Considerations for Nonprofit Collaboration

Nonprofit organizations are often under intense pressure to stretch their resources. Collaboration is one potential way to accomplish more without necessarily adding additional resources. Donors are well aware of this and often encourage, and in some cases even reward collaboration between and among nonprofits. The presupposition is that a cooperative relationship will allow organizations to achieve their goals in a more cost-effective and beneficial manner than they would when competing for scarce philanthropic resources. Yet, many nonprofit Executive Directors resist the notion that collaboration can be an efficient and effective solution. Donors, too, are sometimes hesitant to enter the organization into the complexities of such relationships.

This resource examines the types of nonprofit collaboration and evaluates the reasons for such collaboration, also considering possible roadblocks.

Types of Collaboration

There are three common forms of collaboration: resource sharing, joint venture, and strategic alliance. Each varies in complexity and in the level of commitment that is required from participants. Moreover, each type of collaboration is suited to a particular type of outcome. This is why organizations considering collaboration must be sure to clearly define the desired outcome of the venture. The appropriate collaboration structure may then become apparent as board members and staff discuss how that goal is to be achieved.

Resource Sharing

Resource sharing is the first level of collaborative effort and may be extremely effective in eliminating costs. Participants agree to share the cost of service delivery or to save money by sharing or acquiring a resource that neither could afford nor justify on their own. These minimized expenses are reflect an increased net gain on the Statement of Financial Activity. For example, Saint Joseph’s food kitchen delivers meals to the homeless and Saint Mary’s Convent delivers clothing to the homeless. Together they can come together and purchase a van to simultaneously provide their services, also saving money on gas, insurance, etc. From a donor’s point of view, nothing could be easier. Resource sharing requires a moderate level of administrative oversight, but not a significant commitment. In fact, depending on the nature of the shared resource, organizations could have very little interaction after the initial agreement is struck. All participants retain complete autonomy and their interaction is essentially limited to the use of the shared resource. Resource sharing agreements may also build familiarity and trust, leading to a deeper interaction as additional strategic commonalities are discovered.

From the nonprofit’s point of view, however, such resource sharing could constitute a logistical nightmare. Imagine a scenario where both organizations need full utilization of the van at the same time of the day. To further complicate matters, the food pantry needs to outfit the vehicle to keep the meals horizontal and warm during transport to a constituency located primarily in the inner city, while the convent needs to deliver clothes in a vertical storage mode at room temperature to an aged population mostly located near downtown. What seems like a simple solution to the donor can be a headache for the two organizations who are the “lucky recipients” of the gift.

Joint Ventures

A joint venture involves commitments from two or more organizations to undertake a major project or to jointly address a strategic issue or community need. The distinguishing feature of a joint venture compared to resource sharing is that it undertakes a particular project or need. The level of commitment is higher than resource sharing and any change of these boundaries should involve renegotiation among participants.

In its most basic form, a joint venture has a single objective or project with a defined beginning, middle, and end. Examples are collaborations for a joint fundraising event or to create a venture that will sustain itself. This was seen when several minority colleges joined together to apply for a large grant that funded information technology system updates for educational institutions. Alone, the colleges would not have the infrastructure, or the need, to receive such a large grant but their joint venture provided the resources to become a perfect candidate.

While this type of collaboration does not necessarily require a sophisticated infrastructure, periodic meetings to review project progress and redefine participant or project needs are crucial to success. Each review session should involve all participants who agree to the final collective distribution of responsibilities.

Joint ventures tend to be initiated by the nonprofits themselves, and for this reason are more popular with the nonprofits. Donors who are asked to underwrite the joint ventures, however, can be skeptical of the ability of normally autonomous nonprofits to sustain a long term relationship. Consolidated reporting is another cause for concern for donors who are funding more than one organization at a time.

Strategic Alliances

Strategic alliances are the most ambitious type of collaboration and the most open ended. A strategic alliance is a commitment by two or more organizations to pursue an agreed set of goals that assist both in attaining their mission. Although they go beyond normal interorganizational dealings, they do not go as far to create a formal merger or consolidation. Strategic alliances, instead, involve the creation of a new organization, charged with undertaking variety of activities on behalf of the participating organizations.

Strategic alliances are often found between regional or national organizations, particularly to engage in public education, advocacy, or lobbying. For example, the New York City Chapter of the American Heart Association (NYCAHA) needed to cut its resources allocated to lobbying. Understanding that its “competitors,” that of the National Multiple Sclerosis Society and the Arthritis Foundation also were struggling with funds to support its lobbying efforts, the NYCAHA approached the organizations to create a strategic lobbying alliance. All three organizations paid a third of the cost for a lobbyist to represent their issues with one legislator at the same time, appropriately stressing the core principles of the organizations while outlining their distinctions.

On a smaller level, large joint purchasing or resource sharing could be served by a strategic alliance. Regardless of the purpose, all participants must envision and agree that the alliance will evolve over time to address a variety of challenges and opportunities. Additionally, although strategic alliances involve a higher level of commitment than resource sharing or a joint venture, the payoffs are potentially much greater.

Strategic alliances tend to arise out of necessity or a common need. The force of circumstance that drives most strategic alliances tends to make them more readily accepted by both organizations and donors alike.

Reasons for Collaboration

To advance the mission of the organization. Each participant, not just one or two, must be able to say unequivocally that the cooperative venture contributes meaningfully to the accomplishment of its own mission and/or its capacity to service its community. If the venture does not advance the organization’s mission, it is not worth the effort. It its important to note that as more participants join a cooperative arrangement, the more unrealistic it becomes to ensure the collaboration is equally beneficial to all participants. Some will inevitably benefit more than others.

