Scott Schaffer and Julie Gelfand
As the world grapples with how to deal with the two long-term ecological crises it faces (climate and biodiversity), we offer a suggestion to the ENGO community: Consider strategic restructuring as a means of strengthening your capacity, your resilience and your ability to help society transition to a future in which humans live in harmony with the natural world.
Deep partnership and alignment of organizations are proven approaches that can deliver economies of scale, which are elusive in many stand-alone environmental nonprofits. Economies of scale are, in essence, efficiencies gained by increasing the size of your operations or programs. Every organization must have certain basic elements in place, such as an administrative back office and systems for coordinating the work of board members and other volunteers, managing staff, operating programs, raising funds and communicating with the public. In general, the smaller an entity is, the greater the share of its time and resources that must be devoted to these basics. By attaining larger scale, organizations can often increase their impact by focusing proportionally more effort on mission-related work and activities that will bost overall impact.
Examples of favorable scaling effects include:
Specialization and focus of program, administrative and fundraising staff
Depth of management overseeing the organization’s work, which can support greater agility in responding to challenges and opportunities
Greater bandwidth for strategic thinking by senior staff
Greater bandwidth for relationship development
Improved ability to recruit and retain staff by paying more and offering career advancement opportunities
Broader brand awareness
Greater influence in communities and government.
Photo by Noah Grossenbacher on Unsplash
How can ENGOs leverage these benefits? Aside from straight-up program growth, which is not always feasible given funding or market constraints, organizational leaders can consider a wide range of partnership and alignment options.
A Range of Structural Options
Contrary to conventional wisdom, nonprofits have an array of alternatives for joining forces, beyond collaborating informally or merging operations entirely.
Strategic Alliance
One category of less commonly understood structures falls under the banner of strategic alliance.
Strategic alliance is a formal agreement between two or more independent parties to pursue a set of specific long-range objectives, while remaining independent organizations. This can take many forms, for example:
Joint programmatic strategy, in which two or more organizations integrate goal-setting and operations of some or all programmatic activity
Unified advocacy, in which ENGOs join forces in a common voice for public policy development
Co-branding, in which organizations may choose to present an activity to funders or the public under a common identity
Organizational development networks, where multiple entities align to meet common goals ranging from programmatic methods and standards, branding, advocacy, staff professional development and/or technical support
Administrative consolidation, in which two or more organizations combine back office operations
Shared infrastructure, in which ENGOs share space, technology and/or equipment.
Fiscal sponsorship, in which an initiative functions as an autonomous program of a host organization, which provides charitable status and administrative services for a fee.
These structures have different benefits and costs. They fit a range of needs and circumstances and can be combined. Strategic alliances are framed by detailed cooperative agreements that typically lay out multi-year commitments and define resource commitments. Alliances have a governance structure that defines, among other things, how strategy will be established, how shared work will be accomplished and how disputes will be resolved.
Strategic alliances have inherent challenges. They require time investments, entail some loss of each individual organization’s autonomy, require establishment of innate trust between partners (which may take time to build) and often face cultural differences between groups. But most of these challenges can be resolved if the value proposition is clear and partners share goals and standards for common work.
Corporate Consolidation
A second overarching category of alignment structures is corporate consolidation, which involves bringing two or more charitable entities together under common operation and governance. Here are several variations:
Common merger, the most familiar type of corporate consolidation, results from the combination of organizations into a single continuing entity, usually one of the precursor organizations.
Asset transfer is a vehicle in which some or all of one entity’s assets (which may include real estate, contracts, intellectual property and even employee relationships), are assigned to another organization. Asset transfer can be a favorable method of restructuring in a variety or circumstances, including when common merger is not legally viable.
Consolidation with Autonomy is a variation in which two or more ENGOs can exist as a single fiscal entity: a governing organization runs shared services, under the oversight of a fiduciary board, and subsidiary organization(s) operate localized programs. This structure allows a degree of autonomous goal-setting and decision-making at the local level, while integrating functions such as administration and fundraising.
Corporate consolidation generally offers clearer pathways to tangible benefits of scale than do strategic alliance options. Consolidation also entails long-term and even permanent commitments. However, the benefits of consolidation in the nonprofit sector have ample precedent. Done well, with attention to integration of high-level strategy, operations and organizational cultures, the risks of consolidation can be minimized.
First Steps
ENGOs can consider this wide range of alignment options in the context of their own challenges, constraints, goals and dreams. These alternatives offer an ample toolkit for achieving benefits of scale in a variety of ways.
We recommend that leaders of environmental nonprofits start by evaluating their own situations, including a frank assessment of the likelihood of long-term environmental impact under the status quo.
A second step is assessing potential partners, including factors such as alignment of meta-goals, complementarity of organizational assets and compatibility of cultures. Unlikely suspects may emerge from this process.
A third step is reaching out to initiate an open-ended discussion, recognizing that it may take a series of meetings and some time to reach common ground on an approach that suits both partners on the same timeline.
Partnership discussions require patience and some finesse, but the potential benefits to the sector, communities and the planet may be immense. By considering a range of organizational development options in the context of long-term vision, we hope ENGOs can help chart a productive next chapter in the environmental movement.
The future of the world may, quite literally, depend on it.
Scott Schaffer is Principal of Public Interest Management Group. Contact him at scott@pimconsulting.com.
Julie Gelfand is former federal Commissioner of the Environment and Sustainable Development, President of Nature Canada and President of Jenco Ventures Incorporated. Contact her at jgelfand@rogers.com.