Balancing the Mission Checkbook

When economic times get stressed, as they are now, nonprofit organizations are often urged to consider mergers or other collaborative structures as a strategy to navigate reductions and shifts in funding. The topic came up again at a meeting last week titled “The State We’re In: Fulfilling Human Service Needs in a Time of Economic Uncertainty.” Scott Russell at MinnPost.com wrote a good summary of the tone and comments of the meeting, Nonprofits hear a gloomy forecast about future funding. With financial pressures from all sides, coupled with increased demand for services stemming from employment and housing problems, many nonprofits will be hard pressed to keep up the juggling.

No one would say that mergers are the right answer for every nonprofit, but if you do think that joining forces would make sense and help your organization maintain stable services, where do you find your mate? All of the articles and books I’ve read discuss the importance of finding the right fit with leadership that can work together, board buy-in, and mission alignment. But where do you find them? What happens when the board chair or director of a small nonprofit calls the CEO of a large, established agency to inquire about a potential merger? Do they invite you over for coffee? Do they even return the call?

I think I’ve found the answer – speed dating for nonprofits! Speed dating is an organized event to help singles meet a number of people in one evening with the intent of finding one or two for an actual date. Speed dating for nonprofits would follow the formula. Nonprofit leaders, from large, medium, and small organizations, would be scheduled for a series of 5 to 8 minute conversations about mission, programs, and goals. A bell would indicate time to move on to the next “date.” No commitments or promises are made. At the end of the event everyone indicates on the list which of the nonprofits they would like to talk with further. It’s efficient and direct.

On the other hand, if you’d rather proceed with more control and confidentiality, there are a number of resources available. A short study published in 2004 by a collaborative of Milwaukee funders, Nonprofit Collaborations and Mergers: Finding the Right Fit, lists these key characteristics of successful partnerships: committed leadership, unambiguous goals, clearly defined roles, commitment at multiple levels of the organization, dedicated staff time, and sustainability in the midst of change. Fieldstone Alliance has two workbooks by David La Piana on nonprofit mergers. For hands on assistance, Project ReDesign is a new service from MAP for Nonprofits to assist with any part of considering, planning, and carrying out a merger.

I’m asking this question in the context of neighborhood and community development planning. In these conversations, nonprofit organizations are usually engaged as providers of services and as advocates. Community development nonprofits, for example, create housing, train entrepreneurs to launch small businesses, and facilitate community planning and participation. But what about the nonprofit organizations themselves – are nonprofits desirable and valuable as neighbors to include in community development planning? Unfortunately, nonprofits are not always viewed as a component of economic development – and sometimes are seen in quite the opposite light. We had an illustrative experience a few years ago. Nonprofits Assistance Fund’s loan funds provide credit to nonprofits for both working capital and facilities. We applied for capital funds in response to an RFP for funding to spur business growth and job creation in some targeted neighborhoods. We are denied funding with the comment that they didn’t want to encourage more nonprofits to locate in these neighborhoods. What they wanted were small businesses like restaurants and retail shops. Nonprofits were viewed as service providers and fundraisers, not as employers and economic entities. Economic development press releases frequently cite how many businesses were started and grew in the last year – but have you ever read a celebration of how many new nonprofits were started or grew in the same year? Why is there a disconnect between nonprofits as essential service providers and nonprofits as community businesses?

We have a case study for this question in Saint Paul and Minneapolis as the light rail transit Central Corridor line is planned and developed. This 11 mile route will link the downtowns of Minneapolis and Saint Paul via the University of Minnesota campus and University Avenue. The corridor along University Avenue has been a magnet for nonprofits for years because of the proximity to both cities, easy access, and affordable rents and real estate – there are about 800 nonprofits currently located in the Central Corridor. The city of Saint Paul has already invested considerable effort in creating a development strategy for the Central Corridor with a framework for “neighborhood revitalization, reinvestment and growth”. Fortunately, many nonprofits are engaged in the process already. I encourage everyone to think of the role of nonprofits as both advocates for the community and as small and medium-sized businesses who have much to offer the community as employers, sources of economic activity, community assets – and as good neighbors.

There has been some research and discussion about the role of nonprofits as both providers and as community development assets. One interesting publication is Tom Borrup’s Creative Community Builder’s Handbook: How to Transform Communities Using Local Assets, Arts, and Culture published by Fieldstone Alliance. Please post a comment or send me an email about other resources on the topic.