How Not-for-Profits Can Share Risks and Reap Benefits through Collaboration

“We are all here on earth to help others; what on earth the others are here for I don’t know.” – W. H. Auden

I’ve spent most of my career in business development and have worked with organizations of all shapes and sizes, both for-profit and not-for-profit. From this vantage point, I’ve observed that leaders of social- impact organizations tend to be risk averse. This is because they feel pressure to maximize their time and resources on achieving the immediate needs of program service delivery. Often this pressure is increased when funders restrict resources to specific short-term projects.

In business, as in philanthropy, it takes long-term planning, time and resources to identify prospective partners and find mutual goals. There is an element of risk involved in sharing information and undertaking new business strategies together. One way that I like to describe strategic partnerships is by comparing them to a seesaw.  Participating organizations strive to balance the four R’s: Reach, Resources, Revenue and Risk.

Like a seesaw, organizations that collaborate can keep moving forward if they remain focused on their collective push, that is, their mutual mission. They balance the potential to increase their Reach, Resources, and Revenue against the greater weight of Risk.

There is no one size fits all approach to collaboration. Partnership arrangements can be formal or informal, long-term or project-specific.  Some examples include: negotiating purchasing deals with other businesses, undertaking a benchmarking study with peers, forming a coalition to address a community need, coordinating program service delivery, or forming a joint venture.  

Organizations addressing similar social problems or serving similar constituents stand to benefit the most from collaboration. For example, Harlem’s Children Zone is hailed in the philanthropy community as a trailblazer in the collective impact movement. By working with community partners such as tenant associations, social service agencies and health care providers, the organization provides a comprehensive, birth-to-college continuum of services to help poor youth succeed. They also host workshops with community representatives, policymakers, and funding agencies.  This model has been replicated in other cities across the nation and has helped inspire a nationwide initiative, Promise Neighborhoods.

Identifying prospective partners and building and cultivating relationships that can lead to meaningful partnerships takes time and energy—and yes, an element of risk. However, keep in mind that inaction can be just as risky, if not riskier than taking manageable strategic risks. The latter offers potential growth opportunities while the former just ensures that the organization will remain stagnant. It would be irresponsible to stay still while those around you are moving forward.

If you want to learn more on this topic, I recommend AICPA’s online e-learning track, “Governance and Strategy for Not-for-Profits.”  You can purchase this track individually or as part of the Not-for-Profit Certificate Program. To learn more, go here.

Bret Johnson, Director of Channel Management and Development, American Institute of CPAs.

Collaboration image courtesy of Shutterstock