It’s a familiar sentiment expressed by a local donor: The charity she supports is asking for money with increasing frequency. Yet nothing changes for the better, and now duplicate groups are popping up, all of them requesting funds to address the same problem. To her, the requests seem endless. She wonders whether the nonprofit organization should use less money for administrative costs, if it’s possible they run more like a business and if disparate groups addressing the same issue is truly efficient.
This donor’s concerns illustrate a bigger question: Can nonprofits scale sufficiently to solve — rather than simply treat — the community problems they were created to address without exhausting their supporters?
Before we talk about scaling strategies, let’s consider an adaptation of a story from Kellie McElhaney’s book, Just Good Business, which illustrates the choices. Four parents sit by the river when suddenly a large number of young children starts floating by, struggling to swim against the current, with more and more coming rapidly behind them. One parent jumps in and immediately hoists one child after another onto the shore (think of this as charity assistance). Another parent jumps in and starts teaching each child how to swim (empowerment). The third goes upstream to find out how and why the children are being put into the river and to stop that from happening in the first place (root cause solutions). Finally, the fourth parent goes upstream to collect data on the conditions under which the children got into the water, frequency and other factors, so a plan can be developed to control the problem and create new solutions as needed (advocacy).
This story illustrates how scaling and solving a community problem can be difficult unless all aspects are addressed. However, it’s rare to find any one organization that can effectively attend to all aspects of a solution and at the scale required to complete the job. So, what are some options?
Option No. 1: Form Collaborations
One approach involves forming collaborations among nonprofits. First, define the scale of the problem, determine the solution and set a goal. Gather the most effective nonprofits to contribute by doing what they each do best. Next, create a plan, budget and timetable. The cooperating nonprofits then invite their combined pool of donors to participate. Lastly, they publish regular reports to show their effectiveness, and make any required adjustments.
Getting groups of nonprofits to collaborate is no small task. Who has the time, resources and data to manage the development of a collaboration, set goals, record outcomes and guide inevitable course corrections along the way? Fortunately, local groups such as the Sacramento Region Community Foundation, Valley Vision, Social Venture Partners, the Impact Foundry and others can provide assistance.
Option No. 2: Merge or Acquire
Another option is for one nonprofit to acquire or merge with another. The track record is mixed when this happens; in general, mergers and acquisitions tend not to lower costs, but do help eliminate competition for donor dollars, consolidate expenses and increase impact when managed well. Several Sacramento organizations have been involved in mergers and acquisitions, including BloodSource and Senior Gleaners.
Option No. 3: Partner With Businesses
Newer options exist to help nonprofits with scaling, including partnerships with social enterprises, social entrepreneurs or forward-thinking corporations.
Social entrepreneurs produce disruptive, sustainable solutions to social and environmental problems in either the nonprofit or for-profit sectors, and are funded with either donations, public money, earned revenues or a combination of those sources. Social enterprises may or may not be disruptive, but are businesses that produce revenue to sustainably help solve community problems with earned income rather than donations. They also include revenue projects within a donor-driven organization, such as the sale of Girl Scout cookies to benefit that organization.