Board Sustainability, Partnerships and Governance: A Battle That Can’t Always Be Won Alone

Prudence is the standard used to measure or assess a nonprofit board’s fulfillment of its fiduciary duties of care, loyalty and obedience. For want of a “best” practice, common sense is used as a reference for prudent practices.

When it comes to considering board sustainability issues and long-term (aka permanent) partnerships as a sustainability strategy, there is much work to be done by the board. This article introduces considerations on these matters.

“Our director is retiring. We are struggling. Perhaps another sister agency would consider us an opportunity.”

“There are many increasing uncertainties in our community, state and nationally: shifting state and federal government priorities, shifting donor interests, rising costs, more competition from both nonprofits and for-profits (yes, even they get in the act).”

“We are strong and effective, but without going into debt, we will never be in a more attractive position for being acquired or merging as a pathway to
achieving mission.”

“Our services are no longer a priority for state contractors. There are fewer available grants and contracts with competitors getting more of what we used to provide. We are in debt.”

“The founding director at another agency is retiring soon. Combining our resources with another agency could make our success so much more possible.”

“We just aren’t big enough to do all we really want to do. There are other nonprofits in the same boat—why not see what we can do or be together?”

With so many providers and so little money, considering options for increasing effectiveness and efficiency should be a periodic conversation in the board room. Yes, this column is about how “bowling together” may produce bigger and better results than “bowling alone.”

Sustainability, otherwise known as survival, is a concern shared by many nonprofit boards. For sure, it’s hard to always be raising money to pay for ever-increasing expenses to satisfy ever-increasing demands, aka community need.

Clearly, the founders who had a theory of change believed firmly in their solution, and the volunteers and board members who supported this theory joined in the battle. But for many reasons (some listed in the beginning of this column), the battle proves itself to not be able to be won alone.

Enter the partnership. The often-negative-viewed concept of partnerships can include many types of arrangements between nonprofits.

Examples include contracts and agreements (such as collective impact) to conduct programs together; sharing a backroom, a merger (two become 1) and/or acquisitions (one nonprofit becomes part of the other).

But for a nonprofit board, there is always great reluctance in taking any step that might result or be perceived to result in an ending after all the hard work.

What to do? For one thing, the board must make a point of ensuring it is fully knowledgeable and understands its financial and programmatic status.

This, of course, might “feel” like the board fulfilling its basic fiduciary duty of care, but I’ve witnessed too many board meetings where “facts” are accepted without the “so what” being interpreted and understood, particularly within the context of mission and theory of change.

As mentioned in the previous issue, this is where a dashboard is essential and can be the starting point for a solid fiduciary and strategic discussion.

Additionally, a generative discussion should help members be more conscious of what is going on in the nonprofit’s respective sphere and add color to the dashboard. A generative discussion should also provide members with the opportunity to identify and rank criteria for partnerships providing guidelines for “shopping” and future discussions.

I also recommend that the board encourage its executive to be on the lookout and report any opportunities that may provide the nonprofit with improved efficiencies and effectiveness through relationships with other providers.

While many partnership opportunities do not require board action, for those that do (like a prospective merger or acquisition) when opportunities are discovered (either by the executive or even board members), the board will want to establish an exploratory committee to begin discussions with prospective partner board members—possibly in the form of a
joint committee.

These committees can be helpful in building a relationship, ensuring culture, value and theory of change compatibility—beginning to work on an agreement that will shape a future relationship.

Today, I have really provided a broad brushstroke to increase the awareness that not every nonprofit can “make it” in today’s environment, that there are other nonprofits in similar circumstances and still other nonprofits who have the scale and strength to be helpful and incorporate the work of those with greater challenges.

I have also sought to emphasize that understanding and action around these realities is the purview of the board and under the rubric of common sense and prudence and is literally a requirement.

Finally, all this work begins with a sound dashboard, an understanding of what the dashboard has to say and commitment to explore, but, more importantly, commitment to mission.