Thinking Like Businesses

With shrinking donations and increasing demands, the state’s nonprofits are beginning to act a lot like their for-profit counterparts.

And that might not be such a bad thing.

The nonprofit sector has for years lamented about how it was losing public funding and about the difficulty it’s had in keeping private donations at a level it needs to retain services. But the nation’s economic crisis has pushed many charitable institutions into taking significant and new steps toward remaining viable.

In many cases, financial pressures have pushed these groups into each others arms.

In recent weeks, Planned Parenthood of Connecticut has joined forces with its much-smaller sister in Rhode Island. ALSO-Cornerstone Inc. and The Connection Inc., two New Haven organizations that provide supportive housing for people with disabilities, will merge by the end of the year.

Dave Davison, executive director of American Savings Foundation, a New Britain community chest, says cutbacks in state funding to nonprofits will result in entire programs being eliminated or operations shutting down. Finding like-minded partners is among the only alternatives, he says.

American Savings Foundation has been working to help nonprofits find partners. When a literacy volunteer group in Middletown opted to merge in 2007 with a healthier counterpart in New Britain, the foundation awarded it a $15,000 grant to cover legal expenses.

The result was the creation of the Literacy Volunteers of Central Connecticut, which is serving both communities better than they would have been served with separate operations

Much like it does in the for-profit sector, the merging of nonprofits has drawbacks. Jerald Ross, executive director of ALSO-Cornerstone, which underwent a merger several years ago, has raised concerns that charity mergers will be unrealistically viewed as the solution to a deeper, more complicated dilemma.

He cautioned that mergers often don’t save money — and in some cases can actually initially cost more money.

Still, there are many local examples of how at least combining services or positions can help. The Middlesex United Way and United Way of Central and Northeastern Connecticut (UWCNC) plan to share a communications director to save money. The UWCNC affiliate, based in Hartford, also administers a database of online pledges shared between several United Ways in the state.

Other groups are still sorting out whether a merger is in their best interest. The Community Foundation of Southeastern Connecticut, which provides $1.5 million a year in grants and scholarships to students, museums, school districts and churches, is weighing a merger with the Tri-County Community Foundation in Tolland, which serves 31 towns in the state’s northeast corner. Talks over the years about a combination intensified following the departure a year ago of Tri-County’s executive director.

Executives involved in those talks believe one potential drawback is that the charities, from different parts of the state, could lose their local identities.

Still, Connecticut nonprofits are increasingly sharing back-office functions, such as bookkeeping and information technology, executives say.

In other words, they’re beginning to act a lot like for-profit business that have been struggling to find ways to cut costs and increase efficiencies for a long time now.

That is a better strategy than sitting back and feeling sorry for oneself.