That is the third article in a sequence exploring San Antonio’s nonprofit sector. Learn the primary half right here and the second half right here.
Because the coronavirus pandemic ripped by way of communities across the globe, public, personal and nonprofit leaders in lots of of cities like San Antonio began organizing large, coordinated emergency responses.
Regionally, a flurry of working teams and job forces have been established by the Metropolis of San Antonio and Bexar County officers to deal with the instant wants and longterm challenges of restoration.
Charitable nonprofits have been stretched “past their limits” throughout that interval, mentioned Barbara Gentry, who was a co-chair of the joint city-county philanthropy working group on the time.
Two different members of the group, who she declined to call, steered that among the organizations ought to merge or consolidate with a view to ease the monetary burden nonprofits have been experiencing whereas increasing their companies, mentioned Gentry, now the Haven for Hope board chair and former head of charitable giving and vice chairman of neighborhood affairs for USAA.
Regardless of venturing the suggestion, they balked on the concept of really doing it.
“So I mentioned: ‘Effectively, that’s simply nice, would you two chair a subcommittee on that?’” she recalled asking the duo. Their response was: “‘Oh, no, we are able to’t put our names to it,’” Gentry mentioned. “They wouldn’t contact it.”
Lengthy earlier than the pandemic, the concept of nonprofit mergers or acquisitions was considerably taboo — partly as a result of even when the necessity is evident, nobody needs to be perceived because the “unhealthy man” telling everybody what to do, she mentioned.
Whereas not one of the half-dozen giant nonprofit leaders interviewed for this text provided particular solutions on which teams ought to be part of forces, all agreed that no less than among the 2,583 nonprofits in Bexar County and its surrounding counties ought to contemplate consolidation.
“It may be finished in a way that’s not ‘we’re telling you what to do,’” Gentry mentioned. Within the post-COVID funding period, “we’ve restricted {dollars}. We have to work collectively to ensure our bucks are greatest invested. It may very well be a win for everyone.”
Strategic, considerate consolidation may stretch {dollars} additional and finally assist extra folks, mentioned Kim Jefferies, president and CEO of Haven for Hope, town’s largest homeless shelter and useful resource hub.
“With the shortage of sources and the rise of want, I feel within the subsequent few years we’re going to be at a pivotal level the place we’ve bought to be mergers,” she mentioned.
However with every nonprofit devoted to the distinctive work of their very own group, and regardless of elevated competitors for funding, few suppose it needs to be them.
“That takes robust management in every nonprofit and for folks to place egos apart, and for boards to do the identical,” Jefferies mentioned. “We’d like actual leaders in the neighborhood that may reveal how that may occur.”
Leaders of smaller-but-growing nonprofits interviewed for this story pushed again on the concept that there’s a widespread overlap of companies.
A current domestically funded report confirmed that many nonprofits are struggling to maintain up with neighborhood demand, however its findings will be interpreted in several methods — and infrequently are, relying on who you ask.
“We have now knowledge that reveals that the necessity is rising, it virtually seems like fewer nonprofits could be a problem,” mentioned Nadege Memento, president and CEO of the San Antonio Space Basis, which grants thousands and thousands in funding to nonprofits of all sizes yearly.
“It’s not likely concerning the variety of nonprofits,” she mentioned. “It’s actually about, ‘Is the mandatory work getting finished?’”
Merger ‘simply made sense’
In 2010, the inpatient Southwest Psychological Well being Middle and the outpatient Baby Steerage Middle of San Antonio — two child-serving psychological well being services — merged to kind the Readability Baby Steerage Middle.
“The Baby Steerage Middle, with a funds of over 1,000,000 {dollars} a yr, was struggling each single step of the way in which to mainly keep afloat,” mentioned John Seybold, who served on the Steerage Middle’s board on the time of the merger and now serves on Readability’s board.
The merger created a $14 million company, based on media studies on the time. Since then, Readability has upgraded its services and its funds has greater than doubled.
The a lot bigger and worthwhile hospital was basically capable of subsidize the outpatient companies, Seybold mentioned, decreasing general prices.
“Right here we’re, 14 years later, and it’s nonetheless type of like that,” he added. “However now it’s all built-in into the service mannequin, in order that general group offers a unbelievable service for households with out having to interrupt care” by having to go to a different nonprofit for his or her inpatient or outpatient care.
The merger “simply made sense” for the households each teams served, he mentioned. Households went from slogging by way of a “actually inefficient mess” to a streamlined, one-stop store for youngsters scuffling with psychological well being points.
Nonetheless, the merger wasn’t simple — and it took a number of makes an attempt and years to return to fruition, Seybold and Gentry mentioned.
And the timing was best, because the two entities have been in a singular scenario the place neither head govt was a founder and one was already fascinated with retirement, Gentry mentioned.
“It’s costly; the authorized, the accounting, deciding [if] are you going to vary your identify,” she mentioned.
Whereas there are many free sources domestically and on-line to assist the muse and infrastructure of nonprofits, there aren’t many who demystify the merger course of.
