Mission + Strategy = Social Value

Human Service Agencies Merge Back-Office Functions to Save $20M Annually

Tough economic times are forcing all nonprofits, large and small, to think creatively about how to cut costs. One extremely unique example of this creative thinking was recently announced in Chicago where nine of the largest and oldest nonprofit United Way agencies agreed to form a cooperative partnership to share back-office functions for their nonprofit organizations. The nine founding organizations' combined budgets total over $300M and include the Metropolitan YMCA, Hull Housing Association, and Heartland Alliance (formerly Travelers and Immigrants Aid).

An article in Crain's Chicago Business on Feb. 4, 2008 explained that the nonprofits involved in this new cooperative expect to save an average of between 2% to 4% of their operating expenses, for a total estimated savings of $20M annually. The group claims that the primary savings will come from the benefit of combined purchasing power, and not from lay-offs.

"We're in dire straits right now with all of these factors coming to a head," said Laura Thrall, CEO of Metropolitan YWCA. "The savings are important because of what it will allow us to do." Co-op members plan to shift back-office savings into programs where demand has been far beyond funding capacity for some time.

The co-op has its costs, however. The Chicago Community Trust is committting a grant of $400,000 towards establishing the cooperative and the members themselves have agreed to pay a fee of 0.13% of their revenue for the next three years to cover the costs of the cooperative venture. The group is hoping to grow and entice more nonprofits to join them, though, in which case the cost savings could potentially be even more significant.

Welcome to Mission Plus Strategy

Welcome to Mission Plus Strategy. I started this blog because I have a strong interest in nonprofit missions and nonprofit strategy. This interest comes by me honestly; for more than 25 years I have worked in the nonprofit sector, mostly as a staff leader.  For almost nineteen years, I was the President/CEO of Lakefront Supportive Housing, a developer of supportive housing for homeless adults and families based in Chicago.  During my time at Lakefront, we developed more than 1,000 units of supportive housing for homeless adults and families.

I left Lakefront in December, 2005 after initiating and concluding a successful merger with a giant in the affordable housing industry, Mercy Housing Inc, based in Denver, Colorado (press release in Word document format).  Since then I have been working as a consultant to nonprofits focusing on issues related to the question: How can nonprofits generate more social value through business strategy?

When I left Lakefront, I was proud of all that the staff and board had accomplished, but I was burned out. I felt like I was spending too much time raising money and managing board members and volunteers, and not enough time focusing on the mission and outcomes. I believed that there had to be smarter, more efficient ways to grow nonprofit value than through fundraising alone.

Don't get me wrong, I understand the importance of philanthropy, it's just that we can no longer rely on foundations for unrestricted capital to grow nonprofits. We have to find ways, through our business strategy, to do that. Here's what I believe about the nonprofit management:

1. Nonprofit organizations should be mission-driven; mission defines the purpose and general outcomes to be achieved by the nonprofit.
2. Nonprofit organizations are in the business of creating social value as opposed to profit value that we see in our for-profit sector. Social value is the value created by nonprofit organizations that contribute to the social well-being of the community or society at large.
3. Nonprofits should be mission-driven, but they also need to understand how to deliver on their mission; that is the art of strategy. Strategy is an elaborate and systematic plan of action to achieve an organization's mission.

By connecting mission to strategy, an organization can:

• create greater results for their constituencies
• align their values directly to the means for delivering mission
• produce a culture of change that can adapt to new strategies as the environment changes
• focus on intended results from programs and services

Perhaps you are asking: what IS strategy, anyway? Strategy is not just the economic means by which we deliver mission,  but ALL the steps in the process: Programs/Services + Delivery mechanism + Outcomes + Evaluation + Financing =  Strategy.

On this blog, I will have links to great articles, books, and studies about specific nonprofit business strategies as well as links to resources on more general nonprofit strategies. I will also write my own articles that pull from my consulting practice working with clients on nonprofit mergers, partnerships, strategic planning, and whatever else seems related to our topic.

And I will take your questions and comments, or your own suggestions, and do what I can to help you find answers to the nonprofit sector's "most persistent questions.” (Sorry, Garrison.)

I want to share the work of some of the great thinkers on this subject, people like V. Kasturi Rangan, a professor at Harvard Business School, and introduce you to Tom McLaughlin and David LaPiana, the leading experts on nonprofit mergers and alliances in the United States.

On the personal side, I want my blog to be a resource for people where we can celebrate successes and commiserate about failures and complain about just how difficult it is to run a successful nonprofit in the United States today.  So, from time to time, I will include an inspirational poem for my readers. I have often turned to poetry as a means for getting through the fires of leading a nonprofit organization.  If you have a great poem that you think my readers and I would enjoy, please share it.

I promise to be a good listener – so please share your thoughts through the comments, tell others about the blog, and sign up to receive posts via email or RSS.  Thanks for stopping by.

I wish to thank my friend and colleague Celeste Wroblewski who generously shared her time and talent to help me set up this blog. Celeste, thanks for being so patient with me while you taught me the basics of blogging.