I recently read in Louisville Future about collaboration. Corporations are teaming up to make the utility sector more efficient and ecologically sound. The nonprofit community can learn from experiences such as this. Partnerships amongst the nonprofit sector can lead to greater efficiencies and more individuals served. Definitely a win for both organizations.

Last month we conducted a survey of nonprofit leaders and staff asking various questions about whether nonprofits are considering some type of collaboration or outright merger. The trends we found not only validated a few things we suspected but also provided some interesting insights into the status and plans of nonprofit organizations in this economic climate:

• Most nonprofit organizations have less than 6 months of cash reserves;
• Board members see the impact of the downturn in the economy as more severe than even senior leaders or staff;
• Most organizations have already implemented multiple tactics in response to the economic challenges they face;
• About 1/3 of the organizations are considering collaborative relationships with other complimentary organization and are starting with simple partnerships;
• Survey respondents see advancing the mission, a favorable financial impact and improved morale as reasons for pursuing partnerships and collaborations;
• Though not seen as having a major impact on the decision to pursue collaborative arrangements, the obstacles to considering more involved shared service alliances or even mergers include the perceived complexity of the undertaking and concerns about losing the organization’s name or unique identity.

Cash Reserves

In today’s post I want to highlight the first two bullet points. Our sample confirmed what Kentucky Nonprofit Network (KNN) has concluded – that the majority of nonprofit organizations have very limited cash reserves; approximately 75% have less than six months cash on hand.

Not surprising, the organization reporting less cash on hand, and those relying primarily on earned income rated the impact of the current economy as having a more serious impact on the organization’s well-being and survival.

The fact that Board members rated the financial impact of the COVID-19 economy as having a more serious financial impact on the operation and even survival of these nonprofit organizations underscores the importance of their roles as strategic leaders during this critical time. While managers and staff are running the operations and making needed immediate tactical adjustments – Board members need to take a bigger picture, long-term strategic view and consider more innovative partnerships and collaborations with other similar organizations. The promise of maintaining and even expanding on the mission, sustaining the financial viability of the organization, and improving the morale of the people working day-to-day to deliver the services are all potential outcomes that are needed at this most difficult time.

Let’s continue the dialogue! Please know we are always here to chat or share ideas!