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Tuesday, April 19, 2011

Do nonprofits have to collaborate with other nonprofits in times of economic distress?

Chapter 14 of the Jossey-Bass handbook stated that the 2008 recession produced the ‘perfect storm’ “for nonprofit organizations—a reduction on available resources conjoined with an increased demand for services” (376). According to the authors John A. Yankey and Carol K. Willen, the 2008 recession most importantly forced nonprofit organizations to consider collaborative solutions as a necessity for its sustainability. Throughout the MPA program, we have been taught the importance of collaborating or reaching out to others to solve public management issues. If I had not analyzed the Cleveland Foundation in class two weeks ago, I would continue to support the notion that collaborating with outsiders is key to solving public management issues. However, the Cleveland Foundation exemplifies an alternate solution to solving management issues at times of economic distress.

Despite the economic recession in 2008, the Cleveland Foundation managed to attract the highest level of donations in its history. According to the annual report, the Cleveland Foundation prepared itself for a ‘rainy day’ with a well-diversified investment portfolio and carefully accumulated financial reserves. The report does not mention whether the foundation collaborated with another foundation to overcome the challenges the recession provided. Instead the foundation credits its success on their diversified revenue sources.

A nonprofit organization with a diverse/blended revenue source appears to be more effective and efficient than collaborating with other competitive nonprofit organizations. Last week’s readings did not alter my view on competition. While competition is important in sustaining the economy, when serving public good it can backfire. As prospective nonprofit managers, would you attempt to make your nonprofit’s revenue source diverse/blended or would you collaborate with outsiders to sustain your nonprofit?

3 comments:

  1. Tamaria, I'm not sure that I see collaboration and revenue diversification as mutually exclusive. I'm not sure of the details of the Clevland Foundation, but it sound like they had a diverse investments, rather than revenue. Of course, it goes without saying that a nonprofit should NOT rely on one source of revenue because its sets them up for catastrophe if that source runs dry. Indeed, a lot of nonprofits today collaborate so that they can diversify and increase their revenue. A potential internship site (an advocacy and support organization for nonprofits) told me that they are actively looking to financially support organizations that ARE pursuing collaboration. So, like you, I think that both revenue diversification and collaboration are very important, and further, that they are becoming increasingly entwined in the nonprofit sector.

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  3. I agree with both of you. I don’t necessarily believe that collaboration is the best (or only) option in all cases. If an organizations cannot locate an appropriate partner, if the organizational cultures of two related organizations are incompatible, or other barriers arise it may be detrimental mission fulfillment. Collaboration, formal or informal, should be undertaken when it moves the organizations and mission forward. That being said, I also agree with Dan. I do not see collaboration and funding diversification as mutually exclusive either. Perhaps, the diverse funding streams that two, or more, organizations bring to a partnership is one of the greatest benefits. If two organizations come together and bring funding from private donors, governments, and foundations, they may be increasingly able to handle the economic “perfect storm.”

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