Why Aren’t More Nonprofits Seriously Embracing Shared Services as a Model?

By Duane Trombly, SDSVP Partner

The nonprofit sector is facing the most serious challenge in its history – Increased demand for service with year over year decrease in funding. Yet, in speaking with some nonprofit leaders they resist even an entry-level discussion of shared services.

The idea of shared backend services has been bantered about in the nonprofit sector for a number of years. Streamlined operations and reduced operational overhead are some of the promises offered through embracing shared services. Dollars and staff time saved by streamlining operations can be redirected towards programs to meet the ever-increasing demand for services. Shared services are also a way to grow with a smaller budget commitment, and to access higher quality personnel than you can often afford or need on your own. Shared services can range from sharing a bookkeeper to co-locating in an executive suite where the residents are on the same donor management and client management program, supported by an operational executive.

There are almost 1.5 million registered nonprofits in the United States, 80% of which report annual revenue below $100,000 (National Center for Charitable Statistics 2008). Budgets this small limits the organization’s ability to access and install commonly accepted operational platforms that would help them succeed.

Capacity building for sustainability is one of primary pillars of the work that we do at San Diego Social Venture Partners. We are one of the few organizations in the nonprofit sector that focuses primarily on operational effectiveness believing that a firm operational foundation is the basis for a sustainable organization. Sustainable organizations in turn are able to grow their services more effectively ultimately creating stronger communities.

Sharing some or all of an organization’s backend operations simply makes good business sense for a nonprofit. Reducing overhead and redirecting those monies or simply maintaining services provides quality benefits for the whole community.

So I have a challenge for nonprofit leaders: Review your organization and identify activities and services that are not core to your mission and lay the shared services yard stick alongside them. I’m betting you’ll discover opportunities to streamline your operational overhead saving those precious program dollars. Will you take this challenge?

Email Duane Trombly at dtrombly@pointebreak.com

Investing in Nonprofit Effectiveness

By San Diego Grantmakers

Investing in Nonprofit Effectiveness
Community Resource Center (CRC) empowers North County families in need with safety, stability, and a path to self-sufficiency. Yet CRC itself needed greater stability in the face of the economic downturn and dwindling funding. San Diego Social Venture Partners (SDSVP) ensured that CRC could survive and thrive by helping the group reframe its mission to focus on core strengths. Concurrent with completing its new strategic plan, CRC won $1.6 million in stimulus funds to help homeless and impoverished San Diegans.

SDSVP links the power of business with the passion of giving in order to help San Diego nonprofits be more effective. The organization was created in 2001, modeled after a Seattle group that applies venture capitalist ideas to philanthropy: investing in innovative nonprofits and supplying expertise to nurture those investments. The approach evolved into an international network of Social Venture Partners.

Matching Volunteer Skills to Organizational Needs
SDSVP is made up of over 140 people committed to being engaged givers. Partners pledge $5,000 per year for three years and leverage these funds by sharing their skills with “investee” nonprofits selected as part of SDSVP’s annual funding focus, which has included improving the environment, reducing hunger and homelessness, and supporting military families. SDSVP researches and identifies organizations that have the potential to achieve significant results.

SDSVP matches the needs of investees to the skills of volunteer Partners, deploying “Resource Teams” to work in areas like leadership development, fiscal management, strategic planning, technology, and public relations. Rachel Humphreys, founder of SDSVP investee organization La Cuna, notes that the “hands-on coaching and infrastructure support...has been more valuable than the funding we received.”

Strategic Donors and Funder Collaborations
SDSVP not only strengthens nonprofits, but also helps members become more strategic donors. Partners Ray and Gina Ellis joined to go beyond giving by participating in substantive ways, while David Lynn appreciates peer mentoring and learning. Bill Carpenter comments, “It seems more powerful to help charitable organizations launch lasting projects rather than just doling out money.” SDSVP connects Partners with their passions, catalyzing increased giving and volunteering.

SDSVP also fortifies philanthropic connections by seeking out “other funders who will pick up where we leave off,” says Alan Sorkin, longtime SDSVP leader and now president of SVP International. SDSVP has leveraged over $17 million by collaborating with grantmakers like The Legler Benbough Foundation and Union Bank. SDSVP members themselves often make additional grants: when SDSVP helped launch Junior Achievement BizTown,TM Partners assisted with the facility search and then contributed $3 million.

