Tough times are making nonprofits around the state look at partnerships and collaboration to survive.
BY LINDA BAKER
Last February, two Portland nonprofits, Oregon Trout and the Oregon Water Trust, decided to dissolve their respective organizations and form the Freshwater Trust, a group that works to restore freshwater ecosystems. The two organizations had “the same issues, same funders, same constituencies,” says Allan Horton, Freshwater Trust’s managing director. “It was the perfect formula for a successful merger.”
Part of a larger rebranding effort, the restructuring of Freshwater Trust also made sense as a way to weather the economic downturn, Horton says. It’s a common refrain. These days, weathering the economic storm has become something of a mantra in the charitable nonprofit sector, where revenues have plummeted as a result of the Great Recession.
According to a recent survey by the Oregon Community Foundation (OCF), private giving declined in 2008 compared to 2007 for about half of the 137 organizations surveyed. Another report, conducted on behalf of Grantmakers of Oregon and Southwest Washington, found that 26% of the 68 foundations surveyed experienced a loss in asset value of more than 30%.
The results are grim and getting grimmer. Many nonprofits have been forced to slash staff and programs, and in some cases close their doors altogether. Although there are no exact figures on the number of organizations that have folded as a result of the recession, “We are just at the beginning of seeing how Darwinian this whole thing can be,” says Grantmakers executive director Joyce White. And on average, demand for nonprofit services is up 16% since July 2008.
But as the consolidation of Freshwater Trust suggests, there may be an upside to the downturn. Across sectors — arts, environment, social services — nonprofit leaders are using the recession as an opportunity to explore cooperative work strategies, from sharing information and facilities, to mergers and large-scale alliances. These tactics aren’t exactly new to the nonprofit world, which experienced a rash of mergers and consortium building in the 1980s. But in a cyclical market, banding together is going to become more common in the years ahead, funders and grant-seekers say.
“We are seeing real strong interest in networking, sharing costs and collaboration,” says OCF president Gregory Chaillé, referring, in particular, to a series of recession-related community meetings OCF has held with nonprofits around the state. A conference sponsored by Grantmakers that also addressed the economic downturn emphasized a return to core competencies and better linkages among nonprofits, and between nonprofits and the business community, White says.
The financial crisis isn’t the only force likely to catalyze efficiencies in the marketplace. The number of all not-for-profits and nonprofits in Oregon doubled over the past 10 years to 28,000 — an explosive growth rate that invites comparisons to the housing boom. About 14,000 of those are registered charitable corporations, according to the state Department of Justice, which reports that 10 years ago the number was about 9,700.
“The landscape doesn’t have the capacity to support that many nonprofits; we’re oversaturated,” says Linda Golaszewski, interim director of the Institute for Nonprofit Management at Portland State University. Golaszewski’s sentiments are echoed by Carrie Hoops, executive director of TACS, an organization that provides training and support to Oregon nonprofits. “Sometimes I wonder if TACS should serve as birth control for nonprofits,” Hoops observes. “There are so many and money is finite.”
The problem is a national one, says Heather McLeod Grant, a consultant at the San Francisco-based Monitor Institute and author of Forces for Good: The Six Practices of High Impact Nonprofits. “There are far too many duplicative nonprofits in this country,” says McLeod. She says the result is an environment of competition instead of cooperation and complementary services and that funders and foundations are going to start demanding collaboration “for better impact.”
Snapshots of new and existing initiatives in Oregon show varying kinds of partnerships among nonprofits, as well as efforts on the part of grantmakers to encourage best practices. The benefits of networked operations run the gamut, from reduced costs and creative synergies to more effectively leveraging social change.
Consider the before-and-after picture at Freshwater Trust. Pre-merger, Horton notes, a single staff person at Oregon Trout had multiple responsibilities, such as meeting with landowners, attending board meetings and other administrative duties. “That created a division of focus,” Horton says. But today, Freshwater Trust’s larger but more targeted staff means “more specialization is possible and more work gets done.”
That same logic, albeit on a larger scale, informs a recession response summit to be held this fall in Washington County. Dozens of safety-net organizations help people find food, housing and health care, says Lisa Brown, director of development for Community Action, a nonprofit provider of housing and child-care assistance. But those efforts are often fragmented and duplicative, she says. They also tend to focus more on emergency response — opening up homeless shelters, holding food drives — instead of “systemic change,” she says.
