Finding a Nonprofit Partner: Who is the Right One?

In order to understand the incidence and success of formal nonprofit collaborations, The Bridgespan Group and The Lodestar Foundation collaborated in a 2014 research study . Among the many findings, the study revealed that the number one barrier to collaborations (defined as associations, joint programs, shared support functions and mergers) expressed by CEOs was identifying potential partners.”

13903385550_39f7316982_z

Nevertheless, consider this: If a nonprofit CEO is struggling with ways to streamline costs, or deliver more services with greater impact and funding, collaboration should be prime on the mind.

The process of researching and selecting potential partners is not a difficult exercise but requires adequate sector experience, time, and resources. Nonprofits could handle this internally however many executives are faced with constraints on their time as they carry out their day to day responsibilities.  Hence many CEOs turn to independent consultants and consulting firms for help.

What about the funders’ roles in this process? According to the Bridgespan study, funders “need to tread cautiously” when recommending partners because they would not want their word to be taken as “dictate.” A discussion of grantmakers roles in supporting collaborations and other forms of capacity building are best left for another post. (Refer to Grantmakers for Effective Organizations, “Strengthening Nonprofit Capacity”, for common ways grantmakers support capacity building along with benefits and limitations).

Regardless of whether you handle the process of researching potential partners internally or externally, here are several steps which can help you along the way:

1.   Conduct an organizational assessment and environmental scan. If your organization is in tip top shape, this exercise should be relatively easy, however when major changes have recently occurred, such as the loss of a major funder or departure of an executive, an assessment becomes crucial. Objectivity is key. When executives finally come to the collaboration table, both sides need to be prepared to accentuate their strengths as well as explain or defend weaknesses.

Questions to answer in an assessment include:

  • What purpose does your nonprofit serve?
  • Why is your organization unique? What are your competitive advantages?
  • What are your program or other strengths, weaknesses?
  • How adequate are your resources and board in delivering your mission effectively and efficiently?
  • What is your financial condition? (See step 5 for more).
  • What external elements affect your sector, market, demographic?

2.  Determine partner criteria. Mission, vision and value relatedness are important criteria to consider for any nonprofit considering an alliance. By focusing on what’s driving the collaboration and/or what potential benefit is sought from it, executives can pinpoint other “must haves”. Examples include: Program depth and breadth, staff adequacy, demographics, board/funder representation and financial stability.

3.  Compose a list of nonprofits through internet research. If there’s an existing nonprofit with which you currently have a relationship, research it further. The Foundation Directory Online, The National Center for Charitable Statistics and Guidestar are all useful databases for researching other nonprofits similar to yours. Individual nonprofit websites will assist in further research efforts, however, financial performance data is generally omitted, but it should not be overlooked.

4.  Evaluate each nonprofit on the list and determine the best candidates. Further evaluation can be conducted on each partner after step 5) and once both sides have agreed to meet for the first time. In addition, areas which cannot be easily gleaned from publicly available information, such as culture fit and board-management relationship can then be gauged.

5.  Conduct a financial analysis of each nonprofit (and of your organization). This will aid in identifying any financial weakness, which depending on the severity, may force you to discard a candidate from the list. In addition, this analysis may be useful for partner meetings down the road in which major concerns may be voiced.  Partners can be compared to one another electronically through Guidestar’s Nonprofit Financial Scan product or with the help of a financial analyst.

A financial analysis is typically a summary of key organizational financial data from the most recent 5 years of the Form 990, including calculations of growth rates, profitability, liquidity and asset ratios. Specific areas to evaluate are: signs of unmanageable financial problems, negative trends, or anomalies. Cash reserves or special assets, which could be utilized in a potential alliance, should also be noted.

Conducting collaborator research and assessments can no doubt be time consuming and disruptive for nonprofits.  However, with pressures CEOS face in demonstrating organizational and program sustainability and greater impact, conducting collaboration research is essential to facilitate these goals.

How have you found potential partners? What resources did you use? Email or Facebook, or Tweet your comments.

0
  Related Posts
  • No related posts found.