Building community by investing in nonprofit capacity

By Todd Cohen

[Note: This was written for Triangle Community Foundation.]

RALEIGH, N.C. — Marbles Kids Museum created a program to train its staff to help develop early literacy skills in visitors to the museum.

Triangle Family Services developed metrics on the use of its space that helped dramatically reduce the “no-show” rate among its clients.

Both Raleigh nonprofits were among 22 in the Triangle that received grants from Triangle Community Foundation to assess their operations, and among 21 that received additional grants to use those assessments to strengthen their organizational “capacity.”

The Foundation’s total investment in the effort, which included learning “cohorts” designed to provide training for participating nonprofits and help them share best practices with one another, was $330,000.

“Running a nonprofit is a business, and one with an extremely important outcome,” Pat Nathan, a member of the Foundation’s board, told 85 guests attending TCF Connect, an event in October at the North Carolina Museum of Art attended by 85 Foundation donors and nonprofits.

A similar event for donors and nonprofits was held in Durham and attracted 40 people.

Building capacity

Building the capacity of nonprofits in the region that work in the fields of youth literacy and community development is the focus of the first phase of a “People and Places” initiative Triangle Community Foundation launched in 2014 that also will invest in nonprofits working in the fields of land conservation and the arts.

The Foundation decided to make capacity-building in those four fields of interest its focus as the result of a two-year effort to assess its grantmaking with advice from donors, nonprofits and civic leaders from throughout the Triangle.

Lori O’Keefe, the Foundation’s president, told donors and nonprofits attending TCF Connect that its dollars for making discretionary grants are limited and its donors want to see the “direct tangible impact” of grants from their funds.

“As much as we want to give from our hearts, we have to invest in organizations’ ability to grow and expand and be successful,” O’Keefe said. “We have to be accountable for what the return on investment is.”

In the fiscal year that ended June 30, 2014, discretionary funds available for grants to community programs totaled $1 million, or the investment income on 15 percent of the Foundation’s $189 million total assets.

“It’s important for us as donors to recognize that for organizations to feed more kids or buy more books,” O’Keefe said, “they have to be able to invest in their infrastructure, much like a business.”

Literacy, community development

Nathan, founder and president of Dress for Success Triangle NC and a former sustainability executive at Dell, moderated a panel that focused on the issue of organizational capacity and included Sally Edwards, president of Marbles; Alice Lutz, CEO of Triangle Family Services; and O’Keefe.

Since Marbles was formed seven years ago through the merger of Exploris and Playspace, hundreds of thousands of children have visited the museum, Edwards said.

“We knew we had such an opportunity to make such an impact in early literacy but didn’t have the capacity to make it,” she said.

So with a grant from Triangle Community Foundation, Marbles assessed its capacity in the area of youth literacy, looking at factors such as its staff and exhibits to determine how it might best improve its organization to better focus on early literacy.

A second grant from the Foundation allowed Marbles to develop and launch a program in collaboration with Motheread, a Raleigh-based national training and curriculum development organization, to train its staff to help develop the early literacy skills of visitors to the museum.

Triangle Family Services, which works to help families experiencing family violence, financial crisis and mental health issues, was looking for ways to streamline its operations.

With five business units spread across multiple locations and operating seven days a week, the agency was using a complicated process for assigning its rooms for clients to meet with its staff.

Triangle Family Services used an initial grant from Triangle Community Foundation to¬† identify the need to improve that process, and used a second grant to develop and adopt a “systemizing of metrics and measures across all program areas to make it simple and accessible” to assign space for clients, Lutz said.

The result: A reduction — to 5 percent from 18 percent — in the no-show rate among mental-health clients.

Gearing for change

The “People and Places” initiative is part of a larger effort at Triangle Community Foundation to find ways to be a more effective partner to donors, funder of nonprofits and resource on local community issues, Lacy Presnell, chair of the Foundation’s board, told guests at the TCF Connect event.

“When we work together,” he said, “we are stronger and can increase the positive impact we have on our communities.”