And whereas some do mix — the San Antonio Meals Financial institution, as an example, has absorbed the programming of no less than three different organizations over the past quarter-century— closures and mergers aren’t preserving tempo with new teams forming in Bexar County.
Since 2018, the Bexar County area added 109 new nonprofits — a 12% enhance, based on the area’s 2024 State of the Nonprofit Sector report.
In 2016, small nonprofits (these with budgets of $300,000 or much less), accounted for 40% of the realm’s complete nonprofits. By 2023, that share grew to 47%.
Scott McAninch, CEO of the native Nonprofit Council, mentioned what’s lacking is sources to assist a possible founder decide if they need to kind a nonprofit within the first place.
“We’d love to do a program that claims: ‘Don’t begin a nonprofit, and we’ll let you know why,’” he mentioned. “For my part, there’s too many nonprofits and I feel a few of them may merge.”
That’s not meant to undermine the work native nonprofits are doing — and naturally, anybody who needs to begin a nonprofit has the suitable to take action, McAninch mentioned: “They’re pushed by a ardour.”
However ardour isn’t at all times sensible, a number of giant nonprofit leaders mentioned.
Simple to kind, more durable to maintain
In 2022, nonprofits made up simply over 5% of all the realm’s personal sector jobs.
The sector is rising nationally as properly. Roughly 1.3 million charitable nonprofits make use of greater than 10% of the nation’s personal workforce, based on the Nationwide Council of Nonprofits.
“In case you go to the ‘The best way to Begin a Nonprofit‘ part on our web site, the primary couple of steps we’ve are mainly: Pause and see if you actually need to begin a brand new group to do what you’re attempting to do,” mentioned Rick Cohen, chief working and communications officer for the Nationwide Council of Nonprofits. “As a result of there are such a lot of folks on the planet who wish to do good.”
It’s notably troublesome to maintain a small nonprofit now, when donations are down, Cohen mentioned. “The simplest approach to do what you wish to do could also be working with an present nonprofit and asking them to broaden their service space or add on a brand new program,” he defined.
One other component contributing to the expansion of the nonprofit sector is that it has grow to be a lot simpler to ascertain a nonprofit within the U.S., Cohen famous.
The Inside Income Service launched Kind 1023-EZ, the shape to get acknowledged as a tax-exempt group, about decade in the past — and ever since, the nonprofit advocacy group has been asking the IRS to change it.
Whereas the unique kind was prolonged and cumbersome, “the 1023-EZ is just too simple,” Cohen mentioned. “There must be a center floor.”
The brand new kind doesn’t totally describe the processes and necessities behind sustaining a brand new nonprofit, he mentioned: “Yearly, we discover a complete bunch of individuals beginning up and having their tax exemption routinely revoked three years later as a result of they don’t notice they must file a tax kind.”
However these nonprofits that may’t determine the paperwork — or appeal to sustainable donors — doubtless aren’t contributing to any service overlap for lengthy.
“A nonprofit that doesn’t have a spot on this world will lose assist,” mentioned Erika Borrego, president and CEO of Corazón Ministries, which offers companies for folks experiencing homelessness.
“In case your work is targeted on assembly wants which are at the moment not being met, even if you’re overlapping in some small sliver with different organizations that do comparable work, … I might say that each group [like that] has a spot on the desk.”
Extra agile and modern
When Stephen Lucke determined to begin his nonprofit, Gardopia Gardens, a decade in the past, he confronted some skepticism from funders and others within the sector about whether or not the neighborhood wanted city agricultural companies and training.
Different nonprofits do neighborhood gardening, so Gardopia wasn’t wanted, he recalled some advisers saying.
“That’s a really deflating dialog, when folks say that you just’re duplicating efforts,” Lucke mentioned.
However he noticed a niche, particularly on the underserved East Facet of San Antonio, and was decided to fill it.
“You simply hope and need and pray that different folks ultimately see it as a lot as you see it,” he mentioned. “It’s a must to have [a successful] proof of idea … with not some huge cash.”
Gardopia’s annual funds went from nothing in 2015 to an estimated $1.7 million this yr, he mentioned. The nonprofit not too long ago bought the property it had been renting and has formidable enlargement plans.
Smaller nonprofits will be extra agile and modern with out the cumbersome bureaucracies that usually include giant organizations, Lucke mentioned.
“They begin to grow to be extra risk-averse,” he mentioned of bigger teams. “They don’t wish to fail, they don’t wish to attempt new issues. They already cracked the code. They already know what works, proper?”
However younger nonprofits have extra flexibility, each in construction and generally funding, to pivot extra rapidly and take a look at modern approaches.
Whereas many nonprofits urge warning earlier than beginning one thing new, Memento argued that an entrepreneurial spirit — even within the nonprofit house — can result in needed change.
“The subsequent large concept would possibly, proper now, be a small, new and rising nonprofit,” Memento mentioned. “I might hate to see that type of catalyst and spark go away.”
