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Sunday, 04 January 2015 21:00

Battle Creek nonprofit decides to disband to better serve its mission

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After 11 years of operating as a nonprofit, the board of directors at the Battle Creek-based Educators’ Task Force decided recently to disband the organization.

Some nonprofits cease operation after fulfilling their missions, while others close up shop because of financial concerns. For the board at ETF, the decision hinged on the group’s desire to get out of the way of serving its mission of facilitating collaboration among educational leaders in the greater Battle Creek area.

Rather than divert money from helping children to maintain the nonprofit organization, the board decided it would be best if the organization simply went away, said Dennis Bona, chair of the ETF and president of Kellogg Community College. Excluding Bona, all other ETF members are school superintendents, so their role within the organization is filled in their day-to-day jobs, making the separate nonprofit organization a bit unnecessary, he said.

“It’s our day job to collaborate, so we don’t need any money around to facilitate that collaboration,” Bona said. “We’re already doing it. If there’s new money around to benefit education, let’s bring that in to the kids directly.”

ETF received funding from the W.K. Kellogg Foundation from 2010 until 2012. Shortly after the organization stopped requesting external financial support from the foundation, the board opted to shut down the nonprofit because “there are a lot of mechanics of being a nonprofit that become onerous,” Bona said. The board took the final step at the end of October when it opted to stop functioning as a 501(c)(3) nonprofit organization.

Michelle Wooddell, assistant professor at the school of public, nonprofit and health administration at Grand Valley State University, says funding and organizational issues are the most common reasons for nonprofits to disband.

“Most nonprofits get funded by a person with a dream that wants to make the world a better place,” Wooddell said. “And they come in with a lot of passion, a lot of enthusiasm. At some point, they either need to make the transition to being a self-sustaining organization that goes beyond the founder, or the funder gets burned out and the organization either contracts or disbands. It’s kind of a life cycle.”

In more lucky (and fewer) cases, nonprofits disband because the mission has been fulfilled, Wooddell said, citing March of Dimes as an example.

“There’s always the hope — and that’s what we strive for — that (a nonprofit’s) mission has been achieved,” she said. “The greatest example of that is the March of Dimes, which was founded to help eradicate childhood polio and serve those with polio.”

Jonas Salk developed the first successful polio vaccine in 1955 and eradicated polio from nearly the entire world, rendering March of Dimes unnecessary. Instead of disbanding completely, the organization changed its mission. The focus is now on helping women have full-term pregnancies and healthy babies.

Unfortunately, fulfilling an organization’s mission doesn’t happen all that often. Many times, nonprofits disband because they cannot stay properly funded to carry out their mission, Wooddell said.

“Funding is a tremendous challenge for nonprofits, especially for the smaller organizations,” Wooddell said. “Especially if their funding isn’t diversified enough, that’s a real issue. If they rely on one funder for half of their income and that funder goes away, that’s hard to come back from.”

For ETF, funding was the reason why the organization became a nonprofit and why it later disbanded. Founded in 1985 as a voluntary group, ETF became a 501(c)(3) in 2003.

According to Wooddell, acquiring nonprofit status was common during that time period.

“In the early 2000s, there was a rash of everybody had to get nonprofit status as opposed to just being a voluntary association,” she said. “The reason to transition from voluntary to nonprofit is if you’re doing fundraising where people need to get tax donations. The part of making it legal is to be able to provide those tax benefits to their donors.”

That worked for ETF, but only for a little while. The group hired an executive director to communicate with ETF members and complete the back-office work needed to maintain the organization’s 501(c)(3) status. After some time, it was a position that became redundant, Bona said.

“(Y)ou don’t want to hire anyone in that capacity because (then) all the grant money would go toward (salaries),” Bona said. “So looking forward, we just thought there was an easier way. We didn’t need the utility of being a formal nonprofit because we weren’t going to actually take in any grants.”

In the recession, there weren’t as many grants available for nonprofits, leading to an acceleration of the life cycle for some organizations and, ultimately, dissolution. A study released by the Nonprofit Finance Fund (NFF) in 2014 found the economic recovery is leaving behind many nonprofits and communities in need. The survey results represent the sixth straight year where the nonprofits polled reported an increased demand for services and an inability to meet that demand.

Luckily for ETF, the members are still able to meet demand without the 501(c)(3) status, Bona said. They do this by meeting on an issue-by-issue basis — for example, to decide whether to call a snow day, he said.

“We’re in a place right now where we don’t need a forced collaboration,” Bona said. “We all see the advantage of working together and if there’s an issue that’s out there and requires collaboration, we sit down at a table and we do that.”

Sidebar: Advocacy promotes survival for nonprofits

The life cycle of any organization — whether nonprofit or for-profit — ultimately comes to an end.

For nonprofits, the reasons behind that end of life stage can vary, but one California study showed that certain types of organization fail at a higher rate.

According to UCLA’s Los Angeles Human Service Nonprofit Survey, “organizations that provide some of the most basic anti-poverty services for poor and homeless persons, such as shelters (25.8 percent) and affordable housing (33.3 percent), failed at around twice the rate of more mainstream services, such as childcare (13.6 percent), clinical services (14.2 percent) and individual assistance (12.3 percent).”

In the survey period from 2002 to 2011, about 15 percent of the organizations interviewed ended up disbanding, the report stated.

“Engaging in advocacy does seem to promote survival,” a report on the survey stated. “The use of management practices, such as strategic planning, performance and program evaluation, and implementation of cost control systems are minimally but consistently used at a higher rate among surviving organizations.”

Read 4260 times Last modified on Sunday, 04 January 2015 21:34

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