What Does This Mean About Philanthropy?
Some donors fund programs without considering how nonprofits will maintain them. San Diego Social Venture Partners uses a business-like approach to help organizations become successful and self-sustaining, because, as Sorkin points out, “A dollar given to an ineffective organization is a dollar wasted.” By engaging individuals to donate both money and know-how, and collaborating with other funders, SDSVP is working on multiple fronts to create positive change.

Giving is Universal

By Lori Thiel and Mandy Sherlock

In a room full of eager faces, San Diego Social Venture Partner, David Cornsweet stood up, dispersed 15 proposals from nonprofit organizations, explained the guidelines for selection, and announced, “Go for it!”

At first glance, this might seems like San Diego SVP’s Investment Working Group, the committee of Partners that selects the nonprofit organizations in which they’ll invest. However, this is a group of first year MBA students at Sri Sathya Sai Institute of Higher Learning in Puttaparthi, India, where SDSVP Partner, David is a guest teacher.

To reinforce the Institute’s spirit of service in his Group Dynamics class, Professor David needed a project to help his students understand how to make decisions while working in high powered groups. He racked his brain, “What model includes high-powered, strongly opinionated people who come together to make important decisions?” Social Venture Partners, of course! David knew the SVP process of selecting nonprofit Investees well enough to help others learn from it. “If it works for SVP, why not try it with the students in India?”

Prior to joining SDSVP, David was no stranger to helping others in need. In 2007, he became a trustee of the William Gumpert Foundation and had been working with charities since as far back as he could remember. Two years after taking the helm at the Foundation, he was an invited guest at SDSVP’s First Friday. “It was incredible how much I learned in such a short amount of time,” David reflected, “It was then I decided that SDSVP would be a great investment for me and my learning.”

From his learning at Social Venture Partners, David conceived this lesson in engaged philanthropy by giving his students in India a true-to-life case study: while the San Diego’s Partners worked through the process of selecting the year’s Investees, he had his students perform the same analyses a continent away. First, he explained the SVP model to the students and the importance of making a good social investment: “With charities there’s always a need. However, we need to ask, ‘can this organization fill the need, be sustainable, and prove they are effective?’”

So each team excitedly analyzed five applications. The strengths and weakness of the organizations were discussed in depth and then the students narrowed down the pool. After the first round, it was clear the students were becoming passionate about their “favorite” nonprofits. There were heated moments of discussion – not unlike SVP’s investment selection committee! David fondly remembered, “It was like reliving the SVP process all over again!”

After the second round of review, the team leaders shared with the class how their group came to a conclusion. The winner: Reality Changers—the same organization that SDSVP Partners chose. Reality Changers gives at-risk youth the academic and financial resources to become first-generation college students, so it’s no wonder its mission resonated with the students in David’s class. Most of them are from small villages where children are fortunate to receive any schooling at all, so they could relate to the importance and the improbability of going to college. Reality Changers was chosen above all other applicants because they are, in fact, changing the reality of disadvantaged young people. As a result, they are transforming the world view of entire communities who now believe that their children can create a better future for themselves.

In the end, the students got it. Although they already were familiar with the basic concept of “giving back”, the SVP investment process brought a new way of thinking about philanthropy. Before this experience, their idea of philanthropy was helping wherever there is a need and a pull of the heart strings. But now, they’ve learned the importance of giving to organizations that will create the most significant change and get the most “bang for the buck”. Both SDSVP and the Institute students believed that Reality Changers would be a worthy investment because they are a catalyst for transforming lives and ultimately, entire communities.

David reflected, “Unbridled philanthropy is better than no philanthropy. But engaged philanthropy is even more powerful. When people start thinking strategically, it’s very effective.” David was successful in helping his students think in terms of making a larger impact in the community. And that’s what Social Venture Partners is all about.

Nonprofits: The Evolution to the Business Model

By John Burnett, SDSVP Partner

There’s a rumor going around that nonprofits are in big trouble. Recent numbers seem to bear this out. For instance, according to Giving USA, the total estimated charitable giving in the U.S. dropped 3.6 percent in 2009. The Center for Wealth and Philanthropy at Boston College said in its report that individual giving fell 4.6 percent in 2009 but for the rest of 2010 will likely grow to up to $227 billion. This sounds good until you realize that U.S. nonprofits need $1 trillion to operate fully.

There is also the other side of the coin. The needs for the services provided by nonprofits have increased by 30-40 percent during the period since 2008. This trend will continue as more individuals lose their unemployment benefits and suffer greater problems.

