A Strategic Alternative for Nonprofit Organizations

by Rick Cartor | Business First Louisville

We’ve been inundated with facts and statistics about how the global pandemic and ensuing downturn in the economy have impacted businesses and nonprofit organizations alike. Unfortunately, for the nonprofit sector this could lead to the disappearance of some critically needed services.

A recent Ashley|Rountree and Associates survey indicated that the majority of nonprofit organizations have engaged in several forms of immediate tactical responses to financial challenges, such as cutting or reducing programs and services, laying off or furloughing staff, and other permanent reductions in workforce and operations. More than 80% of the sample surveyed reported applying for some form of federal, state or local loan or emergency grant like the Payroll Protection Plan or the One Louisville Covid-19 Response Fund.

The research also identified a category of strategic solutions that nonprofit staff, executives and board members believe are most likely to lead to financial stability, expand the reach and impact of their mission, have a favorable impact on employee morale, and has the potential to increase both program quantity and quality.

Surprisingly though, only one-third of the organizations surveyed reported that they were already engaged in, or were seriously considering, the exploration of this group of solutions. Put differently, almost 70% of the agencies represented in the sample have not seriously explored a set of strategic solutions that they believe would have an extremely favorable effect on the longer-term health and social impact of the organizations they represent.

What could this family of solutions possibly be, and why are they not being considered?

The solutions that may have such positive impacts on the organizations are any of a variety of partnerships, alliances, collaborations (or even a merger) with other nonprofit organizations.

The most likely obstacles to considering partnerships and collaborations, according to the survey, were finding the right partner and the potential complexity involved in implementing these arrangements. Not listed as an option on the survey but identified in follow-up conversations with leaders of nonprofit organizations was the perception that any form of partnering might be perceived as a slippery slope to more complex full merger, or that leaders may perceive exploring such a strategy as an admission that they need help and are unable to successfully lead the organization.

When individuals need assistance in engaging in immediate behaviors that they know would help them in the long-run, experts recommend using “commitment devices.” Commitment devices are techniques that increase the likelihood that an individual will engage in the behaviors that will help them achieve their longer-term objectives (like maintaining an exercise regimen or saving for retirement).

These commitment devices can be translated into practical tips at the organization level. The steps listed below will increase the likelihood that a leadership group will actively consider this set of solutions that they believe can result in the long-term success of the organizations they lead:

• Write down and review your goals. Set a leadership team goal to explore and learn more about types of nonprofit partnerships, collaborations, alliances and mergers.
• Make a public commitment (share your goals). State it at a leadership meeting that it’s a goal — even a responsibility — to research and consider partnership alternatives.
• Plan ahead to avoid temptation or reliance on willpower. Include the topic as a specific meeting agendas item — avoid the temptation to just remember to bring it up as “other business.”
• Break down the bigger goal and set smaller more immediate sub-goals. Make the goal and its implementation immediate and simple. Assign a person or two to do some research and then update the group on alternatives, advantages. disadvantages, success stories, etc., at the next meeting. Another simple alternative is to bring in someone who is well versed on the subject to talk to the group. After that, if there’s still interest to learn more, set another goal for the next meeting.
• Record /post your progress. If the meeting has minutes, report it and save any information that is provided into a dedicated folder on a shared drive.
• Make desired behaviors more likely by building them into a routine. Add the topic to the front of the agenda. Regular reports on operations can consume meeting time and push important strategic items to later in the meeting where they can get hurried, postponed or inadequately discussed. Also, periodically revisit the big strategic topics that have the potential to favorably effect finances, social impact and service/program quality.
• Identify triggers to counter-productive habits. Remind yourself and others, that exploring strategic alternatives like partnerships and alliances is what effective boards do. BoardSource research found that boards rated as having a higher positive impact on organizations’ performance are more likely to be open to discussions about partnerships or strategic restructuring. Considering strategic alternatives doesn’t indicate an inability to lead, rather, exploring options shows responsible leadership as well as effective group problem solving and decision-making skills. And if it’s urgent, do not let ego, misperceptions and hubris delay exploring solutions that may help the organization that you’ve been trusted to lead.
• Learn from others. Talk to someone associated with an organization that has a similar mission or serves a common constituency. Talk to subject matter experts or leaders of organizations that have experienced long-term success in expanding their mission and sustaining their organizations.

The need to consider alternative solutions is not going away. Nonprofit organizations that rely more heavily on earned income were hit first and hit hardest by the economic impact of the Covid-19 epidemic. With PPP and other forms of emergency assistance running out, many nonprofit organizations may still be facing their most challenging times.

So, for anyone who’s in a mid-to senior executive or board position with a nonprofit organization and is committed to perpetuating the purpose and mission of the organization, it’s time to seriously explore partnerships, collaborations and alliances with other nonprofit organizations.

Rick Cartor, Ph.D., is a senior consultant and vice president of Partnerships and Collaborations with Louisville-based Ashley|Rountree and Associates. Reach him at rcartor@ashleyrountree.com