S TRATEGIC Q UESTIONS & P ARTNERSHIPS Bia Vieira The Philadelphia Foundation November, 2012

THE “NEW NORMAL” Pre-2008 Financial Stress Income Diversification Sustainability Talent Management Program Outcomes Logic Models Collaborations Post-2008 Financial Stress x a lot! Income Diversification = (increased competition) Sustainability? Talent Management Results Strategic Partnerships Charitable Deduction?

Key Financial Problems Facing Nonprofits Today Restrictions on Funding – Limited funding for infrastructure and general operations Misperceptions Around Sustainability & Growth – Limited growth capital, little money or time left over to devote to building a sufficient infrastructure to address long-term solutions “Too Many Masters” – Organizations need a robust infrastructure to maximize capacity to get and manage funds Onerous Grantmaking Practices – Duplicative grant applications to demands for arbitrary impact indicators, many grantmakers place enormous burdens on their grantees Knowledge Gaps – Develop a better understanding of the nature of money in the sector. Need to change assumptions and misperceptions about appropriate levels of spending on operations.

About Partnerships Mission comes first Finances follow

T HE D IFFERENT T YPES OF P ARTNERSHIPS Mergers – The full integration of separate nonprofit corporations to form a new whole Back-Office Consolidations – Sharing of administrative services Joint Ventures – New programmatic initiatives undertaken by separate nonprofits working together Fiscal Sponsorships – an arrangement whereby a nonprofit provides oversight and financial management for a grant or other activities of a nonexempt entity Shared Spaces – Buildings that house multiple organizations and provide quality, mission-enhancing workspace

THE NATIONAL LANDSCAPE T IDES launched the Nonprofit Centers Network in 2004 – NCN provides training, T.A., and project consulting for community leaders creating and operating facilities that house multiple organizations, known as nonprofit centers – 2011 Report: Measuring Collaboration: The Benefits and Impacts of Nonprofit Centers, by Mt. Auburn Associates –

THE NATIONAL LANDSCAPE Nonprofit Finance Fund The Catalyst Fund defines collaboration as a relationship between two or more nonprofits that: – meaningfully changes the way participating organizations do business for the long-term – requires board involvement as a high-level, strategic activity – preserves, expands, or improves services to constituents

REGIONAL EXAMPLES Affiliation: Metropolitan Career Center & PHMC Merger using a management service organization (MSO): Liberty Lutheran (Artman Home, LCFS, Paul’s Run and Mary J. Drexel) Merger: Philadelphia Futures & White Williams Scholars Shared Spaces: North Penn Community Health Foundation, Raices Culturales & Casa Venezuela

La Piana’s Partnership Matrix No permanent organizational commitment Decision-making power remains w/ individual organizations Involves a commitment for the future Decision-making power is shared or transferred Is agreement-driven Involves changes to corporate control and/or structure, including creation and/or dissolution of one or more organizations CollaborationStrategic AllianceCorporate Integration Strategic Restructuring

The Strategic Restructuring Process Assessment LLaLat Assessment Resolution Negotiation Agreement Implementation Legal Resolution Integration Mergers, Management Service Organizations, Parent/Subsidiary Corporations, Joint Venture Corporations

WHAT TPF WILL SUPPORT Exploration, including investigation of the potential for cost savings or other benefits from strategic restructuring before forming partnerships Planning beyond exploration, negotiating partnership plan Implementation of strategic partnership plan TPF is careful not to pressure nonprofits to try strategic restructuring

Resources on Collaboration & Partnerships The Collaboration Prize: celebrating nonprofits that come together for greater impact The Foundation Center’s Nonprofit Collaboration Resources Merger Myths, by Thomas A. McLaughlin Merging Wisely, by David La Piana MergeMinnesota, by MAP for Nonprofits The Nonprofit Center’s Network The Nonprofit Finance Fund Secret Sauce of Backroom Collaborations, by Thomas A. McLaughlin Tides Consulting Services & The Nonprofit Centers Network What do we know about mergers?, by MAP for Nonprofits