Changing Nonprofit Cooperation: Non-Monetary Nonprofit Alliances

Historically, local nonprofit organizations have taken two main methods in order to increase their impact: social alliances, which includes the incorporation of a for-profit entity as a main sponsor for the nonprofit organization, and monetary nonprofit alliances (franchising/licensing), which often present themselves in the form of financial ties through licensing under a large nonprofit or combining with other nonprofits to form a singular larger organization. These structures, while suitable for large organizations, are either inaccessible or detracts from the purpose of small, local nonprofits in more remote areas.

This blog post examines a new alternative alliance structure: the nonmonetary nonprofit alliance. Nonmonetary nonprofit alliances are alliances in which local nonprofits are encouraged to cooperate with one another, hence the alliance, without the need to share financial resources or build financial dependence upon each other. Using a mixed method case study, both quantitative donation information and qualitative interviews were conducted on a constituent organization of a nonmonetary nonprofit alliance in Guatemala was studied in order to explore whether this structure can be applied abroad. After gathering the results, it was determined that the nonmonetary nonprofit alliance structure offers several benefits (i.e. constructing a sense of community, increasing experience and training, establishing a larger presence) that can increase the impact of a local nonprofit organizations. However, further study is advised with more sample sizes and different types of nonprofits to investigate whether the structure should be adopted abroad.

Results

After acquiring the financial records of the of the nonprofits, each statistic was broken down into its components before using those components to determine the sector in which those nonprofits would fit in order to generate a more specific comparison to the trend of donations. As seen in Appendix A, the financial receipts and what they were ultimately dedicated to the next year are determined for one of the nonprofits in the alliance. Seeing that most of the budget is directed towards school supplies and fees for transportation to and from school, it was determined that the nonprofit fell into the category of K-12 education.

Next, after calculations by converting the values to dollars for ease of evaluation and by using the formula of final-initial/initial *100 to determine the percent change in the financial income before and after the institution of the alliance, it was determined that the increase in financial donations from $8681 to $8889 resulted in an increase of 2.40% throughout the period of time.

Though a translator-facilitated interview using outlined questions in addition to open-ended follow-up questions, several trends were identified within the responses of the nonprofit organization being interviewed in relation to the nonprofit alliance’s impact and effect on their operations. For a more detailed transcript, please refer to Appendix B.

In terms of the overall impact of the alliances, the responses generally trended positively; since it was a nonmonetary alliance, they indicated there was not a lot of upkeep in order to maintain the alliance structure and thus mainly focused on its current impacts on their organization and ultimately how this structure may be improved upon in the future.

Several intangible benefits/trends that were pointed out by the interview included the following:

(a) The alliance has provided a sense of community and unity in the local vicinity. The interviewee, who is acting chair of the nonprofit, supplemented this information with the idea that even though he has always been dedicated to the cause, the recognition and cooperation of other organizations has provided him with more encouragement and reduced the sense of futility in his work.

(b) The alliance has allowed for sharing of limited skills amongst the organizations. He suggested that since he originally went to college for computer related skills, he was able to provide technical training and electronic organization to the other members of the alliance. In return, all three organizations were able to pool together knowledge and experience from their journey in the nonprofit sector to better formulate plans and strategies.

(c) The alliance has increased the publicity of the organization which has not attracted more donations and foreign involvement but  much needed volunteers that help perennially. Specifically, he refers to how many volunteer organizations form colleges and schools have begun sending help annually and some students even choose to return which again helps make the organization more stabile and sustainable in the long-run.

When asked about the problems/improvements that could be implemented for the alliance structure, the following themes were identified amongst the responses:

(a) Struggles with internal communication. He suggested that even though the constituent organizations are all motivated to continue their works, there is little incentive for constant communication and formal meetings between the alliance. This has made it difficult to coordinate with volunteers and to develop a stronger organizational structure within the alliance itself.

(b) Lack of planning/unity. In the interview, he constantly alluded to how there was a lack of unified goal with the example given being that even though some goals are being achieved, the lack of initially clearly-defined goals have made it difficult to satisfy all three organizations in the alliance with the results they have achieved.

Comparing the data to BlackBaud’s trend graph of donations to k-12 nonprofits (Appendix C), which had a net percentage change of -5% by the end of December 2018, there is a net increase in donation to the studied nonprofit organization  by a margin of 7.4% when compared to the global statistic. When looking at this statistic it is key to remember that BlackBaud’s main trend graph only indicated to include over 8000 nonprofits though it did not break down the specific number of nonprofits for each category in the sample, specifically the k-12 education nonprofits trend graph. However, since the sample size is so large in the original sample, it was still elected to use the smaller trend graph to be as specific to the nonprofit type as possible. A difference of 7.4% is considered statistically significant, especially when concerned with the discussion of finances where a single percentage point can often mean the difference of thousands of dollars.

