Donors often ask us why nonprofits don’t merge more frequently. From their vantage point, many nonprofits are doing great work — but they observe redundancies in some areas and big holes in others.
Why can’t nonprofits collaborate more, they ask?
To understand the question of nonprofit mergers and collaborations more deeply, our colleagues explored the issue from both the donor’s and the nonprofit’s perspectives.
The report, “Making Sense of Nonprofit Collaborations,” analyzes results from a new survey of nearly 250 nonprofit CEOs and 100 grant makers, as well analysis of the Foundation Center’s nonprofit collaboration database, and follow-up interviews with a score of the people who responded to the survey.
The report shares the extent and nature of formal nonprofit collaborations and how leaders rate the results for each type of collaboration.
In addition to outright mergers, the study examined three other types of formal partnerships: associations, which have shared goals but no shared programs; joint programs, which have a formal agreement to deliver services together; and shared support functions, in which nonprofits share back-office or other administrative functions like finance systems, IT, or even office space.
While we knew collaboration was gaining traction, some of the report’s findings surprised us.
First, there was far more nonprofit collaboration than we had expected — 91 percent of organizations in the survey said they were engaged in some form of collaboration.
Second, given the high rate of collaboration, there was far less support than expected from grant makers for those collaborations. More than half the nonprofit CEOs said they received none.
Third, grant makers and nonprofits did not see eye-to-eye on barriers to collaboration. For example, CEOs rated finding the right partner their highest barrier, and grant makers listed it as their lowest. And they had different views on failure rates: Grant makers said joint programs failed least (as in never), while CEOs said they failed the most.
An important takeaway is that for foundations interested in supporting nonprofit collaboration, including mergers, it’s critical to offer flexible support and allow nonprofits to lead the strategy.
In particular:
The power dynamic between foundation and nonprofit can impede collaboration; self-awareness and candor can help bridge the divide. The good news is that nonprofits do not roll their eyes when donors raise the topic of collaboration. To the contrary, nonprofit leaders noted that they often look to grant makers to help introduce them to partners.
But brokering relationships without forcing them can be tricky. A Pittsburgh area grant maker said that “trying to force groups to work together or for us to assume we have the big idea is dangerous — but an easy thing for a foundation to do.”
And even when grant makers are able to take a light touch, they worry about leading the jury: As one Chicago foundation executive noted, “I’m worried [potential grantees] will take my word as dictate. … They need to be committed enough to do their own homework.”
But creating ways for potentially compatible nonprofits to meet one another without forcing relationships is a highly valuable role for grant makers.
One Boston foundation has seen this, noting, “No [nonprofit] wants to be the first one to approach another.” Her view is that while nonprofits almost always know the organizations that would make sense to unite with, a donor can offer important “third party” validation.
Some grant makers navigate this tension by facilitating conversations outside the formal grant-making process. For example, the staff member of a midsize Seattle foundation whose role is to support collaboration, makes clear to the nonprofits she works with that she has no authority over grants. She believes that’s enabled her to build more authentic and productive relationships.
Another option is for grant makers to ask third parties to facilitate initial meetings, thereby taking grant-maker influence out of the room. And no matter the type of support donors offer to encourage collaboration, nonprofits shouldn’t have to feel that success means getting to yes. As the Pittsburgh grant makers told us, “We are willing to accept that nothing may come out of the conversations.”
Grant makers must be open to paying for the processes involved in collaboration in addition to programs. In interviews, grant makers emphasized the benefit of investing in efforts to structure strong collaborations.
But it appears that such support is rare: In our survey, fewer than 20 percent of nonprofit CEOs reported grant-maker support for the process, and fewer than half received any support at all for such collaborations.
Foundations don’t dispute this: A recent Grantmakers for Effective Organizations survey revealed that 53 percent of donors rarely or never support collaborations.
Yet providing support for the collaborative process can give nonprofits the time and flexibility to work through partnership issues and to be fully vested in how the partnerships will play out over time.
For their part, grant makers report that it’s much easier to sell their trustees on the idea of program dollars than capacity dollars.
Funding such collaborative processes requires building adaptive capacity within grantees — from exploring alliances to full mergers — to help them seize opportunities to be more efficient or effective in how they spend scarce dollars.
One grant maker who supports educational causes said a trustee once asked why its foundation’s grantees don’t take advantage of chances to collaborate. “He doesn’t fully grasp that we haven’t given them enough funds to respond nimbly to collaboration opportunities.”
Grant makers interested in creating impact for the long haul will realize that mergers and collaborations are not just an opportunity to get “more for less” but a chance to invest in a healthier nonprofit sector.
Our surveys and interviews, as well as our direct work with donors, reveal significant hurdles to overcome: There are real costs to supporting unions — they can underperform or fail — and a host of issues (including ego) can prevent more from occurring. Yet both grant makers and nonprofit CEOs in our survey report that collaboration of all kinds is able to surmount these barriers and mostly reach or exceed the desired goals.