In the fiscal year ended June 30, 2014, he said, the foundation received over 220 gifts totaling over $25.2 million, and made over 3,700 grants totaling over $15.4 million invested back into the community.

In assessing its grants, he said, the Foundation found the biggest fields of interest that received funding were education, arts and culture, followed by housing and human services, religious activities, and health care, he said.

Today, with $189.4 million in assets and celebrating its 30th anniversary and the 100th anniversary of community foundations in the U.S., Triangle Community Foundation is “trying to stay in step with rapid growth in the region,” said Presnell, who serves as general counsel for the state Department of Environment and Natural Resources.

Retooling for impact

O’Keefe said the focus of the Foundation’s grantmaking is local, with three-fourths of all its grantmaking remaining in the Triangle, and donor advised funds accounting for nearly two-thirds of the grant dollars that stay in the region.

The Foundation has been retooling, looking for “how to best deploy the flexible funds that have been given to us by past and current donors, and how to put them back into the community for the best use,” she said.

In talking to donors, the Foundation learned that while they were “excited about the programs, they were not always sure how it connected back to their funds and grantmaking.”

And finding that donors already were funding programs in the areas of youth literacy, community development, the arts and the environment, she said, the Foundation decided to focus on capacity-building in those four areas.

Partnering for success

Jessica Aylor, director of community investment at Triangle Community Foundation, told guests at the TCF Connect event that partnerships with nonprofits is one of central roles the Foundation is playing.

“We are taking more of a partnership approach with our programs, trying to strengthen the capacity of nonprofits, giving them grants and putting them in learning cohorts” where they can learn from one another, she said. “Stronger nonprofits end up with greater impact in the community.”

Funding for the Foundation’s “People and Places” community programs that focus on youth literacy, community development, land conservation and the arts is available from Fund for the Triangle, created through gifts to the Foundation by donors “who wanted us to be more strategic in our funding,” she said.

Getting involved

In addition to donating money, said panelists at TCF Connect, donors to Triangle Community Foundation and to nonprofits have many other opportunities to get involved with nonprofits they care about.

Donors can contribute time as volunteers, either working directly with a nonprofit’s clients or in the back office, or can serve on boards, committees and task forces, they said.

At Marbles, for example, a donor could volunteer to help deliver programs or with committees such as one working on a master-planning process to expand the museum’s campus, Edwards said.

And at Triangle Family Services, donors can serve on boards, task forces or a facilities committee that currently is looking at how to get a sump pump for the organization, or can attend a coffee chat with the CEO on the first Friday of each month from 8:30 a.m. to 9:30 a.m.

Donors, nonprofits and local residents also can attend the Foundation’s What Matters event on April 1, 2015, that will feature stories about giving and data on the Triangle, and will focus on “how the region is changing and how to be thinking for years ahead,” Aylor said.

This past April, the What Matters event attracted 500 people and focused on community innovation.

“Community foundations,” she said, “are places for people to learn together and support causes they care about.”

O’Keefe agreed.

“The community foundation field is about connecting resources to opportunities and needs,” she said. “The more we learn together, the more work we can do.”

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Nonprofits urged to be sure merging is right move

By Todd Cohen

[Note: This was written for Triangle Community Foundation. I am working with the Foundation as senior communications adviser.]

In the nearly five years since the economy fell apart, nonprofits have faced relentless strain on the operations, rising demand for services, and tougher scrutiny from individual donors and institutional funders.

Nonprofits also have faced growing pressure, particularly from donors and funders concerned about duplication of services in the community, to consider collaborating with other organizations, or even merging with them.

Partnership strategies have seen some early successes, but they also have sparked cautionary warnings from experts about the need to think carefully before collaborating or merging.

Nonprofits should make sure they are pursuing a partnership strategy for the right reasons and that, in developing a partnership, they are addressing critical issues that can mean the difference between success and failure.

“For the last few years, there’s been a lot of talk about mergers, with encouragement from the funding community,” says Sally Edwards, president and CEO at Marbles Kids Museum in Raleigh, an organization that was created in September 2007 through the merger of Exploris museum and Playspace.

