Rethinking Nonprofit Partnerships

Lessons learned help groups do better job of collaborating

As charities grapple with cuts in state funds and declines in corporate and foundation grants,

the search for new charity partnerships, and even mergers, has again started to gain currency among nonprofit groups as a way to save money and expand services.

But the idea, hailed during economic hard times in the 1980s and 1990s, is being met with more caution and skepticism than in years past. Many previous attempts at nonprofit collaboration have foundered, often producing more hurt feelings than financial savings.

Charity and foundation leaders today say they are approaching potential collaborations armed with a better understanding of what makes them work — and why. Charity partnerships can be good business, many observers say. But some nonprofit organizations avoid them, saying they worry about losing their identities or spending inordinate amounts of time and energy to make the relationships work. Instead of forming long-term partnerships, some charities, often with foundation support, opt to cooperate informally on small projects, with no long-term commitments attached.

In cases where it makes sense to merge organizations, charity leaders and consultants say they now realize just how much time, care, and attention to the people involved with both organizations are required to make the efforts successful.

Many foundation officers, looking back on the wave of collaboration that took place in recent years, say they have learned that using grants to induce charity matchmaking can be extremely risky.

John Colborn, a program officer at the Ford Foundation, recalls how he tried to get two job-training and placement groups to join forces on a big project, and even gave them some money to get the effort going. However, the groups, which he would not name, never hit it off.

A grant is “too blunt a tool” to be used to encourage a partnership, says Mr. Colborn. Instead, he says, foundations should act as intermediaries, introducing people so they can decide for themselves whether to court each other.

Mr. Colborn also says that experience has shown him that collaborative projects require a leader at one of the organizations who has the courage to take risks and the energy to expend significant effort on making the partnership work. Such leadership cannot be imposed on the collaborating groups, but must develop naturally, Mr. Colborn says.

Encouraging Groups to Work Together

Even if they are reluctant to require their grantees to collaborate, some foundations have promoted partnerships in indirect ways. The Pew Partnership for Civic Change, a research organization in Charlottesville, Va., supported by the Pew Charitable Trusts, recently published a study that focused on collaboration.

The project, called Solutions for America, which the foundation supported with $4-million over four years, sought to profile and recognize local groups that are working in tandem to solve social problems.

The work was based on the premise that social problems such as poor family health and local economic stagnation require collaboration among groups with specific missions because the problems themselves are too big for any one group to handle on its own, says Suzanne W. Morse, the director of the group.

She points to a program in Arlington, Tex., where 16 local charities created a health program called Sealing Molars Improves the Life of Every Student, or Smiles, which over seven years halved the rate of severe tooth decay in local children by providing dental sealants to students attending public schools in poor neighborhoods.

The William and Flora Hewlett, James Irvine, and David and Lucile Packard Foundations recently gave a combined $3-million to Strategic Solutions, a project run by David La Piana, a San Francisco consultant who is renowned as an expert on charity mergers and partnerships.

Working with Amelia Kohm, a researcher at the University of Chicago’s Chapin Hall Center for Children, Mr. La Piana designed a survey of cultural and human-service groups in metropolitan Cleveland and San Francisco. From the analysis done so far, Ms. Kohm says that 62 of the 262 cultural and human-services groups that were surveyed reported undertaking some kind of collaboration, ranging from joint programs and shared administrative functions to full-scale mergers.

Half of the groups with budgets of $10-million or more that were surveyed had collaborated, she says.

While foundations like Pew, Hewlett, Irvine, and Packard are encouraging collaboration, others may be unwittingly doing the opposite. Dennis P. McIlnay, a professor of business administration at Saint Francis University, in Loretto, Pa., and author of How Foundations Work, says charities are wary of partnerships prompted by foundations partly because such relationships often lead to reductions in grant money. Two groups that had been receiving $10,000 each, for example, would be unlikely to get a total of $20,000 if they collaborated or merged, Mr. McIlnay says.

The nature of the nonprofit world also tends to discourage long-term or extensive partnerships among organizations and makes it especially hard for charities to work together on fund raising. A group’s ability to attract donors and enthusiastic staff members, and thereby its ability to advance its mission, depends on having a unique identity, says Thomas A. McLaughlin, a senior manager in the Boston office of Grant Thornton, an accounting firm that often works with nonprofit clients.

Groups often begin a collaboration with clear boundaries in mind, designed to protect their unique identities and, especially, their donors. Four cultural groups in Dallas are experimenting with a partnership in hopes of attracting more families with young kids as members, but are not on the verge of merging or even sharing their most valuable information. The partners — the local public broadcasting outlet, zoo, art museum, and science museum — are putting on free events and helping to promote events at the other groups.

But the charities will not be actively sharing mailing lists. Says Karen Hamilton, vice president of membership at the Dallas Zoological Society, “People are zealous about guarding their membership base.”

Following are three other examples of charities that are engaging in partnerships in hopes that they will find strength in numbers.

Nine museums that are located near the southern tip of Manhattan counted their blessings after the September 11 terrorist attacks because none suffered irreparable damage to their buildings or lost staff members. Yet they all suffered financially. Many were forced to close, some for up to a month. When they reopened, their attendance had fallen between 50 and 80 percent. School groups had canceled trips. Tourists avoided the area because of air-quality concerns and transportation problems. Staying afloat was difficult.

Emergency grants that some of the museums received from the Andrew W. Mellon Foundation and American Express, among other sources, have not offset the financial losses they suffered in the six months following the tragedy. The museums estimated that they collectively lost $3.5-million in donations and spent $251,000 on cleanup costs.

