How Nonprofits Can Share Down Their Costs (Part I)

Q: What are ways that nonprofit organizations can benefit from sharing… without losing autonomy?

Recently, I picked up a flyer for a theater company requesting a unique kind of donation: storage space. The theater sought homeowners in a densely populated area of San Francisco (where storage space costs a pretty penny), and asked people to lend their closet or garage space for storage of costumes, sets, and props.

Cool idea: For donors, it’s a way to give without donating time or money, and for the organization, it’s a free place to store giant paper mache elephant heads when they aren’t putting on shows for school children. And it’s sharing, our favorite subject, of course.

Collaboration Among Nonprofits is Nothing New

Sharing and collaboration are nothing new to nonprofit organizations. Much has been written about how nonprofits can collaborate with each other, often for the purpose of jointly delivering services. Grant makers love collaboration, usually envisioning that their grants will make more of an impact if two or more organizations with related missions come together to achieve a mutually desired end. But it’s also one of those, well, kind of hairy topics that brings out strong opinions among those who have seen the good and bad of collaborative efforts. It’s understandable. When people are working to save the world, they will have strong (and often differing) perspectives about what services need to be delivered and how.

And Then There’s Sharing Through “Restructuring”

Then there’s taking collaboration even deeper levels, and giving it a name like “strategic restructuring,” which is a fancy way of saying “consolidation” or “merger.” And “merger” is usually a fancy way of saying “one organization swallows another organization.” Nonprofit mergers have become a hot topic lately. In February 2009, Fortune predicted a boom in nonprofit mergers, speculating that it would be a crucial survival tactic for nonprofits. And companies that specialize in facilitating nonprofit mergers report being far busier than normal.

But What About Sharing While Preserving Autonomy?

What about ways that nonprofit organizations can share without sacrificing autonomy or stepping on each other’s toes? Instead of focusing on collaborations where organizations jointly deliver services, I’ll focus here on sharing of overhead and related needs, such as administrative functions and physical space. I also won’t limit my discussion to ways nonprofits can share with nonprofits, but will include ideas for ways that nonprofits can share with for profits and with private individuals. Most of the sharing I’ll talk about here is far less complicated than “restructuring;” it is sharing that requires usually no more than a written agreement among parties (or what nonprofits often like to call “Memoranda of Understanding”).

Sharing Allows for Unlikely Partners

In contrast to service delivery collaborations, overhead sharing arrangements allow for some unlikely partnerships. A nonprofit could share with a for-profit, with private individuals, or with other nonprofits that, on the surface, seem very different. For example, consider ways that an environmental advocacy organization and a 24-hour crisis hotline can work together. Their programmatic goals and tax-exempt purposes are likely very different, but their means to those goals may bear many similarities. For example, both groups may need, and thus be able to share, the following:

  • Office space
  • Office equipment and supplies
  • Telephones
  • Utilities
  • Janitorial services
  • IT staff
  • Administrative staff

These organizations may even have a complimentary relationship if one organization works more during the day, while they other has a spike in activity at night. They could even occupy the same spaces by taking turns or hot desking.

Space: The Nonprofit Sharing Frontier

Nonprofits are increasingly sharing in space – workspace, that is. For some nonprofits, facilities-related costs can be one fourth or more of the total budget. Sharing space creates an opportunity to cut cost of all kinds, including equipment, utilities, staff, building services, and so on. Further, when non-profits share spaces, it creates opportunities for cross pollination, incubation of ideas, greater visibility, and often, more fun.

Recognizing the power of proximity, Tides launched a program called Tides Shared Spaces, which aids in the formation of stable shared facilities for nonprofits. Tides promotes the creation of Multi-Tenant Nonprofit Centers, typically offices that house multiple organizations with common administrative and lounge spaces, shared staff, equipment, and/or services.

Coworking spaces are also a great opportunity for nonprofits. A nonprofit that I am currently helping launch will use The Hub to provide workspace to summer interns. To interns, it’ll probably feel like a bit like working in a coffee shop, but with the energy and excitement of working alongside others in the nonprofit and social enterprise fields. (All the pictures that go with this piece are from The Hub website.)

And sharing offices is not the only way to share space. There are probably tons of examples, but here’s one: a nonprofit soup kitchen could use the kitchen of a for profit breakfast café. Since the café only uses the space in the mornings, the soup kitchen could take it in the evenings.

Combining Functions

Sometimes the sharing of space and the sharing of staff come hand in hand. Organizations that share office space could share an IT department and even purchase computer systems and software together. Other functions that could be combined are finance and accounting, marketing, and fundraising, for example.

Sharing of Stuff

Sharing doesn’t always require working out of the same space. But in the case of equipment-sharing, it does require some proximity at least. For example, a community garden could share equipment with a landscaping company. While the landscaper rests over the weekend, the gardening group can use the landscaper’s shovels, clippers, and rakes for Saturday gardening parties. Another example: nonprofit music programs could pool resources to create a musical instrument library, so that someone who teaches a weekly guitar class in a juvenile detention center can have access to 15 guitars just once a week.

Sharing for Bargaining Power

Another kind of sharing that requires less proximity is collective purchasing. Nonprofits can also come together to collectively bargain for goods and services, in order to receive more competitive rates and bulk discounts. A nonprofit purchasing IT services as a block can probably get some deals from a consulting firm.

Next: How to launch a sharing revolution among nonprofits -- and what issues nonprofits need to think about as they set up sharing relationships.

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