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.
An rich example of effective nonprofit collaboration is the Chattanooga Museums Collaboration. This innovative partnership was one of the eight finalists in the Lodestar Foundation National Collaboration Prize.
I was fortunate to participate yesterday in a webinar led by Heather DeGaetano, Development Director for the Tennessee Aquarium, at the 2009 Conference of the Association of Fundraising Professionals, RI Chapter.
I sat with rapt attention listening her describe this extraordinary collaboration between three very different museums which are sharing a variety of back office services such as finance, human resources, retail pos system, and information systems.
They have even collaborated on the third rail of nonprofits … you guessed it … fundraising! The three museums working together on a transformational waterfront program raised — hold onto your hats— $120 million in 90 days!
Over and over again I see opportunities for building strong partnerships like this. Joint ventures that don’t require giving up your sole through merger. Partnerships that could emerge organically and not by a forced marriage orchestrated by funders. Sharing back office functions can result in stronger and more competent operations, shared expertise, and even cost savings or revenue generation for providing that support to another.
What did Heather tell us this collaboration learned? Among other lessons:
- That collaboration can work.
- That good faith and trust are essential elements of strong collaboration.
- That the benefits of their partnership just keep on coming… and run so much deeper than just cost savings or additional revenue. One example, the Hunter Museum of American Art and the Tennessee Aquarium jointly opened new exhibits called Jellies: Living Art. (wish I lived nearby, the photos are fabulous)
- That they can no longer imagine doing this another way.
I was reluctant to write this piece as they’ve been inundated with calls for information and support since the articles came out. But you really don’t need to contact them to understand what they are doing (after all, they have museums to run rather than spending their time fielding questions). Heather’s report, A Rising Tide Lifts All Boats, provides a pretty comprehensive description of what’s involved.
Instead of calling the museums, how about calling your own colleagues in your community and asking “if they did it, why can’t we? What can we offer each other? How will this help us be better at serving our communities? What would make each of our organizations stronger and more resilient?”
Know that you know it’s possible, you don’t really need to know a lot about the Chattanooga how. What you need to know is whether this is the kind of collaboration you are willing to say yes to. And then make it happen.