The response from nonprofits has been predictable. When-in-doubt cut costs – limit travel, count paper clips, reduce benefits; and, most painfully, cut staff, cut salaries/time, and eliminate programs. All these cuts threaten the Mission of the organization and the reason for its being. The assumption made by many Executive Directors is to wait, and things will turn around- they always have before.

Of course, there is always the possibility that the nonprofit can take action. Learning about social media is the current hot button; hiring a fundraiser, who, in turn, puts in place an elaborate program that includes finding 2-3 angel givers; recreating the Board so that it gets and gives; and organizing a new gala, are all potential components. Even a bit of token Marketing is possible. “All these changes will allow us to operate a couple more years, and then the economy will be better.”

Based on my twenty years working with nonprofits in a number of capacities, I have concluded that these band-aids are not the solutions needed. It is not the bad economy, or the donor who quit giving; it is a fundamental flaw in the nonprofit model. Organizations cannot endure if their fundamental goal is to breakeven every year or they are not allowed to delete programs/services that don’t make sense. The world has changed and nonprofits must adapt to a business model that is relevant, implementable and realistic. The process of creating such a model is well established. It starts with a review of your situation including the mission, a SWOT, objectives, strategies, tactics, budgeting, and evaluation. However, the challenge is the lack of resources necessary to create this document and implement it fully.

One possible solution for this lack of resources is for the nonprofit to connect with an organization that can guide them through this process and keep them on track. Although there are many possibilities, San Diego Social Venture Partners is one that I have recently joined and feel offers all the elements to help nonprofits succeed and sustain. Check them out at http://www.sdsvp.org/.


Click here to read more about John Burnett.

SDSVP Investees Utilize Questions to Tackle Tough Issues

By SDSVP Partner, AmyK Hutchens and SDSVP Board Member, Christopher Bush

For many philanthropic organizations it's about the check. Money is indeed quite helpful and appreciated, but what if you could take $1 and magically make it worth $9? SDSVP knows how to wave that magic wand with each and every Investee by focusing on engagement. Engaged partners are at the heart of the organization. With diverse backgrounds in business, law, medicine, human resources, finance, philanthropy, and the arts, to name a few, SDSVP leverages each dollar with our time and expertise. The engagement opportunities lead to rich dialogue, better decisions, and healthy outcomes.

In July, the Executive Directors from each of the Investees were invited to an educational roundtable discussion on leadership led by SDSVP Partner and international speaker, AmyK Hutchens. Utilizing question-based tools to raise the level of critical thinking, participants immediately tackled tough issues such as facilitating cultural change, overcoming economic challenges, restructuring a business model and how to maximize their relationship with SDSVP. Through the lens of Socratic Methodology, Partners and Investees framed specific operational and strategic issues so the problem could be better evaluated, reflected upon, and successfully solved.

There are six main types of critical thinking that the brain can perform. However, when it comes to organizational leadership, there are three levels of thinking that yield the most profitable results: reflection, evaluation and prediction. Unfortunately most leaders often ask low -level (recall) questions that simply require memorized, regurgitated responses. Very little critical thinking takes place. However, when a leader asks a more reflective, evaluative and predictive type question, critical thinking skyrockets as does the quality of solutions. For example, if a leader asks, What is our goal this year? and everyone shouts out, To raise 1 million dollars in funds, that was an easy question…too easy. If the leader changes that question to, How might we meet and exceed our 1 million fundraising goal?, now respondents have to think. They must reflect on where and how money was successfully raised in the past, they must evaluate where they are now in the process including the current environmental and legislative changes, and they must predict what their first several steps and collateral consequences will be in successfully moving toward their new fundraising goal. A simple change in the quality of your questions can exponentially raise the quality of your answers.

In an interactive workshop format, triads of Investee Executive Directors and SDSVP Partners put the Socratic Methodology to good use by evaluating their working relationship. They then identified critical factors that would contribute to healthier, more measureable outcomes. Groups closed by sharing their ideas/tweaks that SDSVP Partners and each Investee could make, that when put into practice, would create an even stronger benefit for both organizations.

Participants at this forum included ARTS, Tariq Khamisa Foundation, ElderHelp, Community Resource Center and Corporation for Support Housing. This forum was so successful that SDSVP has already scheduled Part II which will include more of the Investee staff members. For more information about SDSVP's Executive Directors Roundtable and our upcoming events, contact Mandy Sherlock at mandy@sdsvp.org.