How Grantmakers Can Support Strategic Partnerships
The recent economic crisis has illuminated the value of strategic restructuring, a continuum of partnership options including joint ventures, administrative consolidations, parent-subsidiary arrangements, management service organizations, and mergers. Using these forms of partnership, nonprofits are achieving scale in programs and operation, realizing operating efficiencies, and having greater impact. Grantmakers often play a critical role in encouraging and shaping these partnerships. In addition to providing essential financial support, they offer moral encouragement and practical advice.
Still, grantmakers are sometimes reluctant to get involved in promoting partnerships, for fear of being perceived as interfering in their grantees’ independent decision-making. Frequently, grantmakers ask us how they can appropriately encourage and support strategic restructuring among their grantees without overstepping appropriate boundaries. In response, we compiled the best of this advice in a brief primer featuring the most powerful ways grantmakers can help their grantees to partner effectively.
The First Step
Before you begin, be clear about what you hope to accomplish. If you believe that there are too many small organizations in your community or field of interest and want them to find ways to consolidate, hoping to improve efficiency and reduce costs, hosting an informational meeting on mergers will probably not achieve the results you desire. On the other hand, if you just want to start a conversation in your community about strategic partnerships to see where it might lead, providing information may be a great place to start.
Think through at the outset how you plan to respond to nonprofits in your community that may actually become interested in strategic partnerships. Will you make funding available to interested organizations to explore partnerships or help in negotiating an agreement? Are you able to move quickly while their interest is high? Knowing what you, the grantmaker, want to accomplish is the first step.
Top Five Ways Grantmakers Can Help
1. If your goal is educate or start a community conversation so that nonprofits are more aware of the possibilities of strategic restructuring, provide information on the potential and options for strategic restructuring.
- Hold a webinar or a workshop to educate grantees on the options beyond merger, the steps in the partnering process, and the potential risks and benefits; include in the session some local nonprofit leaders who have successfully partnered to share their experience.
- Create a publication or an area on your website that highlights strategic restructuring. Link your website to resources such as the Foundation Center's Nonprofit Collaboration Resources and our overview of Strategic Restructuring.
- Share local and national examples of successful partnerships through case studies, published articles and other resources like the Nonprofit Collaboration Database.
2. If your goal goes beyond education to encouraging nonprofits in your community to consider and explore partnerships, once grantees are armed with information, follow-up with resources that can move interested organizations toward partnerships.
- Offer advice as they explore potential partners and provide feedback on the viability of potential partnerships from the grantmaker perspective.
- Provide the financial resources to explore partnerships; fund readiness assessments.
- Sponsor a training program for local consultants so they can learn proven and state-of-the-art techniques for facilitating successful partnerships.
3. If your goal is to create substantive strategic partnerships among grantees, when grantees are ready to move forward, help them get to the type of partnership that will provide the greatest benefit to their constituencies and your community.
- Connect grantees with consultants and attorneys who have experience facilitating successful strategic restructuring partnerships.
- Stay involved for 12-18 months; support both negotiations and integration activities such as budgeting, strategy development, and branding, as well as necessary consulting and legal resources.
- Stand ready to offer encouragement and moral support to their efforts; connect board and staff leaders going through the process with peers who have already created strategic partnerships. This is hard work and objective “problem solvers” and thought-partners can make a difference in ensuring that grantees successfully reach their goals and yours.
Read about the Cuyahoga County Human Services Strategic Restructuring Pilot Project in Cleveland to explore one example of a multi-phase approach.
4. If your goal is to make it a community priority, develop a collaborative grantmaker initiative to provide education and financial resources to nonprofits considering partnering. Doing this models collaboration for grantees and raises the profile of strategic partnerships in your community.
5. Recognize successful partnerships at grantmaker and nonprofit gatherings and highlight partnerships in your media outreach efforts. This will reward those who have made a partnership work and motivate others to follow them. See these recent articles and blogs featuring Strategic Restructuring below.
Do's and Don't's for Grantmakers
For grantmakers wanting to support successful grantee parternships, there are common best practices to adopt and pitfalls to avoid.
- Provide education, support and resources for the exploration of strategic restructuring.
- Be open to the variety of options an organization may wish to explore – it is not all about mergers. Provide opportunities for nonprofits to explore together the potential benefits of partnerships by providing resources ranging from consultants to meeting space.
- Introduce willing participants to the opportunity to discuss a potential partnership with another organization.
- Recognize that timing is critical for the development of any partnership so move quickly when approached for support.
- Understand that a less intensive partnership today may evolve over time into a more intense partnership such as a merger.
- Pressure nonprofits into a merger or other partnership – shotgun weddings seldom work out. Facilitate negotiations but don’t pre-ordain the outcome.
- Fund legal fees and integration costs until the parties have agreed to a partnership. Only fund negotiations at the outset of the process.
- Pay for 100% of the costs of a partnership; expect grantees to contribute their time and resources beyond what your grant covers.
- Forget that partnerships cost more money, not less, in the early years. Don’t reduce your support of the organization now that it is in a partnership.
- Think the only way you can help is with a grant. Offer the use of your conference room for negotiations, or ask another grantmaker to join you in supporting a partnership.
La Piana Consulting is the nation's number one resource on strategic restructuring. Since 1998, hundred of foundations have used our extensive array of online, print, and workshop resources to educate their grantees about strategic restructuring and partnerships. Is your organization interested in encouraging nonprofit collaboration? Read more about La Piana Consulting's services and contact us today.