Non-Profits & The Sharing Economy: Space, Systems & Employees
In 2001, my marketing consulting firm, MarketFitz, took on the new and innovative company, Flexcar. It was the first company of its kind, a leader in the mega trend called “the sharing economy.” Flexcar allowed people to purchase an interest in a fleet of cars, rather than owning one outright. The ownership group shared the vehicles.
Now, 16 years later, Flexcar has merged with Zipcar, and the sharing economy continues to grow. Airbnb has emerged as a home-sharing service, providing new competition to the established hotel business. Moovn lets you share your own car and earn money as its driver, while Turo lets you rent your car for someone else to drive. In some parts of the world, you can even share airplanes, camping spots or washing machines!
The sharing economy has grown rapidly, and for good reasons. Making use of someone else’s downtime makes good sense. By sharing an asset than an individual is not using, that individual recoups some of the cost, the individual using it doesn’t need to make as significant an investment to have access to the asset, and we score an environmental win by reducing the number of new cars, hotels, airplanes or washing machines we need to produce.
But these organizations all facilitate asset sharing between individuals. What about asset sharing between non-profits?
That, too, has been on the rise. And in addition to the clear benefits of reduced cost on behalf of the non-profits who would otherwise need to make significant infrastructure investments, non-profits are reaping other benefits from the arrangement.
The Sharing Economy & The Non-Profit Sector
Look at your non-profit’s balance sheet. Do you have an asset that is costly but not fully utilized? For example, do you have office space that could be shared with another non-profit on an as-needed or consistent basis? What about vehicles that are parked for long periods of time? Or a computer system that could be leveraged by more than one non-profit without negative impact to your organization?
Now turn to your income statement, or statement of financial activities. Do you have underutilized staff? Could you reduce supply costs by pooling purchasing arrangements with other non-profits? Could you reduce overhead by sharing administrative costs with another organization?
If you said yes to one of these questions, you may have an opportunity to improve efficiencies through source sharing. Here are a few examples of organizations who have successfully reduced costs through collaboration:
The Thoreau Center offers non-profits shared space and shared centralized services, such as copy machines and reception services, in both New York City and San Francisco. An article about the facility in The Non-Profit Times reports that tenants both reduce costs and benefit from increased knowledge sharing and collaboration.
One of Washington’s largest healthcare organizations sliced a double-digit percentage off the cost of running its communications team by engaging MarketFitz to reengineer and manage the department.
Shared Resource Purchasing
Five competing arts organizations banded together to purchase software that streamlined operations but was too expensive for any one organization to purchase independently. In addition to having access to a system that was otherwise cost-prohibitive, the group’s approach to data gathering has improved development efforts.
Eight non-profits with non-aligned missions formed a coalition to share training, resources and information. Each of the organizations houses one or some of the shared team members, but costs are divided among the organizations equally.
Three not-for-profits in Tennessee share a single CFO, allowing them to tap top talent at a fraction of the cost.
Benefits of the Sharing Economy for Non-Profits
Non-profits who participate in the sharing economy through collaboration with other non-profits enjoy financial, human resource and operational benefits.
Organizations can reduce operating costs by sharing human and other resources that would not be fully utilized by one organization alone. Organizations with space or other assets can offset the costs of those assets by renting them as needed to other organizations. Sharing services, either through purchasing or shared staff, can reduce the overall cost that an organization would incur if they were to purchase a smaller quantity of the resource on an individual basis.
Human Resource Benefits
Sharing employees can provide a career path within a smaller organization that might not otherwise be able to offer advancement opportunities. Sharing access to training and other services can also increase employee retention, satisfaction and performance.
Whether sharing space, software or resources, non-profit partners in a sharing arrangement are more likely to collaborate in other areas. For example, if several organizations with aligned missions share space, they may be better able to coordinate programs for their target markets.
While the benefits are significant, non-profits interested in sharing arrangements may run into resistance. Board members and employees may fear the loss of complete management control, have concerns about whether competing organizations may have access to closely guarded donor information, or be worried about job losses and/or upsetting team dynamics.
To optimize outcomes and minimize anxiety, follow these five steps:
Step One: Clearly identify your organization’s goals and needs.
Outline the conditions required to ensure your success. Identify possible areas of risk, such as the inadvertent disclosure of confidential information, and determine how to protect against those issues. Be specific as you outline the benefits you expect as a result of the sharing effort, both for you and for the organizations with whom you partner. Carefully assess potential outcomes and risks using formal analysis techniques such as time and motion studies, resource reviews and financial evaluations, particularly if the project constitutes a substantial change for your organization.
Step Two: Determine whether to partner with non-competing or mission-aligned organizations, or with a vendor.
Consider competitive concerns carefully before selecting either a non-profit partner or a vendor, and only partner with organizations you trust. If you are using a vendor, be sure to choose someone with solid experience that matches your needs.
Step Three: Formalize the engagement, including roles, responsibilities, and expected outcomes.
Establish ground rules, roles and performance expectations early in any source sharing partnership. Identify a leader who will serve as coordinator and fiscal agent for the collaboration. Also, carefully consider succession issues and the impact transitions might have. Don’t forget to consider labor and tax laws as you evaluate the structure. This is particularly important when you are using independent contractors or sharing employees.
Step Four: Get buy-in from your staff and your board.
Educate your staff and board about the benefits of the sharing arrangement. Prepare to answer specific questions both at the first meeting and in subsequent conversations.
Step Five: Build in routine evaluation criteria and timelines.
Before you implement the sharing program, specify when the group will reconvene to assess results and what results you expect to achieve on behalf of each organization. For example, if you are sharing a special events team with three other non-profits, you might check in monthly to look at the progress against plan, the number of hours they have invested, or the results they have achieved on behalf of each organization. If they don’t match expectations, the meeting provides an opportunity to address inequities or under-performance.
A Resource You Might Find Helpful
In the process of preparing this article, I found a resource that may inspire potential sharing opportunities. It lists interesting collaborations between non-profits around the United States, including some of the examples I listed in this article. You can find it here.
Is Your Non-Profit Participating in the Sharing Economy?
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