BarnRaisers

 


 

 

 

 

 

 

Page last updated

October 01, 2008

 Establishing a Management Support Organization 
to Serve the Nonprofit Sector


Allen Larson


 

Editor's note:  The article below, "Establishing a Management Support Organization to Serve the Nonprofit Sector," was first published here and in the Cape Cod Times in December 2003.  We are reprinting it now, in October 2008, because the current turmoil in the financial markets has the nonprofit sector heading into a serious financial storm.


Last week, in an article published on September 22, the Boston Globe highlighted that nonprofits will face constrained giving by their usual funding sources. There's no time to dawdle now.  We need to come together and find ways that reduce costs and potentially add new sources of revenue.


One way would be to promote the existence of the Community Directory and its list of individuals interested to be engaged in the Cape community. This is something we had not developed at the time of the first printing of the article below in December of 2003.


Another way would be to become part of the Massachusetts Nonprofit Network (MassNonprofitNet.org), which also did not exist in 2003 and is something that is patterned after discussions that we helped prompt at that time about the need to collaborate.

The Massachusetts Nonprofit Network (MassNonprofitNet.org) is hosting its first conference October 24 at Bentley College, for which Gloria Larson, the president of Bentley, will be giving the keynote address. The conference will be organized similarly to the Volunteer Expos the Cape Cod Center for Sustainability has held in the past.

*     *     *

October 2008

Sustaining Cape Cod involves a lot more than attention to the Cape's natural environment.  Equally important are the people who live here, the factors that affect their ability to make a living and to use each day to fulfill their interests and ambitions.  In this context, one sector of the Cape's economy that tends to be overlooked is the region's active and extensive nonprofit sector.

        Over the past several years, the Center for Sustainability has been working with many of the nonprofit organizations that direct their efforts to serving Cape Cod and its residents.  These organizations define their missions in terms of the economy, the environment, health concerns, and social welfare.  Many have been struggling recently. Some have even closed.  These events compel the effort to determine if there is anything to do.

     From these discussions and observations, we've concluded that there is an outline of an idea that merits closer scrutiny by others who have knowledge and expertise.  We suggest that there is a void in the nonprofit sector that could be filled and lead to improved administrative and operational efficiency.  Doing so would provide economic and operational benefits that could help sustain our nonprofit sector.

     Common organizational tasks provide the context in which technology advances as well as specialized professional services could be used in ways that would save money by realizing efficiencies of scale and by providing access to a deeper reserve of managerial experience and counsel.  These savings could be applied to the programmatic purposes for which any particular charity was formed. 

      In the parlance of the nonprofit sector, the idea is to form a Cape Cod–oriented "management support organization," a term that describes an organization whose purpose is to enhance both the operations management of nonprofit organizations and their compliance with the regulatory structure by which they derive their tax-exempt status. 

     If the term "management support organization" is not a familiar one, consider that it performs functions that are quite similar to an "operations center" that connects a bank with its branches.  There are many differences, to be sure, but the idea is conceptually consistent.  A “management support organization,” like a bank operations center, performs routine tasks that cut across the operations and administration of each of its branches.  It connects its nonprofit branches with professional services firms, foundations, individual donors, businesses, and nonprofit organizations in the effort to realize a higher standard of operations as well as administrative efficiency. 

     The underlying premise of this discussion is not a particularly rosy one:  It stems from the view that nonprofits often struggle to realize their charitable objectives because they are operationally weak.  While nonprofit directors and executive officers are often passionate about their organization's mission, they are also often less skilled and experienced in operations management and less attentive to their compliance requirements. 

    There is no fault to attach here, just a perception that throughout the sector, nonprofits often possess managerial skills that are not equivalent to the size of their budget or comparable to the competency they display in the conduct of their charitable tasks. 

    As one example, consider the information technology (IT) function. Overall, the nonprofit sector has far more computer power and software capacity than many of its individual organizations either understand or actually use.  If a management support organization developed and maintained an information system to provide database expertise while at the same time also reducing the need for hardware, there would be a sizable budgetary savings realized throughout the sector.

     Consider also that nonprofits often lag in meeting their filing requirements at the attorney general's office.  This noncompliance raises real regulatory concerns. Fund mismanagement, purposeful or not, may go undetected entirely or detected too late to realize any realistic chance of recovery.  If a management support organization helped nonprofit organizations to file reports in a more timely fashion, the nonprofit sector overall would suffer fewer losses due to mismanagement or actual fraud. And as with the IT function, the savings could be applied to each organization's own particular passion. 

     A management support organization operates generally along the following lines:  Professional firms in law, accounting, public relations, IT, grant writing, marketing and communication, events planning, and so on serve as "advisors."  In this capacity, advisors present regular programs that lay out the sector's best practices and update managers on these developments. 

     The "members" of a management support organization are the nonprofit organizations themselves.  As members, they gain access to the expertise of the advising firms as well as an opportunity to share experiences and information with their peers. 

     "Sponsors" of a management support organization are well-established for-profit businesses, large nonprofit foundations, and even individual donors.  By sponsoring the establishment of a management support organization, these businesses, foundations, and individual donors realize greater efficiency in their own giving as well as an increased assuredness that any specific grant will be one that a recipient will use as intended by the donor.  A management support organization reduces the possibility that a charitable donation may be misused and result in embarrassment to the donor rather than goodwill. 

     Management support organizations are distinguishable from other well-established and purposeful entities like a community foundation or the United Way in that their primary focus is on nonprofit management and operations.  In contrast, community foundations have primary responsibilities that focus more on grant giving and fiduciary duties.  By contrast, a management support organization focuses specifically on ways to improve operations management and administrative efficiency. 

     In the nonprofit sector nationally, there are several models of management support organizations to study.  Other states that have set up support organizations of this type include Minnesota, Maryland, North Carolina, and Georgia.

     There are several Internet sites one can go to for background information such as a site maintained by the National Council of Nonprofit Associations, which can be found at www.ncna.org, and a site maintained by Community Wealth Ventures, which can be found at www.communitywealth.com

     Establishing a management support organization for nonprofits in the Cape Cod region would be relatively straightforward assuming that the will to do so existed.  And that's really the question.  To answer it, we need to convene professional nonprofit managers and lay out the concept in greater detail.  An initial survey would go a long way to determine whether or not this idea is appealing and whether it is one that nonprofit organizations would participate in as "members." 

     The Center for Sustainability, operating on the web at www.SustainCapeCod.org, is interested to explore this concept further and undertake steps that may lead to the formation of a management support organization.   If you have a desire to assist and suggestions how best to proceed, we'd like to hear from you.  Soon. 


 Allen Larson
 larson50@comcast.net