We Can Never Beat Overhead By Ourselves, It’s Time To Merge!

When I saw a story on Non-Profit Quarterly about four Kalamazoo, MI non-profits entering a shared-services partnership, I immediately assumed it was confined to back office functions as I had written about before. However, that isn’t entirely the case. Moreover, the impetus for their partnership isn’t so much driven by a desire to save money as it is by the fact that funding entities won’t allow grants and donations to be used for administrative overhead.

The four non-profits, Boys & Girls Clubs of Greater Kalamazoo, Prevention Works, Urban Alliance and Big Brothers Big Sisters, didn’t form the shared entity, Hub ONE, just to handle their back office functions, Hub ONE staff will help people navigate the services offered by each of these groups. “With each organization working to combat an aspect of generational poverty, the partnership appears to be a natural fit.”

A three year, $8.3 million grant from the Stryker Johnston Foundation will largely support developing the infrastructure of this new shared services entity. Some of the money will also go toward staff development and retention–something that is actually the long term goal of the shared services model.

…Gail Pico notes that overhead caps stifle social progress by restricting funding for use in effective management (e.g. professional development, evaluation, and strategic planning), keeps direct-service employees in poverty, and discourages innovation by not permitting organizations to take risks in trying new methods.

Each member of Hub ONE has been negatively impacted in some way by overhead myths. For instance, many of their employees are eligible for the programs they offer. Consequently, the group asserts that much of their time is spent trying to hire and retain employees who are driven to leave the sector for better pay. Sielatycki hopes the new collaborative will free resources for member nonprofits to pay employees more competitive wages, thereby helping reduce turnover and its associated retraining and onboarding costs.

The title of this post is a reference to the merging robot motifs of cartoons like Voltron

Of course, what can be a threat to the folks in Kalamazoo and other places is when one organization prioritizes themselves over the whole. (offered more for entertainment than caveat)

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)

I am currently the Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.

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