Enter the summit, which brings together faith organizations, social service nonprofits and county health clinics to create a more cooperative streamlined system — during and after the recession.
“The question is: Who can do what the best?” Brown says. “If my organization does this, can your organization do that? It’s a more strategic approach to mobilizing and delivering resources.”
It’s also the kind of proactive work that would earn a stamp of approval from OCF’s Chaillé. “Too often nonprofits are reactive,” he says. “It’s time for the nonprofit world to assert itself, to really think about what it wants the community to be.”
Recent events in the arts world underscore the distinction between proactive and reactive approaches. In June, Oregon Ballet Theater was saved from imminent demise after a collaborative performance (that featured, among others, the New York City Ballet and National Ballet of Canada) helped fill a $750,000 hole in the dance company’s operating budget. Other arts organizations also spread the word about the ballet’s dire straits.
But if it took a village to save OBT, the effort pales in comparison to another long-term alliance aimed at resolving perennial arts funding crises. Launched last spring, the Creative Advocacy Network (CAN) is a coalition of arts groups dedicated to building public support for an historic arts funding ballot initiative. If passed, the initiative would distribute $15 million to $20 million annually to multiple organizations, including museums, performance groups and educational institutions.
CAN represents a paradigm shift, says Jessica Jarratt, who signed on as the nonprofit’s first executive director in July. Arts organizations typically compete for scarce funding dollars, she says. “But to do the job I am tasked with doing, I need to have the support of everyone: arts supporters, art lovers and organizations with budgets large and small.” Individual nonprofits will need to share their membership and donor lists, Jarratt says, and put aside their differences and immediate needs in favor of a common sustainable solution.
So far, the strategy seems to be working. “I have never seen this level of collaboration before,” says Jarratt, who has been a nonprofit consultant for eight years. “It’s spectacular.”
Donors and foundations are creating new grant-making categories and programs to encourage other resource-sharing strategies — both large and small. OCF, for example, is considering funding a new staff position, with a specific goal of carrying forward the collaborative ideas raised during the recession response meetings, Chaillé says. And the Meyer Memorial Trust recently issued a request for proposals for a new planning grant to allow nonprofits to share space and services.
The Deschutes Children’s Foundation already does just that. Launched in 1990, when children’s services faced dramatic funding cuts, the organization provides free rent to 27 children’s and family organizations in four Central Oregon campuses. The arrangement creates synergies among participating nonprofits and saves about $700,000 per year in rent, shared equipment and staffing, says executive director Jan Eggleston.
Donors are also tweaking due diligence procedures to highlight organizational priorities and how they fit in the current marketplace. “In the past, we have been guilty of saying funding should go toward new programs,” says Doug Stamm, Meyer Memorial Trust president. “Today, here’s the thing we’re looking for: Is it a core program and are you going to be able to sustain it?” The answer comes full circle: Expand community resources to strengthen internal operations.
Explaining his funding criteria, Mark Holloway, executive director of Social Venture Partners, says: “We’re going to be a lot smarter about looking for good funding diversity — especially good business networks to help close the budget gap.” He cites as a model Friends of Children, a nonprofit that matches children at risk with long-term paid professional mentors.
Friends of Children added five members to its board this year, and launched a separate “ambassadors board” made up of young professionals with an average age of 27. The nonprofit has also created a Facebook page, as well as finance, development and governance committees, staffed by community volunteers.
Will other area nonprofits rise to the challenge? As Golaszewski points out, Oregon has always had something of a grassroots, “do-it-yourself” attitude toward nonprofit development — “a willingness to start anew.” An example is the Portland Fruit Tree Project, a two-year-old startup that harvests and distributes unwanted fruit and nuts from urban street trees and is the brainchild of 27-year-old Katy Kolker.
This kind of independence may persist in the future, but it won’t be the only standard for nonprofit innovation. Instead, a more appropriate benchmark for the times is connectedness. The current environment is characterized by limited resources and increased demand, says Chaillé. “Collaboration is required. The traditional way will work for some, but not for most.”