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Vol. 3, No. 6 November 2007

Funders' Role in Supporting Nonprofit Collaboration

David LaPiana, a national expert on nonprofit strategic restructuring, recently spoke to funders and nonprofits both in Phoenix and Tucson. A number of generous funders made his visit possible including The Lodestar Foundation, American Express, Community Foundation for Southern Arizona and Tucson Electric Power. In his sessions with funders, David highlighted the key role that funders can play in supporting successful restructuring efforts. Acknowledging that funders often express frustration with the lack of coordination, duplication of efforts and unnecessary or inappropriate competition among their grantees, he noted that many funders have tried to cajole and/or strong arm nonprofits into some type of strategic restructuring. Unfortunately, research suggests that cajoling or mandating mergers does not produce successful outcomes over the long term.

David recommended that funders first need to recognize that strategic restructuring is not always the answer and that even when restructuring makes sense, it is seldom an easy process. He went on to identify several key roles that funders can play in supporting strategic restructuring:

• Advertise to nonprofits your organization’s opening to discussing issues related to strategic restructuring.
• Help grantees think through their needs. Ask them to define what they hope to get out of the restructuring effort – what will be different?
• Provide concrete help as well as serving as a sounding board.
• Gauge a grantee’s seriousness and capability to undertake restructuring.

Once funders have identified viable candidates for strategic restructuring, David offers some caveats to maximize the chances of a successful outcome:

• Ensure that the nonprofit has some "skin in the game." For example, don't pay for the Executive Director's staff time related to the restructuring effort.
• Don't pay for meeting space - instead, offer your own facilities as a neutral venue.
• Don't invest the bulk of your resources in the assessment and negotiation phase. If the restructuring effort doesn't proceed, your investment is lost.
• Do provide funding for the implementation phase. There are likely to be a number of one-time costs for merging IT and HR systems, designing and printing new letterhead and brochures, etc. that could become a barrier to effective implementation.

For more information, see David's article, Real Collaboration: A Guide for Grantmakers. It is available for download at http://dev-lapiana.iarchitects.com/pdfmultidownload.cfm.