Submitted by Jean Butzen on May 9, 2008 - 08:43

Management Service Organizations Deliver Social Value, Save Costs

What do you say to a nonprofit leader who can't collaborate?  Well, how about: "I'm not on Earth to build Pillsbury United." That's what Tony Wagner, long-time executive director of Pillsbury United, said when pondering the decision about whether or not to become part of a unique management service organization called MACC - Metropolitan Alliance of Connected Communities, based in Minneapolis, Minnesota which formed on Jan. 2, 2006. 
I've written about management service organizations (MSO's) before (see my Feb. 13th entry). An MSO is a collection of nonprofits which come together to share back-office functions and at the same time, they maintain their separate identities, governing structures and programs. The purpose of an MSO is to gain operating efficiencies and to increase the quality of back-office functions through consolidating multiple nonprofit operations. MSO's are really becoming popular.
Tony and four of his colleagues who are part of MACC decided to put their clients - and not their brands - first.  The five organizations in MACC, whose combined budgets total $35M, jointly provide administrative functions to their members such as accounting, office technology and human resources. Their goal is to operate more efficiently and to share best practices in order to benefit their clients.
The story of how they got started is interesting. Initially, the group started out small, with only three nonprofits; today there are seven members of the collaborative. All five of the founding members were human service agencies focusing on self-sufficiency programs for families and communities and their agencies were experiencing similar government and philanthropic budget cuts. I have to believe that kind of mission and operational alignment created synergies for the collaboration and eased the process quite a bit.
And the results show that MACC is meeting its goals. At the end of 2007 - after just one year of operation - the MACC Commonwealth agencies reported that their members served 1,000 additional clients and saved their members $200,000 in annual costs. These are impressive results.
The MACC Commonwealth has been so successful, in fact, that it has drawn notable attention including a paper published by the Humphrey Institute that won first place at a national conference on nonprofit best practices.
Tough times call for new thinking and as Tony Wagner reminded us in an article in the Minneapolis-St.Paul Star Tribune, "Our primary purpose is to serve people, to serve communities." Well said, Tony.