It is in human nature that when we face challenges in our individual or organisational life we reach out for support. Problems can be solved, and risk diminished when we pool our expertise, energy, and insight. This is equally true for nonprofit organisations which unless underpinned by major sources of funding, may struggle to balance resources with their ability to deliver their planned impact.
Forging new partnerships with like-minded organisations can be one way to address challenges of financial sustainability. We have a checklist of key questions to consider as you explore such partnerships.
1. Why is this partnership the right one?
Is it because you already have closely shared interests, but resources are tight, so combining forces may increase impact and share underpinning operational support services and costs? That would seem a good starting point. Finding common ground and shared interests is crucial. If a partnership is seen only as means to fill a funding gap, the absence of common ground will become an unbridgeable gap.
2. What are you prepared to give up?
In a partnership, it is unrealistic to assume that you could maintain total control over activities. Decisions must be made both internally and with your partner regarding what control you must retain and what you are prepared to concede. Our experience is that not thinking through what you will give up or where you will compromise is an obvious and common route to problems later in the partnership. This needs to be understood at all levels of the organisation and in our experience is the most common reason why partnerships fail.
3. Have you thought fully about governance arrangements?
We might argue that in complex organisational arrangements, most things go wrong through poor governance. Will you underpin the governance arrangements with a contract or a memorandum of understanding? Or will it be more informal with an exchange of letters or emails? Time needs to be invested to get this right, thinking about how decisions will be made, how funds will be received and distributed, how relations will be managed with funders and how disputes will be resolved.
4. What are the risks?
Presumably, you have already assessed future financial sustainability as a major risk. But what are the risks, potential or real, that emerge from the new partnership? Conducting a joint risk assessment and maintaining honesty and prudence, will save future stress and steer you towards mitigating strategies. Examples of risk might include one partner deciding to exit the partnership or disagreeing on co-branding arrangements. What can you anticipate during the governance arrangements?
5. How will you manage a power imbalance, recognising that it often exists but is not always managed?
This is particularly visible in international development where better funded and powerful International Non-Governmental Organisations partner with organisations in more poorly resourced parts of the world. It takes a high level of both individual and organisational self-awareness to manage the power imbalances that flow from culture, resources, and dependency. Leaders with cultural sensitivity and first-hand experience are essential to manage these relationships effectively and to ensure that organisational culture and practice adopts appropriate levels of risk tolerance. It must also be made clear whether there is a true partnership or simply a contracting arrangement. This can equally apply to organisations working in the same country where an uneven playing field exists between the organisations.
In summary, although there will be an obvious attraction to forging a partnership to overcome financial sustainability challenges, leaders must consider how their cultural, organisational and governance norms will shape and be shaped by this new and more complex operating environment.
If you require additional support, please contact your usual Moore advisor.