This is my third posting in a series on shared services alliances in the nonprofit sector. Aside from mergers, there is a wide variety of partial integration models that are extremely creative and productive that nonprofits can use. One of these models is called "shared services alliances."
This month I want to share the story of the David and Laura Merage Foundation based in Colorado, and their efforts to strengthen the Early Care and Education (ECE) industry by creating an innovative shared service infrastructure called Early Learning Ventures Alliances. This community-based partnership model involves small ECE providers working together to share costs and deliver services efficiently.
Sue Renner, Director of the Merage Foundation and of the Early Learning Ventures, oversees the establishment of the new shared services alliances for the ECE sector in Colorado. She told me that at the foundation they were struck by the failure rate and market challenges of these business and that investing in them in traditional ways was like "pouring water through a colander; there would be no sustainability." That is why the foundation decided to focus on strengthening operations. Their answer became the Early Learning Venture Alliances, a group of geographically-based alliances, each with up to 100 affiliated childcare businesses. Alliances formed a hub operation to provide a broad array of high-quality services to the affiliates in order to achieve economies of scale and increase the capacity of the affiliates. Services include customized technologies, business consultation, policy and finance reform, technical assistance, quality control, and fund development to optimize the delivery of shared services to the affiliates. The model looks like this:
The goal is to allow providers to maintain their independent identities and to focus on creating strong, high quality programs for the children and families they serve. To date, they have identified seven nonprofits that have agreed to act as the Alliance hub in their geographic region. Each is now in the process of implementing their operations plan.
The business realities for early childhood providers are quite difficult. The average childcare center serves about 75 children and employs fewer than 20 people. Let's face it, when it comes to spreading costs bigger is better. Yet the Shared Service Alliance integrates the services where big matters - financial services, purchasing, human resource services, IT, facilities management, etc. But where small is better - classroom size, student to teacher ratio, etc., then small is the operative word in this model. When it's necessary to have programs that are rooted in communities so that they allow parent involvement and represent cultural concerns, then local is the operative word. The Shared Services Alliance model allows for large leveraging, while it respects small and local values.
To access a Shared Services, you can go here.