When is Nonprofit Consolidation the Right Choice?

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When is Nonprofit Consolidation the Right Choice? Giving Compass

In 2017, One By One (1×1) found itself in a position many small nonprofits may find relatable: their small staff was unable to scale up their efforts without additional resources, which they could not afford to access. Their method of supporting grassroots education and treatment for obstetric fistula survivors was proving successful, but scalability was becoming an insurmountable obstacle.

Former 1×1 Board Director Barbara Gauld recalled the difficulties that the organization faced, citing the frustration induced by the knowledge that the money they worked so hard to raise went to the overhead needed to keep the organization moving, rather than their programs. While there is no shame in healthy overhead, the cycle of raising money so that you can afford to raise money can be exhausting. But a potential solution presented itself: consolidation.

Nonprofit Sector is a complex topic, and others found these selections from the Impact Giving archive from Giving Compass to be good resources.

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Effective Ways to Show Gratitude

Giving Compass' Take: • Vu Le provides concrete steps for people in the nonprofit sector to effectively show gratitude during the holidays and all years long. • Are you a grantor to be thankful for? Who do you need to thank? How can you best communicate your gratitude to them? • Learn about overcoming the overhead myth to be a donor to be grateful for. Match your gratitude with actions: Sometimes, thanking people is not enough, or might actually be insulting, insensitive, or condescending. For instance, if a team member has been taking on an unfair amount of office chores that no one wants to do, such as cleaning the fridge, thanking them without taking other actions may justifiably only irritate them. Get everyone else to do their part and maybe exempt the person from fridge duty for a while to balance things out. Pay people better, and provide health insurance and paid family leave: Speaking of actions, one of the best ways you can show your gratitude to your team is to make sure they are paid decently, have great insurance, and have sufficient paid family leave, among other things. A million thank-you notes or plaques do not make up for undercompensating people. Appreciate your donors of cash as well as of time: Our donors of money are important. And as mentioned before, time is finite and can never be replenished. So let’s appreciate our time donors as much as we appreciate our cash donors. Whatever you do for money donors—thank-you notes, phone calls, mini-muffins—you should also do for your amazing volunteers. Acknowledge funders who provide Multi-Year General Operating Dollars (MYGOD): A pattern I’ve noticed is that funders who provide MYGOD are way less finicky and demanding than those who provide restricted funding, which also means we are less likely to thank them. This is a shame and a bad practice, because if anything, they deserve the most thanks for making our lives easier and our work more effective. So thank them! Highlight them in your media. Give shout-outs during your events. Use these opportunities to not only recognize these awesome funders, but also to talk about the importance of general operating dollars. Read the full article about showing gratitude by Vu Le at Nonprofit AF.

Why Consolidate?

Consolidation is a hot topic in philanthropy – its proponents include Prince William – and evidence has shown that the practice has promise. The argument for consolidation holds water: reduce the duplication of efforts that contribute to overhead by merging two organizations into one. Internal departments (HR, IT) and resources (databases) can be merged and reduced, leaving more money for choosing, vetting, building, and funding programs. Essentially, it is more efficient for one organization to distribute funding than two, or more.

But consolidation can have drawbacks. Merging can blur or eliminate organizational identity that may be important to staff, board members, and donors. Mission misalignment could alienate formerly invested stakeholders. Working with new people, perhaps in a new place, is always a challenge. Actually physical and logistical consolidation also bring a host of potential difficulties.

An Ideal Consolidation Partner

1×1 and Worldwide Fistula Fund (WFF) had already been collaborating closely, working together to provide funding for a mutual grantee in Uganda. Taking the partnership to the next level seemed like the obvious choice. The two small organizations saw eye-to-eye on most things. While their approaches varied slightly – 1×1 focusing on supporting grassroots outreach and WFF emphasizing training for doctors – their values were fundamentally the same. Both organizations wanted to develop holistic, sustainable programs that lead to the end of obstetric fistula.

Ultimately, it was this fundamental alignment of values that convinced all of the board members from both organizations that consolidation was the best path forward. Soja Orlowski, executive director of WFF, likens the consolidation to a marriage.

She recommends that organizations considering consolidation treat a merger like a relationship. Strong lines of communication, honesty, and value-alignment are key to long-term success. Take it slow and do your due diligence.

How to Consolidate

When it comes to consolidation it is essential to decide what features of each organization can be retained and eliminated. In this case, the organizations were intentional about treating the process like a blending of families. They took care to ensure that various communication styles were welcomed and respected. It is key to “invest time in allowing people to adjust,” according to Orlowski.

Orlowski also emphasizes the importance of establishing a transition team from the beginning to communicate the process externally to maintain transparency and trust among stakeholders – especially grantees and donors – throughout the process. The order and method of communication is essential to a smooth process.

1×1 and WFF now both exist under the name Worldwide Fistula Fund in Chicago. It will hold events in Seattle, as well as Chicago and New York, to maintain the engaged, energized donor base that supported 1×1 over the years.

WFF is also excited to adopt 1×1’s grantees, all of whom will continue to receive funding from the merged organizations. 1×1’s Kenya program model will be expanded in concert with WFF other programs. Keeping the most impactful models of both organizations intact and scaling up is the major benefit of consolidation.

Logistical and legal questions can be solved by teams working together well. Database merging and other challenges can be addressed by a prepared, communicative staff.

Consolidation can be a powerful tool for nonprofits looking to make their next big move and up their impact.

Keep Orlowski’s advice in mind: Do your homework on your partner. Build a strong transition team. Work together to problem solve.

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Original contribution by Clarissa Coburn.

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