Hull House in Chicago, the iconic model of a nonprofit
multi-service agency, the original “settlement house” founded by the
Nobel-prize-winning social worker, Jane Addams, closed its doors abruptly in
2012 – succumbing to the formidable social and economic challenges faced by
contemporary nonprofit organizations.
Times are tough. We know that. Those of us who manage
organizations serving the community and who have worked through demanding times
before also recognize that, with creativity and hard work, we can persevere; we
can succeed in continuing to meet the needs of the community.
A recent United Way conference, New Structures for New
Times, reviewed the challenges which nonprofits face and shared findings from a
new study by Wilder Research and MAP for Nonprofits that elucidates one
approach potentially useful for some agencies to preserve and strengthen services.
Regarding the challenges, Sarah Caruso, Greater Twin Cities United
Way president and CEO, identified a triple threat: First, the number of
nonprofit organizations has increased, yet resources to support them have not.
Second, social needs have increased. More people live in poverty. Third, funds to
address needs will decline. Government funding will decrease, and private
philanthropy (individual donors and foundations) cannot make up for that
decrease.
Paul Grogan, president of the Boston Foundation, reiterated
the same three threats in his assessment of the environment which presently
surrounds nonprofit organizations. He warned the audience – comprised of over
500 people, mostly leaders of nonprofit agencies and foundations – that
nonprofits currently focus too little attention on sustainability. They must
realistically take a long term look at themselves.
Nonetheless, neither of these speakers became messengers of
pessimism. Both remained resolute that we can overcome the challenges facing
us. Grogan suggested that we must work to have the sector as a whole “be all that
we can be.” Caruso emphasized that our goal is to meet needs, not to preserve
specific organizations. Taken together, these remarks set up the discussion of one
reasonable approach for some organizations to consider: Merge. Combine
strengths with another organization in order to sustain community impact in the
face of declining resources.
Greg Owen of Wilder Research outlined some factors which
make mergers more successful. For example, having an “executive champion,” strong
board involvement, and line staff involvement in the transition activities
correlated positively with success. He pointed out that, even if mergers
produce long term financial advantages, they can still have a negative
financial effect in the short run. Putting into play the factors identified by
the research can mitigate those negative effects and contribute to long term
financial health.
Organizational mergers don’t offer the solution to all
problems, but they can serve as an effective remedy for some problems. In
appropriate situations, merger participants will find very practical insight
that comes from this study.
At Wilder Research we work directly with hundreds of
organizations each year. I’m proud of the talents that my nonprofit colleagues
in these organizations bring to their work. I’m inspired by their devotion to
mission and by their willingness to do everything they can to improve our lives
and make our communities better places to inhabit. I’m impressed by their
uncompromising dedication in the face of so many challenges which could put their
agencies out of business. So, I’m glad we could partner with MAP for Nonprofits
to complete this study, to assist all nonprofits to recognize and act on
options available for them to continue to serve us well.
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