Now, as the museums struggle to rebound, the nine, including the Museum of American Financial History, Museum of Jewish Heritage, and New York City Police Museum, are forming a partnership aimed at rebuilding attendance and revenue through joint marketing efforts.

A model for their collaboration exists less than 10 miles north, stretching for more than 20 blocks of Fifth Avenue in what is known as the Museum Mile. There, another nine museums, including the Metropolitan Museum of Art and the Solomon R. Guggenheim Museum, have worked together for nearly 25 years. They promote themselves using the slogan “nine museums, one destination.”

The nine smaller museums, located in or near New York’s financial district in what New Yorkers call “downtown,” have submitted an application for $4.7-million to New York State. The money would pay for a publicity campaign to help give the museums a collective identity.

Museum officials say they do not worry too much about their institutions losing their individual identities. “The museums are run by people with strong personalities,” says David Marwell, the executive director of the Museum of Jewish Heritage and de facto leader of the group.

Under their plan, $3.8-million would be used for advertising that already is being developed by a local agency, according to Mr. Marwell, whose museum has a $10.7-million budget, the largest among the nine.

“Before 9/11, only a quarter of the visitors to New York even came downtown,” says Brian Thompson, director of the Museum of American Financial History. “Those people who did visited the Statue of Liberty, the South Street Seaport, and the World Trade Center observation deck.”

Mr. Marwell says that because of the tragedy, attracting tourism to the neighborhood will always be a delicate issue. “The taste and tone of the campaign will be very important,” he says.

Two unlikely bedfellows — the Jewish Community Center of Toledo, in Ohio, and the YMCA of Greater Toledo — tied a knot of sorts when the YMCA merged one of its branch operations with the Jewish center’s main facility.

The Jewish Community Center has had to react to a dwindling Jewish population, both in the historically Jewish neighborhood of Sylvania where it is located and in the Toledo metropolitan area.

The YMCA, a historically Christian organization, previously ran satellite programs in Sylvania using local public-school classrooms and other makeshift facilities. Five years ago the YMCA began looking for ways to make its presence in Sylvania more permanent. But the costs of doing so were potentially very high.

Larry Lev, senior vice president of the YMCA, says building a new branch would have run between $5-million and $7-million. But joining with the Jewish Community Center cost only about $350,000.

“We really had to rise above ownership and egos to do what’s right,” he says. “In Toledo, funding is not as prevalent as it used to be. Not everyone can go to the same well.”

Both organizations say they are happy with the results of the unusual arrangement. The YMCA expanded onto a 44-acre campus. The Jewish center, which believed its facilities were underused, has seen its membership grow from 1,500 to 1,900 families and individuals. They have joined in part because members of the facility in Sylvania can also attend programs and use gym facilities offered by the other YMCA branches in the area.

Eric Goldstein, director of the Jewish Community Center, says other Jewish centers have begun viewing his group’s relationship with the YMCA as a model for how to deal with a plateau or decline in membership and the related unused space. “Many centers across the country are losing members,” he says.

Still, the deal did not come without friction. For example, the Jewish Community Center’s board refused to allow the facility to stay open on Saturdays because of the Jewish Sabbath, even though Saturday is typically the biggest day of the week for YMCA programs.

Moreover, the Jewish center had to overcome fears that its religious identity would be overwhelmed in areas such as child care, where the YMCA’s programs are significantly larger.

Although they originally signed a four-year agreement, both Mr. Goldstein and Mr. Lev expect the relationship to continue indefinitely. They talk excitedly about running a joint capital campaign to pay for an indoor pool, and they joke about how much interfaith dialogue they have generated.

“Forty percent of our day camp this summer is non-Jewish,” says Mr. Goldstein. “They learn about Israeli cooking, dancing, and music, and take it home to their parents.”

For the last five years, Dennis Roy has served as the executive director of two social-services groups in Rhode Island, running Self Help, in East Providence, and New Visions for Newport County, in Newport.

The organizations provide a wide variety of facilities and services for the poor, including substance-abuse programs, food banks, homeless shelters, health clinics, and child care. Absent regulatory hang-ups, the two will become one in another six months.

The groups, which are roughly the same size, together employ 275 people and have a combined budget of $15-million, 75 percent of which typically comes from government.

Five years ago, when Mr. Roy was still just executive director of Self Help, his counterpart at New Visions retired, and the two groups signed an agreement that created a joint human-resources department and consolidated other parts of their operations.

The groups have saved money by streamlining their management structures. For example, now one person runs the program that safeguards the health of mothers and young children for both organizations, eliminating the need for an extra staff member. They also have saved money on health insurance, long-distance telephone services, and medical supplies.

Mr. Roy says Self Help and New Visions and their separate boards had considered continuing with a joint-management agreement indefinitely. But now the organizations are planning to merge, a move prompted in large part by the potential for new sources of income.

Specifically, Mr. Roy hopes to win one of the federal grants awarded to community health centers. The grants are awarded according to a scoring system that takes into account the number of potential clients and an applicant’s ability to deliver multiple services cheaply and effectively. On both counts, he says, the merged group will score better than either of the organizations would if they applied alone.

The imminent merger has created concern among both clients and staff members that the groups will lose their local identities, which are tied so directly to the separate communities they serve, says Mr. Roy. But he says that each group’s original local advisory board will remain intact, and hopes they will assuage the concerns.

Says Mr. Roy, “It’s important not to lose our local flavor.”