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Is Consolidation the Answer?

Posted June 24, 2008 7:25 PM by Ted Jackson

The most recent study released by The Boston Foundation, "Passion & Purpose; Raising the Fiscal Fitness Bar for Massachusetts Nonprofits" is an excellent study of the nonprofit community in the commonwealth (http://tbf.org/Home.aspx ).

One of the most daunting findings in this study is that the number of nonprofit organizations is growing faster than the sector's ability to raise revenue. To make matters worse, cost of business factors are causing expenses to exceed revenue growth. The bold and provocative "Call to Action" stemming from the study heralds the need for restructuring and consolidation.

While the recommendations in this area are far reaching, one of the major recommendations made is: "The Massachusetts Nonprofit Sector needs to seriously consider mergers, strategic alliances and collaborations as a strategy to [strengthen financial positions and create economies of scale and efficiency]."

The avenue taken by the authors was that of financial analysis of the myriad of players in the nonprofit sector. But the recommendation would be the same if approached from the social sector. The critical social needs which are addressed by our nonprofit sector are real and in many cases worsening. Yet the safety net remains fractured with inefficiencies caused by scarce resources and lack of coordination, donors remain confused as to the best way to make an impact and beneficiaries are forced to navigate a complex system of sub-par providers.

Would not a "solution focus" benefit all parties involved? Imagine a world where the strategic approach to a social challenge is captured in a single strategy map with clear measures and targets. Individual providers could determine and proclaim which portion of the solution they choose to provide. Related services would more easily identify opportunities for cooperation. Donors and interested stakeholders could observe results and offer resources where the need and data direct. Only when all players dedicated to providing the much needed solutions for our society chose to focus on the solution itself will that solution emerge.

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