Not long ago, a new shared service alliance or nonprofit administrative partnership was considered a major event—not any more. Back office collaborations are popping up all over the place.

One of the stronger examples is Community Service Partners (CSP), which recently launched in the South Suburbs of Chicago to provide administrative efficiencies among a group of six nonprofits that serve individuals with disabilities.

CSP’s CEO Bryan Dunlap talked to me about how the organization’s administrative partnership got started: “The group started meeting in 2009. We had a driver—one executive director (Dan Strick of SouthSTAR) who said to the others, ‘Let’s get together.’ We also had a lot of help from the Commission on Accreditation for Rehabilitation Facilities, which provided us with a consultant who facilitated our planning meetings. In the early stages, we felt we needed an outsider who would understand the environment our members were operating in, but did not have any affiliation with any of the agencies.” CSP was soon incorporated as a separate 501(c)(3) nonprofit corporation with the mission to “strengthen the business of nonprofits through collaboration.”

Bryan explained that a board comprised of five founding members—who are also customers—governs CSP and chooses what services to provide through a participatory process. The board examines each organization’s interest in services, first in subcommittees. If the board is looking at new human resource service, for example, CSP will bring together the HR directors from each nonprofit to discuss as a group. Everyone talks through the pros and cons before voting on whether or not CSP implements the service. I found this method very democratic and efficient, as it encourages buy-in from all stakeholders up-front. In two short years, CSP has assembled  IT, professional training, bulk purchasing (including employee benefits and energy), and employee recruitment services for their members.

In terms of staffing, CSP has a staff of four, and so far, none of the organizations have had to lay off staff to support CSP. In fact, two people, including Bryan, moved to CSP from member organizations.

Donors such as the Coleman Foundation, the Chicago Community Trust, and the United Way of Metropolitan Chicago contributed toward start-up costs and operations, and members invested between $10,000 and $15,000 each to launch CSP. Its budget is modest: $400,000, and 85 percent of the revenues to pay for it come from fees for service. “We use an IT platform as a labor-saving device. It allows us to serve our customers remotely. In the first year alone, IT saved all five members $100,000,” Bryan explained, “which keeps our costs down.” CSP also works with 12 non-member customer nonprofit agencies in the area to bring in additional revenue.

In the first year of operation, CSP saved its members a total of $196,000, and the plan is to save them $3 million over the next five years. Pretty great results: For an investment of $15,000, each member has already doubled its return and looks to save tens of thousands of dollars over the next five years—frankly, that’s a better return than many fundraising strategies.

Ready to start an administrative partnership of your own?