Monday, September 14, 2009 Jane Lennox, Lennox Associates and the Nonprofit Consulting Group

1. Collaborations, Alliances, and Partnerships: Winning Strategies for Uncertain TimesSponsored by American Savings Foundation Community Foundation of Greater New Britain Monday, September 14, 2009 Jane Lennox, Lennox Associates and the Nonprofit Consulting Group 860-561-3376 jlennox6@comcast.net

2. Outline • Introduction • Concepts • Examples • Tools • “Watch Outs” • The Future

3. Paradox and Uncertainty

4. The danger in times of turbulence is not the turbulence. It is to act with yesterday’s logic. Peter Drucker

5. Managing in Tough Times Bridgespan Survey www.bridgespan.org/nonprofit-managing-in-tough-times-survey-update-may-2009 • Financial situation for nonprofits is worsening, service demands increasing, and nonprofits are focusing on their core programs. • More organizations are tapping into reserves and making contingency plans for both crisis and better times ahead. • More nonprofits are laying people off and taking other employee related cost saving measures. Real danger of losing good people. • Most nonprofits remain optimistic and many have received emergency funds to help with the immediate fallout. • Tough times = tough choices. Opportunity to emerge stronger and smarter.

6. Perspectives:Good Minds Differ • Collaboration isn’t viewed as positive, possible, or preferred by everyone. • Unshakable beliefs, control, independence, stubborn, rigid, impatient, have to resources to go it alone. • For collaboration to work the participants must be able to: • Truly understand perspectives different than their own. • Make choices that are in the best interest of the enterprise and not necessarily what they would choose if they were working on their own. • Achieve policy change, cost savings, new solutions to old problems, and innovations in thinking. • Collaboration is hard, time consuming and frustrating, and requires new skills that often are not in the toolbox of many nonprofit executives, staffs, and Boards.

7. Options • Close • Reduce activities across all programs. • Scale back or eliminate programs. Get smaller to get stronger. • Reallocate expenses. • Lay off staff, cut salaries, furlough staff. • Cut overhead. • Restructure. • Ramp up fundraising. • Change business processes to increase efficiency. • Collaborate, merge, acquire. • The important thing is that you choose.

8. The Nonprofit Starvation Cycle • Unrealistic expectations about the cost of running a nonprofit and the infrastructure requirements. • Nonprofits succumb to pressures to keep costs low and come to believe the unrealistic expectations. • Nonprofits spend too little on infrastructure and underreport what they do spend in order to meet expectations. • The unrealistic expectations are perpetuated. Nonprofit Overhead Cost Study www.nccsdataweb.urban.org/FAQ/index.php?category=51 The Nonprofit Starvation Cycle www.ssireview.org/the_nonprofit_starvation_cycle

9. Break the Cycle • Shift focus from costs to outcomes • What are we trying to achieve? What does success look like? • Funders and nonprofits talk candidly about what it will really take to deliver the desired outcomes; not how cheaply it can be done. • Nonprofits understand their true program costs. • Standardize, consolidate, streamline.

10. 1 + 1 = 1 1 + 1 = 2 2, 3, 4... = 1 supporting or leading the group Hybrid Types of Collaborations

11. Collaboration Ladder Strategic partnering: both partners assume responsibility for each other’s customers success Solutions: one partner assumes responsibility for the satisfaction of the other’s customers Bundling: Value-added integration Arms Length: Buy/sell transaction

12. Big Theater: Small Town • Artistic excellence. • Major impact on tourism but there are “town/gown” issues. • Theater wants a new building and someone will donate the land. • Theater can raise the money, but needs town cooperation to build. • Town wants a new library, childcare center, and affordable housing. • Should the theater and the town collaborate and create a community development project that addresses all four needs?

13. Nonprofit Collaborations in BostonThe Barr FoundationRoy Ahn • Pay attention to the soft skills • Trust. • Do not jump too quickly to outcomes. • Set ground rules and build relationships at the executive Director, staff, and Board levels at the outset. • Costs and benefits • Technical assistance fees, staff time, and opportunity costs are upfront investments that pay off later. • Implementation is very challenging. The Barr Foundation www.barrfoundation.org

14. Trust • Get along on a personal level. • Committed to shared mission, and willing to act in the best interests of the collaboration even when it is not what you prefer. • Confidentiality. • Highly competent, respected. • Reliable I think the biggest thing you need in order to collaborate is confidence in yourself as an organization and trust in your colleagues, both within the organization and with the people you’re partnering with. What you cannot be doing, and no amount of TA will overcome it, is to feel like, “I can’t partner with you and have to look over your shoulder because I don’t trust you.” A nonprofit executive director

15. Know Yourself and Your Organization Mission Vision Values Strategy Governance Culture Ethos Behavior Infrastructure Capacity Capability Herrmann International www.hbdi.com

16. 5 Dysfunctions Of A TeamPatrick Lencioni www.tablegroup.com/books

17. Technical Assistance • Technical Assistance (TA) for collaboration differs from TA for individual organizations. • One-size does not fit all. • Need multiple TA providers using a team or General Contractor approach. • TA must be sequenced and timed appropriately.

18. Funders • Financial and convening resources that can spur nonprofit collaboration. • Facilitate introductions and communication. Provide a non-threatening way for organizations to say, “This is what I might be interested in.” • Subsidize the costs of technical assistance and/or the cost of the impact on the organizations. • Provide realistic financial incentives for collaborators to collaborate. • Essential that assistance is matched to the needs of a particular collaboration, because every collaboration is unique.

19. Funding “The major finding of this study is that the current financing system for nonprofit infrastructure—including foundation funding—favors organizations that support and represent the larger nonprofits of the sector (which make up a small fraction of nonprofits overall) while networks and infrastructure organizations that serve tens of thousands of small to midsize nonprofits have been consistently under-funded.” The Nonprofit Quarterly Study on Nonprofit and Philanthropic Infrastructure http://www.nonprofitquarterly.org/images/infrastudy.pdf

20. Constellation Organizationwww.boozallen.com/publications/article/658308 • Do what you do best and form relationships for everything else. • Your primary business becomes managing relationships in the constellation. • Make money from the things you do best. Sell your value. Stop doing anything you’re not great at. • Don’t think of yourself as a single organization. Think of yourself as one star in a constellation. • Instead of building capacity yourself, buy, borrow, lease it. • Constellation imperatives: collaboration, connectivity, security, individualization, transparency

21. Wraparound Milwaukee • System of care for children with serious emotional, behavioral, and mental health needs and their families. • Kids involved in at least 2 and often 4 different state systems. • Shared philosophy. • Integrated services and broke down funding silos. • Accessed a little used section of Medicaid reimbursement. • Became the single payer for all children's services. • Reduced residential placements, hospital visits, recidivism. • Increased clinical scores, school attendance, living at home. • $9,000 per month residential; $3,800 in Wraparound Milwaukee. • Aligned with goals of public funders and family preferences. www.milwaukeecounty.org/WraparoundMilwaukee7851.htm www.youtube/watch?v=P1CTskgyYMg

22. MacMillan Matrix • Competitive analysis • Are we the best organization to provide this service? • Is competition good for our clients? • Are we spreading ourselves too thin without the capacity to sustain ourselves? • Should we work cooperatively with another organization to provide services? • Four main assessments: • Fit, program attractiveness, alternative coverage, competitive position.

23. Modified MacMillan Matrix Mission Money

24. Process Management and Communication

25. RACI Chart

26. Strong Field FrameworkJames Irvine Foundation • Coordinating the efforts of multiple organizations and individuals around a common goal and creating the conditions necessary for them to succeed. • Rising tide supports weaker organizations and fills gaps in service, enhance peer bonds and knowledge, common goals, and communication • Promotes diversity of types and sizes of organizations as well as in strategy and approach to the issue • A Field has: • Shared identity • Standards of practice • Knowledge base • Leadership and grassroots support • Funding and supportive policy www.irvine.org/publications

27. Strong Field Framework • Define the Field as narrowly as possible to maximize potential alignment. • Map, research, and assess the organizations focused on solving the problem. • Analyze results and formulate recommendations. • Form collaborations based on the findings and recommendations.

28. Tactical Mapping • Map the relationships among the people, institutions, and systems that perpetuate the condition you seek to change. • A planning tool for building more comprehensive strategies and better coordination with allies. • Visualize the terrain. • Identify points of leverage. Center for Victims of Torture: New Tactics Project www.newtactics.org/en/tactical-mapping

30. Collaborating from Strength • Synergies between philosophies and missions. • Combine strengths to make each more effective in their mission. • Half the Sky: education and nurture. China Care: specialized medical care. • China Care allows Half the Sky to save fragile children. Half the Sky allows China Care to expand exponentially. • Aligned with the new Chinese government plan to improve orphan care in its welfare institutions throughout the country. • The partnership makes for a better overall plan for the well-being of orphans in China and will helps both organizations serve more orphans with special needs.


31. Barriers to Collaboration • Few financial incentives driving deals. • Few financial “matchmakers” (as there are in the corporate world) to help leaders identify, explore, and finance deals. • Little guidance on how to evaluate and structure potential deals. • Often used to shore up finances, make organizations appear more attractive to funders, or to address a succession vacuum. • Frequently reactive and involve at least one distressed entity. • Infrequently seen as a way for healthy organizations to strengthen their effectiveness, spread best practices, expand reach, improve or transform the system, and do it more cost-effectively making best use of scarce resources.

32. Watch Outs • Avoid the dragonfly method. • Inadequate time and attention to relationship building. • Insufficient data collection and analysis. Flawed assumptions. • Myopia. Incomplete perspective. • Absence of strategic rationale. • Lack of clarity. Trying to accomplish too many things with one strategy. • Mismatched goals, skills, operating cultures, communication or management styles. • Not getting help. Not learning new information. Not changing. • Executive Director centered.

33. Conditions Favorable to Collaborative Activity • Fragmentation • Large number of nonprofits with many small players. • High degree of competitive pressure • Variable performance that is measurable. Pressure to improve, change, adopt new practices, technology. • Predominantly institutional funding sources. • Inherent barriers to “organic”growth • Asset and labor intensive. • Importance of local brand. • Saturated market. • Highly regulated environment. • Hot Issue • Power centers want change.

34. The Future • Paul C. Light • David La Piana • Booz, Allen, Hamilton • Connecticut Legislators

35. Rescue Fantasy (aka The Blanche DuBois Strategy) • Donors rise to the challenge. Philanthropy saves the day. • Public sector bailout. • Not enough money. • Only a few nonprofits benefit. Least well known, but most necessary left out. • Favors large single organizations or small sub-sectors • Service Nation • A good, but inadequate response.

36. Withering Winterland • Every nonprofit suffers. • Government deficits reduce contracts and grants. • Nonprofits starve themselves into a weakened state with such inadequate infrastructure they can barely function as an organization or serve their beneficiaries. • Large organizations become predatory. • Layoffs swell the unemployment ranks.

37. Arbitrary Winnowing(aka Big Box Strategy) • The most likely scenario. • Rebalance the sector toward larger, richer, and fewer organizations. • Marketing budget, brand, connections, and broad community support will be the best predictors of survival. • Eliminates the middle class of nonprofits. • Alters the role and purpose of the sector in society.

38. Transformation • The most hopeful and most challenging scenario. • Relies on nonprofits leading, collaborating, changing the way they do business and relate to each other and the business and government sectors. • Deliberate, collective action by many players. • Requires a new mindset and bold action • Speed, flexibility, interactivity, and a high tolerance for volatility, negative feedback, ambiguity, and redundancy.

39. David La Piana This transformation will not be optional. Just as the day has nearly passed when nonprofits are viewed as charities, so too will the current conceptualization of nonprofits as institutions and perhaps even as organizations give way. Many top nonprofit brands will instead operate through and be known primarily as networks. Even those that maintain institutional cohesion will be organized to a far greater degree around shifting coalitions, online activism, and a mobile workforce, using volunteers with day jobs in unrelated fields to replace many staff functions. La Piana Consulting NonprofitNext Initiative

40. MegacommunitiesMark Gerencser, Christopher Kelly, Fernando Napolitano, Reginald Van LeeBooz, Allen, Hamilton • Large multifaceted, ever-changing organism. Decentralized, interconnected structure. • Tri-sector engagement and overlapping vital interests.Reach goals they cannot achieve alone, interacting according to their common interests while maintaining their unique priorities • New degree and type of connectedness among players and a new set of mechanisms to manage the connections. • Balance tensions with operating order not hierarchical control. • Echoes the attitudes of the younger generation.

42. General Assembly  Proposed Bill No. 163 January Session, 2009 LCO No. 924 Introduced by: SEN. DEBICELLA, 21st Dist.; REP. ROWE, 123rd Dist.; REP. HWANG, 134th Dist.   AN ACT CONCERNING THE PRIVATE ADMINISTRATION OF SOCIAL SERVICE PROGRAMS. Be it enacted by the Senate and House of Representatives in General Assembly convened: That the general statutes be amended to transfer the administration of all social service programs from the Department of Social Services, the Department of Developmental Services and any other state agency administering a social service program to community-based private providers no later than July 1, 2010, without any reduction in services, except, in geographic areas where a community-based private provider is not available to provide a particular service, as determined by the Secretary of the Office of Policy and Management, the state agency currently administering a social service program may continue to administer the program through July 1, 2011. Statement of Purpose: To transfer to private, community-based providers all social services provided by the Department of Social Services, the Department of Developmental Services and other state agencies. Referred to Committee on Human Services

43. General Assembly Proposed Bill No. 5415  January Session, 2009  LCO No. 2011 Introduced by: REP. MOUKAWSHER, 40th Dist.   AN ACT CONCERNING THE CONSOLIDATION OF PRIVATE SOCIAL SERVICE PROVIDERS. Be it enacted by the Senate and House of Representatives in General Assembly convened: That the general statutes be amended to require the Department of Social Services and all state agencies that provide funding to private providers for the care or group living arrangements of state citizens to develop and implement a plan to consolidate providers of such services. Statement of Purpose: To attain greater efficiency and cost containment in the delivery of social services provided by private nonprofit providers by eliminating excessive executive and administrative costs incurred by the state due to the number of such providers and their individual executive and administrative personnel and salaries. Referred to Committee on Human Services

44. The Last WordTao Te ChingLao Tsu True leaders are hardly known to their followers. After them, come those that are loved and admired. Then, those that are feared. Then, those that are despised and defied. If you don’t trust the people, you make them untrustworthy. In the end, when a great thing has been accomplished, the people say, “Ah! We did it ourselves.”

45. Thank You! Jane Lennox Lennox Associates and the Nonprofit Consulting Group 20 Flagstad Road West Hartford, Connecticut 06107 860-561-3376 jlennox6@comcast.net