Should You Consider a Strategic Alliance?

by James Barrow

Will the “New Normal” suggest new opportunities? 

Many nonprofits are now questioning what is next for their organization. One avenue suggests there will be a whole new level of collaborative initiatives driven by a new attitude about working together, or by recognition that a more streamlined organization is required. This may result in nonprofits having a different relationship, e.g.– a strategic alliance — with suppliers, vendors, or even competitors.

Determining whether a Strategic Alliance is right for you takes a serious, focused, and deliberate approach. 

When your nonprofit discovers a critical need, such as a major IT upgrade or new funding solutions, the first step is to recognize that there is a continuum to choose from – internal development at one end and merger/ acquisition at the other.  Your organization then has to determine whether it should “build, borrow, or buy” to fill the gap. If “borrow” is the best path, then a Strategic Alliance should be a serious consideration.

If you start down this road, you should realize that the first word, “strategic,” means you are going to be talking about the heart of your organization. There are many terrific roadmaps to help you frame your thinking in this area, but here are four critical elements:

  1. Getting the Front-End Right
  2. Use of an Analytical/ Diagnostic Framework
  3. Teaming
  4. A Robust and Sustaining Support Structure

Determining whether a Strategic Alliance is right for you takes a serious, focused, and deliberate approach. 

Getting the Front-end Right. Back to the word Strategic it’s time to pull out your vision/purpose statements along with your “Critical Objectives.” You need to be hardwired to your key business objectives and business model. You are determining what specifically your organization needs to achieve its critical objectives, e.g., an IT upgrade or fundraising support.

You’ll want to consider whether there is a major supplier or competitor that has expertise in one of these “need” areas, such as a competitor with outstanding fundraising capability. Does your organization have a particular capability that this other entity might be interested in? Or you might look for a competitor that has a similar need, to see if you can join forces.

This is when leadership teams from both organizations begin to explore the real issues or opportunities and what the objectives might be for a strategic alliance. There has to be a mutually beneficial proposition for both organizations. In order for the discussion to have substance, you will need to share proprietary information. If you are not willing to take this step, back up and consider another kind of arrangement. These early discussions will validate if the necessary compatibility and commitment exist to move toward.

Analytical/Diagnostic Framework

Assuming you decide to move forward, it is now time to get more specific – and this is where most organizations stumble. Process mapping is one of the most reliable methods to understand how things really work and how they might work in the new arrangement. This step requires clarifying how the relevant processes work, where the sticking points are, and then what an improved, collaborative process would look like. Point being, both organizations need to have a clear picture of those linked activities that will drive the solution.

Teaming

A teaming arrangement between the two organizations is essential. These are the people from both organizations who not only will define the “analytical/diagnostic framework” but will set the tone for the future relationship. The two leadership teams will name the three to four appropriate processes for analysis as well as the team leaders that will drive the effort. High-quality facilitation is usually required to round out the teaming process. Throughout, the original leadership teams are the sponsors and will review and make decisions based on the team’s outputs, recommendations, and action plans.

A Robust and Sustaining Governance Structure

This last element will make or break the alliance initiative. Just getting to this point certainly requires a lot of hard work, and today’s fast-moving pace and changing priorities will challenge the discipline to follow through. However, your action plans must include a structure that evaluates outcomes and sets the tone and commitments, i.e., a contract. Good intentions are admirable, but the usual beast here is that each organization’s culture, inertia, and changes in leadership all contrive to assume things will be taken care and the need to nurture the alliance sounds like fluff. A clear change plan that assures ” leadership’s” active sponsorship, built in check points/metrics, with refreshed teams and shared routines, are all required to deliver a successful intervention.

In summary, like most things, what you put into something is the best gauge of what you are going to get out of it. Most successful strategic alliances require some professional help.  Look for consultants that can provide leadership coaching and facilitation, team development, process training/execution, governance and change management models so you can build the trust and implementation capability for a successful strategic alliance.

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Should You Consider a Strategic Alliance?

by Michael Stauff

Nonprofit organizations have always depended on successful relationships with one another.  Before the COVID pandemic, these strategic alliances served a variety of purposes, including shared services, policy influence, or improved efficiencies. However, the COVID pandemic has created a crisis situation for many nonprofits, making many consider strategic alliances for the first time.

Types of Strategic Alliances

A nonprofit might consider a strategic alliance if their resources are strained (staff, funding, expertise, etc.) to meet their current program and operational needs, particularly in today’s new normal. Strategic alliances span the range from shared resources to outsourcing of programs to complete mergers.  Specific opportunities include:

  • Joint fundraising events
  • Joint grant proposals
  • Program components or clients provided by different organizations
  • Joint employment of CFO, bookkeeper or Development Director
  • Shared IT services
  • Joint purchasing 
  • Centralized administration for two or more nonprofits
  • Facilities/real estate

Considerations

Strategic alliances are not light undertakings. They require analysis, introspection, and research as well as legal, financial, and cultural due-diligence:

  • Measurement: You’ll want clear objectives for your alliance and the ability to measure whether the outcomes were met. Success criteria include improved quality and impact of programs, cost reductions, improved efficiencies and/or improved public perception.
  • Synergies with Partners: If you are considering a strategic alliance, you’ll want to look for a partnership with synergies with your organization – one with complementary missions, clients, and/or programs. 
  • Board engagement: Your Board is ultimately responsible for the success and solvency of your nonprofit so any strategic alliance requires substantial board leadership, engagement and commitment before you begin the search.
  • Staffing Resources: Strategic alliances will put a heavy burden on your staff to conduct the research and develop and implement the work plan. You still have to maintain your services during the diligence period.
  • Funding:  Funding may be required to fund the costs to implement a strategic alliance
  • Legal: Depending on the nature of the strategic alliance, legal contracts may be required.

How ESC can help

ESC has a wealth of experience helping nonprofit clients identify and implement strategic alliances. In addition, we’ve implemented several within our own organization.  ESC can help you identify whether a strategic alliance would benefit your organization, which type of alliance would be of benefit, help you choose potential partners, and work with you to implement your plan.