects the center’s work. When there is a pending FBI raid, Ascent 121 communicates with Lutherwood’s staff and the facility’s staff can be ready to house additional residents.

Hicks-Slaughter is not new to mergers.

In 2002, she experienced her first with the merger of Big Brothers and Big Sisters. At the time only about five Big Brothers and Big Sisters chapters nationwide were still separate, and she was the executive director of Big Sisters. After 18 months of meetings, the organizations were blended, and she became COO of the newly formed local chapter.

Her second merger was the Hook’s Discovery and Learning Center with Marian University. The science-based program was a good fit for Marian, and its programming was integrated in the school’s outreach work with schools. And to round out Hicks-Slaughter’s trifecta, she had a role in the Ruth Lilly Health Education Center merger with Marian University in 2014.

At the time, the Ruth Lilly Center noticed trends in declining school field trips, and anticipating a reduction in revenues, the CEO of the center began meeting with different entities to identify possible collaborations. Marian University was one of those places.

“It started out as a meeting to just kind of talk, and after so over so many meetings, many lunches, many conversations, it was decided that there was such a mission cohesiveness, it should come together. Key was that the trustees of Marian and the board members of Ruth Lilly Health Education Center came together in agreement because the case for this was strong.

“We were also incredibly fortunate to be able to make that case to a major funder who provided a merger grant. It was a three-year grant that helped us the staff move out of that facility and transfer all of its programming to an outreach format that emanates out of Marian. I’m now responsible for outreach, and partnership development at Marian but I’m also the director of the Ruth Lilly Health Education Center, and we continue to grow and get stronger,” said Hicks-Slaughter.

She said it was not an inexpensive venture to incorporate staff and ensure a stable presence. In addition, the grant allowed them to incorporate the “wow” factor into the outreach programming, incorporating virtual reality.

In Indiana, according to the secretary of state’s office, from 2007 through early 2015, 441 nonprofits filed for mergers. The previous year, there were 71 on the list, including the Ruth Lilly Health Education Center (RLHEC) with Marian University. Long-time nonprofits like the 25-year-old Ruth Lilly Health Education Center and Hook’s Discovery Center have been reinvented by joining with Marian to continue delivering services to schools through outreach programs.

Both Donaghue and Hicks-Slaughter reminded that it’s important to not let your donors be surprised. Communicate early and often so they know that the organization is being responsible.

Hicks-Slaughter said once the merger was finalized, they invited donors to a reception so they could see and hear from people who were in the new roles.

“They could hear about the future, not just that we merged, but this is why we merged and where we see ourselves heading. And that’s what they want to hear because they’re not all happy about it. Make sure that you communicate with them and continue,” she said.

The 2014 Bridgespan survey also found that CEOs said the more integrated forms — shared support functions and mergers – were more successful, claiming that joint programs failed 20 percent of the time. Often they felt pressure from funders to engage in some type of joint programing, but when the funding ended, so did the collaboration.

While shared support functions and mergers take more to implement in both effort and money, the outcome provided structure to achieve impact.

McCaffrey’s and Westenberger’s organizations are examples of support function partnerships.

McCaffrey oversees 12 subsidiary nonprofits as part of Mental Health America of Indiana. At the time McCaffrey arrived at the organization in 1991, there were several organizations that had spun off and were frail and fledgling.

“We made a strategic decision to say, ‘Why don’t we ask our spin-offs, if they’d like to come back?’”

The plan allowed subsidiaries to keep their boards and make decisions on programs and policies. As part of a larger group, they could benefit from the statewide group’s business expertise, but had to adhere to its accounting procedures, HR procedures, and be supervised by the parent organization’s staff.

“Sort of independent but sort of integrated,” said McCaffrey. “Eventually it became our strategic way of growing and being more secure financially ourselves. I think it’s been a good thing, and it allows us to expand our reach as an organization, with 12 or so many boards and a volunteer and staff reach that’s huge. It has provided lots of options for grants or funder applications,” he said.

Westenberger has had similar experiences, first with nine nonprofits that became one organization, Fountain for Youth in Columbus, and since 2012 as Indiana Youth Services Association (IYSA). His organization has responsibility for more than 30 client organizations that outsource their accounting and HR functions to IYSA. Besides member services, the organization operates its own programs and is now credentialing Indiana youth workers and building awareness of programs.

“Before these small nonprofits had a part-time bookkeeper who may have only had minimal training. Now, they had an outsourced CFO who is Ivy Leagued educated.

“It wasn’t even the value of the service and when you add the value of the service and what you can do with that money in the community, you’re at $1 million all of a sudden. Out of your $18 million, you’re spending collectively; you just added a $1 million in your social return. That’s the driver; not can I save $100 bucks a month on my outsourced accounting,” he said.

Donaghue reminded the group that it’s relationships in the community that afford you opportunities for partnerships. Begin with relationships in the community, then look to state associations and groups and even consultants who might work with a similar organizations and offer valuable connections.

“Again, I just think it’s relationships and keeping your head up for whatever opportunities are out there,” she said.

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