Competitive Partners: The difficult, but critical, challenge of Nonprofit Collaborations

Tough times have spurred a renewed interest in collaborations among nonprofit agencies – everything from co-location to formal programmatic partnerships to organizational mergers. With fewer public dollars available to support programs, and the economic pinch slowing private contributions, it makes sense to rethink how the nonprofit sector operates.

The nonprofit sector has certainly grown in both numbers and scale over the past few decades. The National Center for Charitable Statistics reports, for example, the number of registered nonprofits in New York State nearly hit 104,000 this year, up 50% compared to the mid-1990s. The human service sector alone (excluding health care) represents over $25 billion in annual revenue in NY with nearly $40 billion in total assets.  In Rochester, Guidestar reports 245 human services agencies with income over $100,000—from Hillside Family of Agencies with revenue of $100 million to Bethany House women’s shelter with income under $130,000.

Despite these resources, there is also continued frustration that we have not made enough progress to mitigate core social challenges – from child poverty to homelessness to literacy rates.  Surely, if we only worked together better and pooled our resources, brainpower, and collective will, we could move the needle on these issues, right?

Funders have taken notice. Large private foundations and governmental agencies have begun requiring grantees to demonstrate collaborative efforts in order to receive funding. Yet what is often not recognized is that nonprofits face many barriers to working together. Consider a few:

• With a shrinking pool of grant dollars available, nonprofits are increasingly in competition with peer organizations with the same mission;
• The very act of making a grant application requires making a compelling case for why your organization or program is better than all the rest;
• Group work takes time and resources – which are often underfunded. The hard work of collaborating can be less appealing if the resulting slice of funding is not sufficient enough to cover the costs involved;
• Program funding can be too small and narrowly focused, thus precluding collaborative solutions;
• Many of our funding streams provide disincentives to working together. While instinctively working across systems makes sense, nonprofits need their own homeless shelter beds filled, subsidized kids at their day care center, and after-school meals eaten in their building in order to receive reimbursements to keep the doors open.

So what can we do?

Collaborations still make a lot of sense, if only because we can’t continue to support nonprofits as we have in the past. Yet to make collaborations more than window dressing we need to recognize the inherent tensions mission-focused nonprofits face in moving in the direction of greater efficiency.

Funders have a powerful role to play in making this happen. They are in the best position to facilitate difficult conversations, working hand-in-hand with nonprofits to develop the right transition path to a new way of doing business. Governments, foundations, and private philanthropists can encourage meaningful collaborations, of course, by funding them, but not initially at the expense of supporting general operations if they want to get players to the table. Funders can also model the desired behavior by collaborating themselves to provide support significant enough to encourage meaningful partnerships, including funding the time it takes for organizations to work together while being flexible to allow for creative holistic solutions. Funding policies should also be looked at with a lens to incentivize collaborative behavior, while maintaining a healthy dose of competition.

And yes, competition among nonprofits can be a good thing – but that is a discussion for another day.