The strength of combined forces is usually greater than any single strong-arm, especially in tough economic times.Within the business realm, Sysco Corp. is angling to buy up a rival, US Foods, giving the combined entity close to a third of the national food market.
Within the shipping industries, three giant container carriers, CMA-CGM, MAERSK and MSC, have worked out an arrangement to do joint shipping in certain lanes.Within the healthcare industry, mergers and arrangements have long been implemented, with giant health care leaders slowly gobbling up smaller community healthcare centers and hospitals. Nonprofits ought to look at that strategy, too.
When a board or executive team decides that a nonprofit must combine forces with others in order to be most effective and sustainable, there are three different modalities to explore.
1. Collaborative Agreements. Just as the shipping companies worked out a deal of how to partner to deliver services that are similar, non profits can explore ways to maintain their own identity while partnering with other agencies. To give you an idea of how this works, let’s use the example of a food pantry that has limited budgeting and can only provide a site supervisor and the donated food; but would like to expand and offer more services to build its credibility and impact.
The food pantry might elect to invite in a legal aid society and a free tax return service into its space. The food pantry maintains its own identity, but has now broadened the scope of its reach and services to clients by allowing other nonprofits to use the facilities and deliver expanded services to its end users. All for the same budget as before. It has now become more of a key player in the neighborhood service arena and more noticeable to donors.
2. Mergers. Is there another struggling nonprofit that would benefit from being merged with your agency and are your goals and target market the same? The route that Sysco is taking might be the option for your agency. By combining programs, certain administrative costs will be reduced while still maintaining the double stream of revenue, if both programs are funded. For example, a preschool program might want to look at merging with other existing after-school enrichment classes.
3. Expanding the Reach. Can your organization create spaces within other spheres to broaden its reach into new markets and neighborhoods. An example of this would be of legal aid societies who place workers into other social service spaces. Another creative nonprofit placed job coaches at neighborhood associations, going from a Manhattan-based module to one where they can boast of “services in all of New York City.”
In times of decreased revenue streams, cutting costs does not have to mean curtailing programs. It could possibly signal that it is time to merge, collaborate or expand in creative ways that will bring in more bang on the existing buck.