Transcript Slide 1
The Changing Landscape
Strategic Structuring in the Nonprofit Sector Debbie McKeon, Executive Director NorthSky Nonprofit Network
© Copyright 2010, NorthSky Nonprofit Network. All rights reserved.
Acknowledgements
BoardSource Social Enterprise Alliance Fieldstone Alliance LaPiana & Associates
Today’s Agenda
• Setting the Stage: Some Trends • What this means to the nonprofit sector • Strategies and Tools to facilitate work • An introduction to Strategic Structuring • Our region’s early innovators: our panelists Angela Schuler, co-chair, board of directors, City Opera House Gene Jenneman, ED Dennos Museum Center, board of TREAT John Noonan, ED Great Lakes Children’s Museum & Discovery Center
What trends are we seeing?
Government
• Transfer of responsibility for some programs/services to others • Unfunded priorities • Increased focus on economic drivers • Seeking innovators • Delayed payments on contracts • Reduction in funding of program/service administrative costs • Increased focus on volunteerism
What trends are we seeing?
Business
• Developing corporate social responsibility platforms • Recognizing triple bottom line • Propagating concept that social good needs to “act more like a business” • Descriptors as “economic drivers” • Launching social enterprises • Accessing philanthropic capital
What trends are we seeing?
Philanthropy
• Leveraging funds is highly valued • New recipients: BRIs, Aggregated Capital, PRIs-L3C • Increased desire to fund economic drivers • General operating support grants increase • Greater direct involvement • Focus on ROI, sustainability, capacity building-a healthy organization, not only an important program
What trends are we seeing?
Societal
• Local vs. global-complex challenges, many choices of where to help • Communication vehicles changing rapidly • Greater emphasis on volunteerism • Impact of next generation-view new ideas as normal and uncontroversial • Some individuals believe “To make an impact I need to do it myself”
What this means to nonprofit sector
Nonprofit Sector
• More focus on negative image stereotype need to “operate more like a business” • New messages relating mission to economic drivers • More types of entities competing for philanthropy • External demands to collaborate • Drive to reduce duplication of services • Younger generations form organizations
What this means to nonprofit sector
Nonprofit Sector
• Increased focus on sustainability-generally under capitalized business model • Greater demand for transparency • Demand sophisticated financial management • Scope & complexities of problems increasing • More focus on academic preparedness for leadership vs. from program specialists • Growing evidence problems are systemic and structural vs. cyclical and self-correcting
What this means to nonprofit sector
“ At least 100,000 nonprofits nationwide will be forced to close their doors in the next two years.” Paul Light, Professor Public Service, New York University “ Though the economy may be stabilizing, there is no going back to business as usual for the nonprofit sector. Going forward requires us to envision a different future for our organizations. But only those boards that are willing to transform themselves will succeed in transforming their organizations.” Linda Crompton, President & CEO, BoardSource
How are nonprofits responding?
A transformation in thinking. . . .
• Transformative Governance • From networked organization to network of organizations: a systems approach • Professional development
Network of Organizations
From networked organization to network of organizations:
“Instead of a myriad of institutions all operating in isolation from, and often in competition with, each other, the new landscape is likely to resemble a honeycomb with allied entities that share resources.” BoardSource
Network of Organizations
• “Old” sources of power, having control over information, disappear when that information becomes largely free • Mutual back scratching replaced by dynamic groups committed to sharing power and knowledge • New forms of relationships emerge or risk isolation and lack of resources • Well designed strategic partnerships will maximize and leverage resources
Why-what is the goal?
• Better meet community need/the mission & give context to work • Alignment between mission, organizational capacity and capital that ensures continuation of the work, competency and impact and opportunity to grow and scale • Steward & leverage community resources: work as efficiently, effectively, affordably and with least environmental footprint as possible
What’s happening in the NP sector?
Adoption of new strategies and tools. . . . . • Strategic structuring/restructuring • Revenue diversification • Social enterprise • Professional development in financial management and capital structures • Professional development in technology & evaluation to be a performance driven organization
What is strategic structuring
?
• Continuum of partnership options for nonprofits • Use of partnerships to more effectively achieve an organization’s mission • Different from collaboration: Change in areas of control • Valuable tool for organizations
What is strategic structuring
?
LaPiana Associates: Role in Strategic restructuring
•Leader, research •Leader, develop process, recognized best practice •Leader, training consultants to use process •Leader, facilitation using the process
NorthSky
•Kellogg Foundation funded intensive training w/LaPiana •Co-consulted with LaPiana using process •Facilitates strategic structuring using modified process
What is strategic structuring
?
Why do Nonprofits consider partnerships?
• Improve quality of services/programs • Maximize financial resources • Take advantage of new opportunities • Expand range of services/programs • Serve more clients/audiences • Improve program outcomes • Leadership challenges • A tired board • Achieve administrative efficiencies
What is strategic structuring
?
From organizations that have done strategic structuring. . . . . Critical Success Factors:
• Staff/board member championed the alliance • Positive past experiences with collaboration • Board leadership/encouragement/support • Organization risk-taking/growth orientation • Positive board-executive relations or used as change agent • Mission compatibility
What is strategic structuring
?
• • •
To Start The Process Self assessment-Know Yourself
motivators, desired outcomes, critical issues, organizational factors, financial assessment
Potential Partner assessment-What adds value
trust, past experiences, “usable skills and assets, cautions and challenges, mission/program compatibility and complementarities, financial condition
Board resolution to explore
What is strategic structuring
?
Potential Roadblocks
• Concerns over autonomy • Lack of trust • Lack of leadership • Self-interest • Organizational culture • Trying to do it on your own without outside assistance —facilitator plays important role
Some Strategic Structures
A program of Rotary Charities Functions as parent-subsidiary
PLACE HOLDER
Management Services Agreement
Goodwill/Paperworks
Joint Venture Great Lakes Children’s Museum, The Watershed Center, Maritime Heritage Alliance, Traverse Area Community Sailing Merger Goodwill Industries, Paperworks Studios Management Support Organization Old Town Playhouse, Dennos Museum Center, City Opera House, Traverse Symphony Orchestra
Wisdom from our panelists
•
Describe the type of structure you have and process followed to develop it
•
How is it going?
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Nuggets of wisdom for others considering this work
Recap of lessons learned
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Seek assistance-start with NorthSky
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Just because it is a good opportunity doesn’t mean your organization should be doing it
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Plan for impact the new structure will have on the existing organizations
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Assure appropriate expertise exists within team engaging in strategic structuring
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Be prepared to work very hard
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Don’t under estimate organizational culture-key to success
What are some of the risks?
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Unrelated Business Income Tax
• •
Risk management exposure Partnership Taxation/controlled corp.
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Negative affiliation- - - brand/reputation
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Risk to charitable status
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Drains capacity of existing org. instead of enhancing
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Mission drift
Questions & Comments
Thank You
Contact NorthSky at: www.northskynonprofitnetwork.org
231.929.3934
Debbie McKeon Extension: 207 [email protected]
Special Thank you to: NorthSky Nonprofit Network, a program of: