Consolidation of the sector? Maybe not.

by Jane Arsenault on November 19, 2010


Well, the study is out.  One would have thought that, if the sector was going to consolidate in a big way, that time would be now.   Our firm is certainly doing some of this work, and as I check with colleagues around the country, so are they.  But the numbers are not overwhelming.  The new study, released in October, by the Urban Institute may give some insight into why that is.  See Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracting and Grants.

Most common coping strategies used to deal with government cutbacks and/or late payments were:

  • Freezing or reducing employee salaries
  • Reducing the number of employees
  • Drawing down on reserves
  • Reducing health, retirement or other benefits
  • Borrowing
  • Cutting programs and services

Consolidating with other entities didn’t make the list of coping strategies.   Organizations would rather shrink than partner, it would seem.   There has been a fair amount of effort on the part of foundations, United Ways, and nonprofit associations to educate the sector about models to capture partnerships and to encourage this thinking.

I am wondering though if we are going at this the wrong way.  I think we have this upside down.   I always teach that form follows function,  that you have to know what you are trying to accomplish before you decide what structure is best suited to the purpose.  But each and every time we have one of these discussions about all the different ways organizations can get partner (the structures), we never really get around to talking about what they want to do, or what they need to do, or why “ it” is important or whether partnering  is necessary to get “it” done.  The structures, including mergers, are just tools.  Organizations should work together for a purpose…and given how often having partners is really quite annoying, the purpose has to be worth it.  Maybe the focus should be on inspiration rather than mechanics....on brainstorming some big outcomes that can only be accomplished by coordinated effort…and stimulating that discussion with examples of folks who are at least attempting to do big, important things and have found that they need new and different structures to do those things.  

We know some people like that and it is an honor to be working with them.  But what are you experiencing?  Are you and your partners asking the big questions? Or just working to keep the doors open?


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