A Smart Nonprofit Strategy You're Not Using Yet: Shared Services

Nonprofit news over the last year is telling a clear story: Collaboration between organizations is no longer optional or “nice to have.” It’s now a smart survival strategy.

For example, in Central Oregon, funders are now requiring nonprofits to demonstrate collaboration in grant applications. In Nebraska and Iowa, two long-standing children's care organizations, Child Saving Institute and Children's Square, are unifying to both maintain operations and expand their service footprint where community needs exist.

Collaboration doesn't just mean programmatic partnerships. Some of the leading nonprofits are sharing back-office functions to make better use of their budgets and leadership capacity.

What Shared Services Looks Like

Think beyond the traditional merger or joint program and consider a few real scenarios:

• Three small nonprofits splitting the cost of one experienced HR director who works 10-15 hours per week for each organization.

• Two social services organizations pooling IT and cybersecurity support, reducing individual organizational costs significantly.

• Four arts organizations co-hiring a grant writer who dedicates 25% of their time to each, bringing specialized expertise to each.
  

According to Nonprofit Finance Fund's latest survey of the sector, 36% of nonprofits are ending 2024 in deficit and 85% are expecting increased service demand. You can't deliver more programs and meet additional needs with less money using the same old structure.

After helping 20+ organizations align their operations with their strategic goals, I've seen how back-office bottlenecks drain energy and keep leaders from focusing on their mission.

Why Shared Services Work

When done well, shared services can help your organization:

• Access expertise you couldn't afford alone while reducing existing overhead.

• Free up leadership time for mission-critical work instead of managing functions outside your wheelhouse.

• Show funders you're being strategic about sustainability and resource stewardship.
  

How to Get Started

Before jumping in, take a clear-eyed look and assess your current operations:

Step 1: Identify your pain points. What back-office functions consistently drain leadership time or create bottlenecks? Some common candidates include HR, IT, accounting, grantwriting, and communications.

Step 2: Calculate the real costs. Beyond direct salary and benefits, factor in management time, training, and the opportunity cost of leadership attention on non-mission work.

Step 3: Find natural partners. Look for organizations with complementary needs; maybe they need HR support while you need IT help, or you both struggle with grantwriting capacity. Start by examining your existing networks: sector coalitions, organizations you already partner with on programs, or nonprofits in your area facing similar challenges. From a funding perspective, philanthropists want to see collaboration and innovative approaches to sustainability. Shared services demonstrate both. In your proposals and conversations with funders, you can highlight how your approach allows you to direct more funding toward programming, and shows your commitment to working strategically with peer organizations. 

Step 4: Start small. Test the concept with one function before expanding. A shared grant writer or bookkeeper is less complex than shared HR across multiple organizations.

Good Planning

Success requires treating this like any other strategic initiative: clear communication, defined roles, and regular check-ins to ensure the arrangement serves everyone's mission effectively. Be sure to consider and discuss these questions with potential partners:

• Who manages the shared staff member day-to-day? 

• How do you handle competing priorities during busy seasons? 

• What happens if one organization wants to end the arrangement?
  

Stay Focused On What Matters

Many of your finance, HR, and IT needs likely aren't as unique as you think. What's unique is your mission, and that's where your energy should go.

If your organization is struggling with capacity, cash flow, or leadership bandwidth, ask yourself: What core functions are we doing in-house that we could share with partners?

I help nonprofit leaders translate strategy into action by aligning their teams, systems, and operations with their most important goals. If you’d like to explore this further, book a call and I’d be happy to share more.