imageNine nonprofits in Chicago have found a great way to adapt to the difficult funding environment. The largest members of the United Way of Metropolitan Chicago, whose combined budgets total more than $300 million, have agreed to form a cooperative to share back-office functions including everything from HR to accounting. Co-op member Richard Jones, CEO of Metropolitan Family Services, said that the groups hope to “have a more efficient system.” By taking this step, co-op members hope to reduce administrative expenses and shift the savings to programs where revenue streams have stagnated or fallen in past years.

How much of a savings are they estimating? On paper the co-op believes that within five years they will save their members $20 million annually and even more, if the co-op grows. Laura Thrall, CEO of Metropolitan YWCA, said, “We’re in dire straits right now with all these factors coming to a head. The savings are important because of what they will allow us to do.” An article about the co-op, published Feb. 11, 2008 in Crain’s Chicago Business identified more details about the co-op.

The leadership of these nine organizations created the concept of the co-op themselves through a two-year planning process supported by the United Way of Metropolitan Chicago and the Chicago Community Trust. These CEOs knew that they had to do something to increase revenue for their programs, but the question was, what?

The leaders involved in this effort showed real courage to break out of the same-old strategy of increased fund raising and survival of the fittest to identify this new solution. There is great creativity in the nonprofit sector, but it is not always apparent. Let’s hope that other nonprofits learn from the lesson in this Chicago example. The nonprofit sector can create the solutions it needs to grow and adapt to the environment we are in today.

imageJean Butzen, Mission Plus Strategy consulting, specializes in mergers and alliances in the Chicago area.