RENAE OSWALD-ANDERSON: "The folks using the services don't care about the name of the nametag, they care about access to services."

The board of Dell’s Place was worried.

Chairman Mike Foell had been serving the Buffalo-based nonprofit, which operated group homes for disabled adults, for more than 25 years. And he was still considered one of the new guys.

While the organization’s financial snapshot was solid, the number of retiring board and staff members meant Dell’s Place needed to outsource administrative and accounting duties. That’s when the board asked nearby Functional Industries Inc., a workplace rehabilitation program, to take over the books.

Foell and Functional Industries’ chief executive officer Rod Pederson felt an almost instant connection. But it took four years for them to figure out how to best work together. “There’s so much you have to do to have confidence and trust in both organizations,” said Pederson. Finally, in October 2009, Functional Industries acquired the group homes and their staff—and left the Dell’s Place name behind.

Nonprofit leaders across the state are considering similar partnerships as a tough economy and the strain of ever-decreasing state funding take their toll. “The state budget in the next biennium may very well be worse,” said Kate Barr, the executive director of the Nonprofits Assistance Fund, which helps nonprofit boards and leaders better understand their financial picture. “This is not going to get better quickly.”

During the last 30 years, the Nonprofits Assistance Fund has provided more than $73 million in loans to 1,800 nonprofits. The organization works with about 300 nonprofits each year, half of whom, Barr said, need to seriously look at their existing business model. In the wake of the economic downturn, she anticipates even more boards will seek help and consider acquisitions, mergers and the unloading of fully-formed programs to sister nonprofits.

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While these decisions are rarely easy, experts say it’s important for nonprofit leaders to remember that their original mission was to serve people.

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This isn’t necessarily bad news. That interior house cleaning, Barr said, gives nonprofit leaders the chance to change the way they run their programs, alter their organizational structure and sometimes even rethink their revenue sources. Sometimes a merger is the best way to continue to provide services. “If two organizations are servicing two groups of clients and have similar missions they might do better if they did it together,” she said.

While these decisions are rarely easy, experts say it’s important for nonprofit leaders to remember that their original mission was to serve people. “The community and folks using the services don’t care about the name on the nametag; they care about access to services,” said Renae Oswald-Anderson, the director of Project Redesign, a merger counseling program run by the St. Paul-based Minnesota Assistance Project for Nonprofits. Since 2007, MAP has helped 26 Minnesota nonprofits merge and 18 dissolve.

That’s sobering news. But experts agree that more central Minnesota nonprofits will close their doors in upcoming years. Already the region has lost the St. Therese Center in St. Cloud and the regional office of the Minnesota Senior Federation. But many of the departed organizations will pass along their programs to healthier nonprofits. “In a struggling nonprofit with financial challenges, it’s about saving the service,” said Oswald-Anderson, “not about saving the organization.” IQ