“People jump to a merger,” she says, “when they should be asking, do they need to collaborate?”

Thinking before merging

Last year, The Women’s Center and the Family Violence Prevention Center, which had been formed in 1978 and 2000, respectively, merged to form Compass Center for Women and Families in Chapel Hill.

The merger was the result of eight months of detailed talks, including meetings nearly every week of members of the two agencies’ staffs and boards.

And while it may generate some savings, the merger was designed to improve and expand services to clients and prospective clients.

Yet preparing for the merger consumed vast amounts of time and resources at both agencies, and has resulted in continuing costs and operating strain the two agencies did not fully anticipate, says Anne Gerhardt, who is executive director of Compass Center and was executive director of The Women’s Center.

Gerhardt, who estimates she spent at least half her time on the merger in the year leading up to it, says the two agencies went through a comprehensive and highly structured “due diligence” process that examined every aspect of their organizations, operations and programs.

Preparing for the merger already has cost $100,000 and likely will cost another $100,000, an investment that has been compounded by the fact that the two agencies suspended their fund development efforts for a year to prepare for the merger.

“We’ve lost some traction with donors,” Gerhardt says. “Other donors have been very supportive.”

Deepening that lost connection with donors, she says, is the fact that many donors can be reluctant to provide the operating support that mergers require, such as a new website and new brochures and the integration of information technology systems, phone systems, donor databases and client databases.

While some donors were willing to pay for consultants to help make the merger happen, she says, the merger generated real needs that required funding.

“We still have two offices and two phone systems,” she says. “We’re still on two computer systems. We need somebody who can help us there.”

The merged agency will post an operating deficit of roughly $20,000 on a budget of $666,000 for the fiscal year that ends June 30, and expects to post deficits in the next two fiscal years as well.

And the merger has placed continuing strain on the combined staff of 12 people.

In the past year, Gerhardt says, she has hired six people to replace staff members who left, and the organization still has two open positions.

“Our agencies were operating very efficiently prior to the merger,” she says. “We were not duplicating services.”

The merger and its continuing costs, she says, have placed “enormous strain on the staff.”

Combining cultures

Edwards at Marbles Kids Museum says Exploris and Playspace merged after community leaders and a consultant who conducted a feasibility study recommended the merger but advised against launching a possible capital campaign to raise $12 million to create new exhibits.

“Having the opportunity to create a new museum together was one of the things that made the merger successful,” Edwards says. “We were able to create a new culture rather than trying to blend the cultures of two organizations. It turned into a community project. We had a chance for a do-over in this space.”

In addition to technical details about programs, operations and finances, key issues the two organizations addressed in making the merger work focused on “people, emotions, cultures,” she says.

“You need to start thinking about the people just as soon as you start thinking about technical aspects,” she says.

Nonprofits considering a merger also should “be prepared for the unexpected” and build enough time into the planning process to avoid stress or rushing to decisions, Edwards says.

“Make sure you really are doing an assessment that will expose any kinds of risks, and build in contingencies for any risks that may be exposed,” she says. “Try to spend enough time and not be stressed. Eliminate surprises but try to figure out what they might be.”

Most important, she says, is the need to develop a clear statement of the long-term impact a proposed merger aspires to create, rather than merging simply to solve an immediate problem.

“You want a longitudinal vision for why you’re merging,” she says.

Staying objective

Trudy Smith, executive director of Executive Service Corps of the Triangle in Durham, says nonprofits considering a merger should get a third party involved in helping them assess the possible benefits and disadvantages, and navigate the process.

“It’s very hard to be objective because there’s so much emotion,” she says. “Your dealing with peoples’ babies.”

Key issues possible merger partners should address, she says, include who will lead the staff after the merger; how to combine boards; what to name the merged organization; how to blend the two organizations’ respective missions and organizational cultures; how to consolidate programs and operations; and whether there are any “secrets”.

“What are their finances,” she says. “What haven’t they told you.”

The value of a third party is to “bring up things people don’t necessarily think of when headed down the road to merge,” says Smith, whose organization has provided assistance for a handful of mergers in the Triangle.