[Editor’s note: This is the second of two stories about how North Carolina nonprofits are coping with the economic crisis. Read the first.]
After almost three years of economic unrest and a growing sense that a quick return to the glory days of the early 2000s is unrealistic, North Carolina’s nonprofits need to find new and better ways to achieve their missions.
While the path through the recession was a difficult one, it seems to be bringing about some needed changes, experts say, including a greater willingness to work together and a renewed appreciation of the gravity of executive and board leadership responsibilities.
While funders and consultants long have encouraged collaboration and partnership among nonprofits, weaving together different organizations can be difficult.
But the financial strain of the last few years has forced many nonprofits to collaborate, even if out of necessity.
The good news is that the recent laser focus on mission may be making that easier than ever before for nonprofits, which now can approach partnerships from a position of self-clarity, says Jane Kendall, president of the North Carolina Center for Nonprofits.
“They are more clear within their own organizations about what it is they’re trying to achieve,” she says. “They are more focused on the core mission and that makes it possible for them to talk with other organizations about how they might economize or form an alliance.”
She is seeing partnerships take many forms, including coalitions that advocate together or organizations that share back-office functions.
“This economic environment has the potential to create some very innovative, imaginative collaboration opportunities,” she says. “Nonprofits by nature have to be resourceful and this is one more tool for them.”
Jennifer Tolle Whiteside, president and CEO of the North Carolina Community Foundation says that, while some organizations are seeking collaboration because they’ve had to cut costs, working together generally has been a positive development.
“Folks are talking about ways to work together,” she says. “Folks are writing grants together, sharing staff, sharing office space and looking at ways to do some things that have been a good idea.”
And collaboration is increasing among the state’s funders, which are struggling with challenges of their own, including battered assets and shrinking administrative and grants budgets.
To make the most of the dollars and staff they do have, foundations are working together to compare funding approaches and increase communication, Tolle Whiteside says.
“There are a lot of unmet needs across North Carolina and we’ve got to find some ways to support each other, support those issues and put limited dollars toward the best possible outcomes,” she says.
Kendall says caution is required when considering collaboration.
Partnership born of desperation or coercion can create more cost and aggravation than savings, she says.
“Sometimes funders require it, or boards may jump to it out of fear or desperation,” she says. “Neither of those is a good way to begin a partnership of equals.”
Leadership and planning
While few, if any, organizations could have predicted the severity and timing of the economic meltdown, some nonprofits were able to do a better job of planning for the inevitable bumps in the road.
“The planning piece is critical,” says Tolle Whiteside. “Those that were successful were those that looked ahead and had some board support and leadership support and a well-thought-out plan for the future.”
But effective planning and preparation are impossible without good board and staff leadership.
“The organizations with strong leadership got stronger,” Tolle Whiteside says. “They used this as an opportunity to pull people together and move forward.”
The stronger organizations used the recession and its aftermath as a prompt to educate their boards, she says, and many boards and finance committees convened more frequently to respond quickly when changes were necessary.
Those boards have emerged from the last few years with a better understanding of how to guide their organizations well, while others may not be as well prepared or structured as needed.
“Boards are either stepping up and realizing their responsibility for the financial model or getting out,” says Kendall.
For some people, board service requires more of a commitment than they are able to make, or they find they don’t have the required skills, she says.
“For boards, passion and caring are a prerequisite and are vital, but they are not sufficient,” she says. “A board needs more than that from each board member.”
A major board responsibility is ensuring a sound financial structure and stable funding streams for the organization, in the process providing a better shot at to withstanding a major upheaval.
Tolle Whiteside says the nonprofits the North Carolina Community Foundation saw struggling were those that depended too much on one or two sources of funding.
“And nonprofits that were relying on special events really had some significant difficulties,” she says.
In response to that wake-up call, more nonprofits are having serious discussions about diversifying their funding sources, she says, and are creating or building their endowments as a way to hedge against difficult times down the road.
Leslie Winner, executive director of the Z. Smith Reynolds Foundation in Winston-Salem, says that while diversity in funding makes financial sense, it also benefits the long-term health of the organization in other ways.
“For financial and political reasons, organizations need to focus on growing their base of supporters,” she says. “It also makes it likely they’ll be more effective in finding a base of volunteers and engaged citizens that understand the issues they’re dealing with.”
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