New study suggests opportunities for solving small nonprofit back office needs

Here’s a new must read if you care about small nonprofits: “Outsourcing back office services in small nonprofits: Pitfalls and Possibilities.”

Thank you so to my colleague and friend Jane Arsenault of FioPartners for forwarding this report.  (If you are interested in nonprofit alliances and haven’t read through Jane’s 1998 book Forging Nonprofit Alliances, you’ve been missing one of the pioneering works on this topic).

“Outsourcing back-office services…” is a study conducted by the Management Assistance Group for the Eugene and Agnes E. Meyer Foundation of Washington, D.C. It confirms through a study of Meyer grantees, industry experts and other literature what many of us have been thinking about, wishing for and experimenting with for a number of years.

Among the findings:

• Outsourcing may present an opportunity for small organizations to improve their back office.
• There may be new for-profit business opportunities in providing these services.
• Because of their small size and lack of spending on any back office, outsourcing doesn’t offer immediate cost savings for most small organizations. But the report goes on to say that it could help free time for more focus on program and strategy.
• Outsourcing needs to be approached cautiously by both organizations and their funders.

Large nonprofits and nonprofit networks have been outsourcing many back office functions for years. In our experience, small nonprofits haven’t been profitable enough for for-profit businesses to service. The lack of money to be made providing these functions has been a real barrier to the development of many services from which small organizations could benefit.

And small organizations simply haven’t had the time, expertise or money to solve this problem for themselves.

Across the country, larger nonprofits are stepping up to provide some of these services. All types of creative arrangements have been developed that don’t force small organizations to merge and thereby dissolve the important, close constituency and localized advocacy work that so many of our smallest nonprofits provide.

With the current economic crisis and a renewed interest in exploring nonprofit joint ventures, the time may finally be right for a thousand flowers to bloom in this area.