Civilization as we know it started with collaboration. The human condition took a giant leap forward when subsistence transformed into specialization. One farmer could grow enough produce for many if he could count on collaborators to share the spoils of their hunt or the clothing from their loom. Eventually this cooperative agreement freed up capacity for things like religion, government and art, which led to grand endeavors that would have been impossible without collaboration: Infrastructure, schools, hospitals et cetera.
Aligned interest and trust are the core tenets that make collaborations work – each stakeholder had an incentive to join the collective effort. With these two attributes in mind, we examine why our local entities don’t collaborate nearly as readily as they should.
The recent assessment report from the Foundation for a Healthy St. Petersburg shows that as a community, we have significantly more small non profits than the national average (and fewer large organizations). Over 87% of our organizations are operating in the lowest tranche of operating capital. This essentially mirrors the income distribution for a poor neighborhood. For many reasons: fragmented community, under-giving, over saturation – our nonprofits work with less. Working with less makes sharing more critical. Acumen, knowledge, labor, office space, transportation and marketing are just some of the potential areas where small organizations could benefit greatly from sharing resources. But it doesn’t happen nearly as much as it should.
When I started my career, I used to attend a weekly gathering of entrepreneurs that met to talk business. Around our table were eager photographers, accountants, website developers and other up-and-coming professionals. New attendees would nervously share their elevator speech and ready themselves for a wave of action. What they soon realized was that none of us had any money, and they would be getting no action. Knowing this, however, didn’t stop them from coming back. It only changed the nature of the action. Instead of revenue, they converted their value system to what the group could offer – praise and affirmation. “Whenever my clients need a photographer, I always recommend Alfred.” “If some day I have money that needs counting, I’d only trust my finances to Judy.” How I feel now when I achieve a lucrative contract is the same way I felt then, when someone complimented my strategic thinking. I adapted my currency from cash to the best available value.
Through a business lens, it doesn’t make immediate sense why nonprofits don’t share resources when it’s clear that sharing will help achieve more efficient and effective outcomes. Nonprofits’ very nature is people working together to distribute resources for a better community. The reason they don’t share is that value has shifted away from effectiveness and efficiency and into personal meaning.
It’s not that nonprofits don’t intend to achieve better outcomes, it’s that scarcity of resources has made it very difficult. On the low capital end of the spectrum, those that are purely motivated by outcome don’t last – they self-select out of existence and aren’t included in the graph above. Many of those that choose to persevere are making an illogical decision from a strictly return on investment (in outcome) point of view. They are deriving personal meaning for themselves to supplement the deficiency of benefit created.
Of course, most non-profit professionals get personal meaning from their work – it’s good and valuable work. There is lever between personal meaning and mission outcome. The further towards the end of the personal meaning spectrum, the less value there is in collaborating. Working together, especially in the beginning, is hard. Meshing practices, sharing limited funds, wrangling over pecking order are just a few of the obstacles that await two organizations who want to connect on a strategic or operational level. The business equivalent is expecting two corporations to work together when they know they’ll lose money. Just as a company won’t (intentionally) spend money to lose money – a nonprofit founder won’t give up control of their personal meaning to lose personal meaning.
This phenomena also offers a perspective on how we should consider the vast collection of capital-lite nonprofits: we shouldn’t. Less than 10 percent of for-profit businesses make it five years. The reason 90 percent fail is because they aren’t profitable, and profitability is the determining factor for continuing to operate. We can’t apply business rules to entities that don’t operate on business values.
It’s important to remember that most nonprofits started with founders having a value system with some mix of personal meaning and mission outcome. Over time, environmental pressure moved many value systems towards personal meaning. That can certainly shift back. There are several factors to this happening:
- Nonprofits, with the help of supporting initiatives, should measure and examine the R.O.I. of their operation with personal meaning as a variable. Personal meaning clearly has value. Founders should attach some value to their time and infuse personal meaning into that number. This allows leaders to quantitatively contemplate the value proposition both internally and externally of their nonprofit’s existence.
- After the above self-awareness exercise, nonprofits with the thinnest value should consider closing (or merging). There is plenty of overlap between our thousands of organizations, and founders can find positive ways to roll their efforts up into another entity with a similar or complementary mission. This should be lauded as a positive exit from the space or transformation to a more effective nonprofit.
- Grant-makers, media and civic leaders should present our nonprofit ecosystem as a whole, living organism. The simple existence of a nonprofit should not be praiseworthy. The same way we apply fishing quotas to ensure our seafood is a renewable resource, so should we understand that giving, acumen and other resources, at current levels, can only support so many efforts. Over burdening the system means everyone gets too little, overall effectiveness goes down and the community is worse off.
- Each entity has an administrative and operational threshold to overcome before they can deliver benefit to the community. The bloom of low-capital nonprofits creates an equivalent proliferation of admin costs. Nonprofits are often judged by the percent of income that goes to benefit. While this statistic has its flaws, there is use in considering this for the nonprofit community as a whole. Making it part of the conversation will change the narrative in a way that impacts personal meaning. The perspective will appeal to the pragmatists first and, with their supporting voices, travel through the nonprofit landscape.
We started with the two core tenets of collaboration – trust and aligned interest. Of the two, I almost exclusively hear trust as the reason given for the lack of collaboration. If small nonprofits are fiefdoms, handing over the keys to the castle requires trust. In practice, trust comes second. Interest must be aligned before trust becomes relevant. So the challenge remains to truly and accurately understand our interests and how they may change with time and pressure so that we may better understand and overcome the barriers to collaboration.