A New Role for Philanthropy

Increasing access to shared strategies for operational support

Effective nonprofits require effective operations – the accounting, human resources, information technology, and other back-office support services that create the foundation for organizational health, compliance, and resiliency. 

The prevailing expectation is for nonprofit leaders to independently bootstrap together just enough operational supports to get by, but we think this is beginning to change. More high-quality operational capacity is being accessed through shared back-office services, including:

  • Management support organizations offering operational services, including accounting, and database management, in support of many nonprofit clients 
  • Comprehensive fiscal sponsors allowing mission-aligned organizations to engage in financial, human resource, and other established services and systems 
  • Contracting structured for multiple organizations to access the time and expertise of the same external service providers or a staff member with capacity (for example, a part-time employee who becomes a full-time employee with time shared between 2 organizations)

While we’re excited by this trend, we notice that these shared service strategies are not accessible for all organizations because they require nonprofit leadership to have:

  • Insight about their organization’s operational needs and capacities
  • Money to explore and define these new relationships and pay for services received
  • Connections with advisors, service providers, and potential partner organizations, who also must have money, insight about operations, and connections

and most importantly,

  • The power to be able to honestly name operational needs and to experiment with new ways of doing things.

Money, insight, connection, and power are not held by all nonprofit leaders and we recognize that this is especially true for BIPOC, immigrant, low-wage executive directors and board members who are systemically excluded and oppressed by dominant nonprofit and economic structures. This leads us to wonder, what can be done to increase access to operational capacity for all organizations?  

We see a new role for philanthropy, one where…

  • Funders take it as a sign of strength, not ineffectiveness, when a nonprofit leader admits that they can’t do it all and that their organization is better served through external operational support
  • Funders recognize that nonprofit innovation, including operational innovation, requires seed funding, and 
  • Funders increase their investment in organizational capacity building through funding operations

In the private sector when an entrepreneur seeks funding from investors, the deal often includes the provision of advice and guidance, relationships and connections with service providers and distribution partners, and sometimes an entire management team – in addition to money. Investors recognize that they have a stake in the organization’s success and solid operations are integral to that success.

Nonprofit funders could provide similar supports including connections to service providers and centralized turnkey operational systems. This would look like: 

  • Foundations offering comprehensive fiscal sponsorship and/or options for grantees to engage in centralized management support services 
  • Funders offering connections to trusted service providers to rapidly move organizations through start up and growth while ensuring compliance
  • Guidance, advice, and supports that increase all nonprofit leaders’ knowledge of operations and expand their power to explore alternative strategies to build capacity

In these ways, funders have potential to address the inequities that limit access to shared service strategies, while increasing operating capacity for all. 

This article is part of a series, based on conversations between Jackie Cefola and Debra Box about nonprofit shared services and related topics. 

Jackie Cefola, principal of Jackie Cefola Consulting, is a trusted advisor to nonprofit leaders who are starting up new collaborations, often related to shared services. Debra Box, principal of In the Box Consulting and former President and CEO of Support KC, where she helped nonprofit organizations to focus on their missions by providing integrated expertise in financial management and support services.

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