Collaboration: All the Rage in the Nonprofit World, But is it Right for Everybody?

Peas in a Pod:
Collaboration: All the Rage in the Nonprofit World, But is it Right for Everybody?
By Robert Evans

The news that three historically prominent suburban Philadelphia synagogues – two Conservative and one Reform – planned to combine their religious schools into a single supplementary Hebrew school last month made big waves. It garnered major coverage from the Jewish Exponent, the weekly newspaper covering the Philadelphia region. (To be clear, the synagogues themselves are remaining independent.) Some “sky is falling” observers viewed the move as further evidence of the decline of liberal Judaism in a changing but still heavily Jewish suburb. Others with a more “glass is half-full” perception took the news as another sign that the once great Reform-Conservative chasm is narrowing. And many recognized the plan as a response to reality and hope that the effort leads to a vibrant and successful school.

But, perhaps what the school merger most epitomizes is the increasing propensity of nonprofits that once viewed themselves as competitors to work together. Throughout the Jewish and secular nonprofit worlds, organizations that once might never have imagined working together closely – never mind merging – are joining in common cause.

Collaboration and collective action were major buzzwords at the General Assembly of Jewish Federations held in November in suburban Washington, D.C. According to a report by JTA, talk at the conference focused on the idea that the challenges – and potential opportunities – for innovation and creativity are so vast and overwhelming that nonprofits stand a better chance of making an impact if they work in collaboration.

Ever since the economic collapse of 2008, there has been a great deal of chatter about the importance of collaboration and avoiding duplication. The lack of resources, the thinking goes, demands that nonprofits find new and creative ways to work together.

But what are we talking about when we talk about nonprofit collaboration? Are we seeing more of it in the nonprofit world? Is it making a positive impact?

A recent report released by the Bridgespan Group and The Lodestar Foundation called “Making Sense of Nonprofit Collaborations” offered an informative look and enumerated four main types of long-term, formal collaborations (as opposed to more informal, one-off type efforts such as running a joint fundraiser). These efforts can be broken down into:

• Relatively informal associations
• Running joint programs
• Sharing support functions
• Merging

One might have thought that the recession would have led to a spike in nonprofit mergers. Indeed, for a time, it seemed that, every week, another Jewish organization was either folding or merging with another group. But the report found that the overall rate of nonprofit mergers remained unchanged between 2007 and 2012. The flat rate was due to the fact that even in the most troubled of economic times, the total number of nonprofits grew. So even as the number of mergers increased, the number of all nonprofits increased as well.

The Bridgespan/Lodestar survey of 237 nonprofit CEOs found that 91 percent of the respondents had engaged in at least one of the four forms of collaboration and 54 percent engaged in two or more. Clearly, there is a great deal of enthusiasm for the idea of collaboration. According to the study, the two biggest obstacles toward greater collaboration are inadequate funder support and the challenge of finding the right organization with which to work. Innovative foundations like Lodestar are promoting the idea of collaboration and urging philanthropists to fund these efforts. But more philanthropic support is needed. Collaboration is not just about saving money, but about enabling organizations to better achieve their mission.

In a recent interview, Laura Solomon, Esq., a Philadelphia-area attorney whose firm caters to nonprofits, said that, during the Great Recession, a number of Jewish and non-Jewish organizations faced bankruptcy or dissolution and, in other cases, entered too hastily into affiliations and mergers. For sure, there have been enough examples of nonprofit mergers that felt like hostile takeovers to make volunteer and professional leaders – not to mention employees – nervous about dramatic change.

Whenever a tax-exempt organization collaborates with another nonprofit or for-profit, Solomon explained, the organization needs to consider first whether the collaboration is in furtherance of its charitable mission. Then, the organization should work with legal counsel to fully understand the unique corporate and tax consequences of the form of collaboration, which may be an affiliation, a management services organization, joint venture, traditional merger, or a “virtual” merger, where one nonprofit becomes the parent of the other. Nonprofits need to consider both the cultural and legal issues as there is a potential for misunderstanding when nonprofits don’t fully vet the partner organization or engage legal counsel to weigh in on the form of collaboration. But, as the economy has improved and most nonprofits have recovered, they are being more selective about collaborations and, on the whole, making better and better-informed decisions.

“We are seeing charities that are not merely reactive, but are looking at potential collaborations in a strategic way,” said Solomon. Solomon noted that “in many cases, these collaborations are being encouraged by board members or required by funders as a condition of continued funding.”

Lois Savage, president of the Arizona-based Lodestar Foundation, said in an interview for this posting that in the past, there was a certain stigma attached to nonprofit mergers.

“It was usually a measure of desperation,” said Savage. “Mergers are now often very strategic. There has been so much money spent on issues where you are not gaining a lot of tracking, where you are not moving the needle. For example, some organizations are saying ‘if I feed the homeless, and you clothe the homeless, maybe we would have more impact if we did it together? It is not about me, it is not about my organization, it is about making the most impact that we can make.”

I know of no definitive study examining or quantifying nonprofit collaboration in the Jewish world. But I urge readers to take a look at the Foundation Center’s Nonprofit Collaboration Database, which, as it so happens, was put together in collaboration with the Lodestar Foundation. Type in the search term “Jewish” and you’ll find it full of detailed descriptions of innovative partnerships. For example, there are pages and pages of information and data outlining the decade-old partnership in Portland, Oregon, between the Mittleman Jewish Community Center (MJCC) and Portland Jewish Academy (PJA), which have long shared a campus. Here’s the short version: A decade ago, the organizations were often operating at cross-purposes, competing for philanthropic dollars and running concurrent early childhood programs. Now, the two nonprofits have an arrangement that is somewhere between sharing executive functions and a full merger. They have one board and each organization pays half the salary for executive positions, which saves more than $200,000 a year. More importantly, the day school now runs the sole early childhood program which acts as a feeder for the day school. Enrollment has increased at the day school and membership at the JCC has rebounded dramatically.

Not every merger or partnership makes sense. When organizations team up with others on any level, they give up a certain amount of autonomy and that comes with risks and complications. But clearly, the tolerance among funders of an endless “alphabet soup” of Jewish agencies has worn thin. Philanthropists, indeed all of us who care about the Jewish future, are seeking real answers to our many current challenges. There is no doubt that the Jewish world will be better off if more of our organizations and synagogues work together in common cause. Our professional and lay leadership, as well as our funders, must understand this.

Robert Evans, President of the Evans Consulting Group in suburban Philadelphia has more than 35 years of experience advising nonprofits on fundraising campaigns and strategic planning. A member of the Giving USA editorial review board and a board member of the Giving Institute, Mr. Evans is frequently quoted in media outlets such as The New York Times and is a regular contributor to eJewishPhilanthropy.com.