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