The NonProfit Times - November 1, 2008 - (Page 12)

BACK OFFICE Continued from page 11 member’s birthday or that the visitor hadn’t come in for a month.“We will be able to interact better,” he said.“We don’t have the capital and technology to manage this.” Estimates place a $1.5 million price tag for startup costs to set up the joint body. The eight agencies are funding the venture by contributing 0.13 percent of each operating budget.The BOC also obtained a grant of $400,000 from the Chicago Community Trust while the United Way has made $200,000 available. Cole hopes the remainder will arrive from national foundations. “We think we can obtain $3 million in expense reduction,” Cole said. One estimate has the agencies saving $20 million over five years. Step two is developing technology.This leverage could convince governmental entities to automate payment systems.“Many of us have city and state contracts and the requirements are identical,” he said. Such development and expense reduction doesn’t mean eliminating overall jobs. “We could use the funds to hire more program-oriented people.” The concept doesn’t impact relationships with national headquarters.“Each organization of the YMCA has independent governance. We’re blessed with the national because they don’t interfere,” he said.“If the concept works, we could offer it to the 1,000 Y’s in the country.” Creating an entity to represent eight The Role Of The Board How do you structure a board that represents eight leaders of separate agencies? Kevin Carty, president and CEO of the Back Office Cooperative (BOC), relies on a board that aims to represent the eight organizations of the YMCA of Metropolitan Chicago, the YWCA of Metropolitan Chicago, Metropolitan Family Services, Casa Central, ChildServe, Chicago Commons, Kids Hope United, and Youth Guidance. “We don’t have to give these originating agencies an equity stake in the transaction,” Carty said. “That gives them more of a capability to work collaboratively in solving issues because they have a piece of money at risk.” The BOC board is chaired by Stephen Cole president and CEO of the YMCA of Metropolitan Chicago. A requirement calls for the board to be filled by CEOs or executive directors who can’t send surrogates to meetings. “Most of the agencies have known each other for a long time,”Cole said.“That means we bring a certain amount of trust to the table.” To build a culture of timing where everyone is on the same page in expectations of decisions, the bylaws and operating rules state that the agency is bound to commit themselves at a certain point and will suffer financial penalties if the organization fails. “That helps us see ourselves as part of a greater whole,” Cole said. Cole explained that one obstacle was the usual competition in the nonprofit sector where an organization seeks to gain a better deal than others in town. “Everyone on the board has to play by the same set of rules,” he said. A responsibility exists for all to reach compromises, according to Richard Jones, CEO of Metropolitan Family Services (MFS). “We might have the 80-20 rule,” he suggested.“That way we may have a method to satisfy 80 percent of the board, and that decision would be applied to the rest.” – TOM POPE agencies needs the support of an umbrella group, according to Laura Thrall, CEO of the YWCA Metropolitan Chicago and chair of CACE. The YWCA operates on a $13 million budget and serves 130,000 people annually through 11 centers. “The concept is an initiative of CACE,” she said. “All agencies are members of CACE.” The Chicago Community Trust and United Way support CACE efforts. “The leaders wanted to help each other and we knew each other,” she said.“Reducing expenses is one way to survive in hard times and if we’re not doing that, we’re not doing our job.” Thrall expects to see success starting in June 2009. “We hope to see the first benefits — we didn’t build any savings into this year’s plans because we have a demonstration project,” she said. “We’d like the rest of the country to see that nonprofits can make a savings and become a model.” Richard Jones, CEO of Metropolitan Family Services (MFS), said he would like to see a 5 to 10 percent reduction in cost as a sign of success. “We simply won’t renew an old contract with a vendor that isn’t selected,” he said. Some agencies might find a larger reduction than others depending on the rates they were previously paying.That situation doesn’t become an obstacle. “We simply would accept that because we’d know that we’re working together,” he said. He looks beyond the initial strategic sourcing to the time when BOC eventually consolidates accounting, IS, and human resource functions. Perhaps a toll-free number could give access to workers to handle human resource issues. Done right, the concept could be,“very good,” according to Peter Goldberg, president and CEO of the Alliance for Children and Families in Milwaukee.“This depends on the execution.” His comments address the fact that MFS is a member agency of the Alliance and Richard Jones is the board chair for Goldberg. “Doing right means that the execution doesn’t have an impact on the services delivery of the organization,”Goldberg said. “Also, they have to make sure the expenses bring in the quality for the items.” Ideally,without an impact on the delivery of services, the public wouldn’t be able to tell whether the back offices have merged. “We’re all searching for ways to operate in a more business-like fashion,” he said. NPT Tom Pope, a New York City-based journalist, writes about management issues. Exceed your expectations, AccuFund. Award winning financial management software for your non-profit organization. • Extensive reporting financial, grant, client & management • Staff’s choice for ease-of-use • Complete selection of fully integrated modules • Low total cost of ownership select Learn more at www.AccuFund.com AccuFund, Inc. I 877-872-2228 I Sales@accufund.com 12 NOVEMBER 1, 2008 THE NONPROFIT TIMES www.nptimes.com http://www.rwrconference.com http://www.AccuFund.com http://www.AccuFund.com http://www.rwrconference.com http://www.nptimes.com

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The NonProfit Times - November 1, 2008 Reach Out Community Investment Loans Agencies Aim For Back Office Savings Contents Page 4 Special Report: An In-Depth Study of America's Largest Profits Charity Accounts Foretold Ecomonic Meltdown Liquid Assets Groups Shaving Expenses With An Eye Toward ROI Green Is Good Governance Becoming Institutionalized National September 11 Memorial & Museum Finds Its Footing NPT 100 Groups Turning Real Estate Into Cash NPT 100 Investments Beat Broader Market The NPT Power & Influence Top 50 Gala Calendar NPT Jobs Resource Directory

The NonProfit Times - November 1, 2008

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