Leveraging the resources of two or more organizations can create a venture more powerful and beneficial to the community than the two organizations operating independently. For example, two after school programs in the same community may choose to alternate class offerings with the same staff.

At the same time, cooperative arrangements can be a powerful mechanism for external growth, helping participants to enhance its comparative advantage with a lower level of risk and financial commitment than would be required if it pursued the strategy on its own. Thus, a cooperative venture might help an organization strengthen its position in a competitive environment by expanding its service area or controlling service distribution.

To satisfy funders or other important stakeholders. Two key groups that exert powerful influence on nonprofits are government and grant makers. Government has a major impact, both as funder and as regulator. Grant makers, organizational and individual, contribute cash to nonprofits to enable them to carry out their stated missions. Some funders tend to push collaboration in order to address the latest trend, fad, or “cause of the month.”

Certainly such demands are powerful motivators and catalysts, and they are not inappropriate as along as they do not cause organizations to simply go through the motions of collaboration in order to satisfy the narrowest interpretation of the mandate or guidelines. Unfortunately, mandates often produce just that kind of behavior – minimal compliance in order to quality for the reward. This can lead to “mission creep” and undermine all participants’ differentiation and weaken its ability to create social value. Cooperative ventures are most successful when all partners enter the arrangement of their own accord with full commitment to the spirit of the group and its participants.

To grow the organization’s visibility and build community support for a cause impact in the community. Collaborative strategies often have higher level of community visibility than even the most ambitious individual organizations acting alone. A large collaborative effort not only provides credibility, but may also attract the attention of political officials and other community leaders. At the same time, favorable media attention is short-lived and a poor motivation for a cooperative venture. The event will be soon forgotten while the commitment will remain.

Particularly for smaller organizations, a strategic alliance could greatly enhance its ability to have a meaningful input into the bigger political agenda. Planned Parenthood is an excellent example of branding independent clinics together for greater funding opportunities and recognition.

To reduce costs of the organization. A cooperative venture may help an organization to maintain or grow services while using fewer resources. This is particularly critical in an economic downturn when funding decreases or for small or young organizations that are cash tight. Sharing allows an organization to more efficiently implement its mission all the time. The challenge of an organization desperate for collaboration is that organizations have a difficult time finding partners if they don’t’ bring significant value to the relationship.

An endangered organization might also seek a cooperative arrangement in order to survive longer. While amiable and even if temporarily successful, a collaborative venture will rarely save a dying organization. Suggested actions the organization may want to consider is drastically reducing its administrative overhead.

Collaboration Challenges

Collaborations can encounter challenges that threaten the success of the alliance. Preparing for these situations ahead of time can assist in developing a response.

To ensure benefits outweigh time required. The amount of time it takes to formulate and implement a collaborative effort is often given as a reason not to partake. A collaboration can take as much or as little time as each participant desires, but it will fail if one or more participants is not fully committed. The expected time should be weighed against the benefits and articulated clearly between members.

To agree on core principles without compromising overall mission. Collaborating organizations should not find themselves on the opposite sides of an issue. Ideal collaboration happens when each participant brings an element the other lacks, even if they disagree on the implementation of the mission. For example, although animal rights groups disagree on the level of acceptable consumption of animal products, such as the allowance of dairy and eggs versus no animal products at all, they have been able to successfully come together to create an overall message addressing animal rights and cruelty.

To work with competitors. Many organizations tend to think in geographical or service boundaries, particularly when neighboring organizations provide similar services or compete for the same resources. Collaborating organizations must have a high level of mutual trust and respect for these boundaries as well as what each brings to the relationship in order to ensure success.

At the end of the day, collaborating with another organization represents an external allocation of resources. Strategy must inform this choice. Leaders should ensure that the partnership aligns with the organization’s long-term strategy. Collaborations should be reviewed regularly to ensure the ongoing benefits to all parties involved.

Articles and Resources for Further Reading

1. www.ideaencore.com. An online platform for nonprofits to exchange information and resources with other organization.
2. Austin, James. The Collaboration Challenge: How Nonprofits and Businesses Succeed through Strategic Alliances. San Francisco: Jossey-Bass, Inc., 2000.
3. Boardsource. “Making Nonprofit Partnerships Effective.” September 2004. http://www.boardsource.org/Spotlight.asp?ID=116.375
4. Gilbert, Michael. “A Practical Approach to Collaboration.” http://news.gilbert.org/PracticalCollaboration April 5, 2007.
5. Kearns, Kevin P. Private Sector Strategies for Social Sector Success: The Guide to Strategy and Planning for Public and Nonprofit Organizations. San Francisco: Jossey-Bass, Inc., 2000.
6. Heifetz, Ronald A. and Marty Linsky. Leadership on the Line: Staying Alive through the Dangers of Leading. Boston: Harvard Business School Press, 2002.
7. Phills Jr., James A. Integrating Mission and Strategy for Nonprofit Organizations. Oxford: Oxford University Press, 2005.
8. Spiro, Jody. Leading Change Step-by-Step: Tactics, Tools, and Tales. San Francisco: John Wiley & Sons, Inc., 2011.

For more information, please visit the Giersch Group at http://www.gierschgroup.com/ or contact us at prosper@gierschgroup.com