While percentages often standardize for the pure number of amounts, it is important to remember that by calculating it through this method that the smaller organizations such as the one in the study have the advantage in numbers. Since the total donation amount is less, any small change will reflect into a larger percentage change. Thus, while indicative of growth, this cannot be considered a large foundation for the argument that the alliance is beneficial. Instead, it should be interpreted that the alliance has not harmed the constituent organization’s financial situation, which is key as monetary nonprofit alliances require fees and monetary commitments. Nonetheless, the increase in financial donations at least offers that the alliance in feasible from a fiscal standpoint, meaning that even small local organizations will be able to apply this structure without the stress on their finances.

Given the financial feasibility supports that the alliance could be applied, it is up to the more in-depth qualitative interview to determine whether the structure should be applied. From the interview, it was determined that the main benefits are the low barrier of entry and the sense of community that is fostered through the alliance. Because there is no direct monetary cost in forming a “Nonmonetary” alliance, it was emphasized throughout the interview that the situation was conducive for the foundation to building a sense of community amongst the nonprofits. This suggests that the structure can act as an alternative for the smaller, local nonprofits who either cannot afford to enter a monetary alliance and/or lack the support structure to attract the attention of large corporations to form social alliances.

On the other hand, since there’s no major barriers to entry, there also seems to be a decrease in commitment to the alliance itself. The problems with communication that the alliance has experienced and the lack of structural monitoring and meetings, which in the long-term may lead to fractioning in the alliance and ultimately a dissolving of the structure in general. Since the qualitative results were gathered after the nonprofit had been organized into the alliance structure for roughly a year, they do not reflect how the alliance may function in the long-run, which could be cause for further research

Conclusion

Considering both the financial feasibility and the intangible information offered through the interview, it can be concluded from this study that the nonmonetary nonprofit alliance structure offers several benefits (i.e. constructing a sense of community, increasing experience and training, establishing a larger presence) that can increase the impact of a local nonprofit organizations. It can and should be applied to local nonprofits that cannot attract large social alliances and are willing to cooperate with other nonprofits who share similar goals in order to increase their local impact.

Due to the limited scope of this case study, it would be much too presumptuous to reach the conclusion that this new alliance structure would be effective in other situations; however, this case study does highlight one case in which this new alliance structure has been effective and opens the doors for future research regarding this completely new alliance structure. Ideally, this case study becomes a first step in the journey to create an alliance structure best suited to local nonprofits such that they do not detract from their goals or cater to large corporations and instead are able to focus on their community impact.

By: Raymond Qin (GRC Harvard)

Appendix A

Appendix B

Preplanned questions and general responses:

Q: Have you felt the alliance structure of the organization?

A: If I am showing support for the proposed alliance established in 2018.

Q: How active is the role played by the alliance in its operations?

A: The alliance is active, improving expectations. The main problem is my organization not having long-term hired staff, which is not taking full advantage of this alliance.

Q: What are the contributions you've done to the alliance?

A: The main contribution is my experience and training, I consider it a valid partnership. As the alliance develops, I should be able to contribute more resources.

Q: What are the contributions that the alliance has given to you?

A: Products received organizational strengthening: extension of contacts, improving the website, plan volunteer, plan to improve fundraising

*Notes have been translated by native Spanish speaker to preserve meaning though some phrasing may be different due to linguistic differences

Notes from interview:

Empowering/can be used to increase impact

Network is important, building a sense of community both big and small.

The alliance has helped create a network of volunteers. People are coming back and have developed a sense of service from being a part of the organization. Helped increase publicity which really helps bring in attention and help from outside of local influence. Great since there’s limited resources to hire. Products and materials take a big load from them.

Helps other organizations in the alliance through: Experiences in the nonprofit sector, technical experience especially since he is one of the few educated people in this geographical location, acts as a mentor for other organizations in the area and provides free training for volunteers of other organizations. For example: has had foreign volunteers reach out to help during the summer and helped establish relationships with other organizations away from immediate area.

He wants to continue and has the motivation, but there have been internal changes and struggles to get volunteers to help.

Yes, he is still under the alliance. He is running his individual organization alone since it has been hard to contact the other members of the alliance. Even though they’ve maintained contact, it has been hard to find the time and structure to sit down and have a formal structure and planning period.

Problems with the alliance: Having checks and more constant communication between the organizations. Promoting unity such that the alliance is satisfied.

Appendix C