Jitasa Nonprofit Blog

Shared Services and Affiliated Nonprofits

Recently we have been having more and more conversations with franchised or affiliated nonprofits. These are the groups that have a national brand, but have unique 501c3's serving local geographies. Groups like the YMCA, Boy Scouts of America, Make*A*Wish, Special Olympics, and many many more have this model. (Sharon Oster, Yale School of Management Professor, has written some great articles on this topic.)

Many of these organizations were founded decades ago, or in the case of some, 100+ years ago. At the time, decentralization was about the only way to operate a national model. The airplane was just being invented when the Boy Scouts were founded and organized. Now there are many great studies, like Professor Oster's, that outline the pros and cons of centralization.

One thing in research is pretty consistent, centralized shared services make sense for most organizations. The program impact and cultural impact is often minimal and the financial savings are significant. That is money that can be saved and diverted into programs and mission critical activities. Shared services, or outsourcing as a group to a vendor, is a quick way to achieve financial savings across an affiliated network (without all of the pain and emotion involved in mergers or other cost saving activities.)

There are great consultants out there who exist to help people think through these issues. There is no single silver bullet answer. But the time has come for affiliated nonprofits to investigate this as a solution.

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