This One-of-a-Kind Nonprofit Collaboration Just Might Upend the Funder-Grantee Power Dynamic

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When a foundation CEO recently asked Prevention Works CEO Danielle Sielatycki for permission to bring in a busload of donors for a nearly day-long site visit, Sielatycki did something that most nonprofit leaders would only do in their dreams: she pushed back, telling the CEO that the visit would be too disruptive. The result was a long conversation about alternatives that would provide the foundation with the information it wanted without forcing Prevention Works to shortchange the families it serves.

Sielatycki felt relatively safe having that conversation because of her organization’s membership in Hub ONE, a collaborative between Prevention Works and three other nonprofits in the Kalamazoo, Michigan, area. Through Hub ONE, which was launched in 2018 with the support of the area’s Stryker Johnston Foundation, the four organizations — Prevention Works, Big Brothers Big Sisters, Urban Alliance, and Boys & Girls Club of Greater Kalamazoo — share many of their administrative functions, and even some of their fundraising. In the process, Hub ONE has allowed its member nonprofits to save money on operating costs, begin paying living wages to all employees, and start to address the power disparities between grantee and grantmaker — while simultaneously increasing services and attracting more funder support.

Hub ONE sounds like a fairy tale. But it’s a real-life example of what can happen when nonprofit leaders are willing to tear down the artificial walls of scarcity and competition that have been built up by decades of inadequate funding and what’s often been called the nonprofit starvation cycle. It’s also the result of a hell of a lot of hard, painstaking and thorough work. 

Sielatycki told me that Hub ONE was the eventual result of breakfast conversations between herself and other area nonprofit leaders that began roughly four and a half years ago. Even back then — before the COVID-19 pandemic and subsequent Great Resignation made the nonprofit worker burnout crisis much harder to ignore — Sielatycki said that employee burnout and turnover was the No. 1 topic she and her fellow leaders talked about. One of the nonprofits that eventually became a Hub ONE partner, for example, had a whopping 400% turnover rate in a program dedicated to youth. The breakfasts, Sielatycki said, became something of a think tank where the leaders asked themselves how they could start tackling some of the systemic barriers they all faced after living with scarcity for so long.

Confronting the nonprofit Hunger Games

The collaborative has published several online white papers detailing its history, process and results so far, but here’s a quick overview of how it works. Rather than operating as a separate 501(c) nonprofit, Hub ONE is housed within Prevention Works, with Sielatycki as the lead executive. The other nonprofits’ leaders comprise Hub ONE’s leadership team, all of whom have a voice in decisions and a role in implementation. As a collaborative with roughly 200 employees altogether, Hub One has already been able to combine its members’ HR functions and save money by negotiating and contracting as a group with vendors and some insurance companies. 

Even with delays caused by COVID, Hub ONE has achieved some remarkable results. Each of the member organizations, for example, has created detailed job descriptions and salary ranges for all of their positions — and each organization now pays, at minimum, the MIT-calculated living wage for a single person in Michigan (arrived at by a market rate overview of pay for similar jobs in both the area’s nonprofit and for-profit sectors). 

“Hub ONE set out to address intergenerational poverty and some of the root causes of that, so [member organizations] had to look internally at our own staff and pay,” said Sarah Weishaar, CEO of Impact Collective Group. Weishaar’s organization, which specializes in sustainable business strategies, is among Hub ONE’s consultants. “Pay equity is a thread through all of this,” Weishaar said.

And while each member organization still does its own fundraising, the collaborative also raises funds that are shared among members, with each member organization receiving support according to its needs. 

All of this might make Hub ONE sound simple, its implementation even easy. That definitely hasn’t been the case. Sometimes, Sielatycki said, the leadership team would open one “can of worms” only to find another, equally full can of worms inside. For example, she said, Hub ONE’s leaders thought at first that creating job descriptions and other HR processes like progress evaluations for four such closely aligned nonprofits would be straightforward and simple. Instead, she said, the nuances of each member nonprofit’s work, and the specifics of the jobs created to do that work, made it necessary to create much more customized processes for each organization. 

The surprising intricacies of setting up a collective HR system weren’t the only complication. “I don't really think we realized how much the scarcity model of funding and donations, and living in this scarcity mindset, has made our organizations so broken,” she said. “And so even as we're running organizations, we sometimes push aside the brokenness because we've got to serve the people. And that brokenness kind of builds up over time.”

Logistics hurdles aside, Sielatycki said, probably the biggest challenge in building Hub ONE has been “pulling down our walls. In our sector, funding often pits us against each other," she said. “And it's almost like ‘The Hunger Games,’ where I'm not going to share my insights with you because that gets me funding.” To build Hub ONE, she said, its members’ leadership had to be willing to bring down their walls and share their processes with each other — including the areas where they were already strong and the ones where each needed support. 

Power in numbers

The member nonprofits within Hub ONE aren’t all that large; Sielatycki said that their annual budgets range from $2 million to $5 million. Through Hub ONE, though, each member has found success that they may not have enjoyed on their own. Prevention Works alone estimates that it has expanded its services by 30%, and while exact figures weren’t available for the other members, they’ve also reportedly been able to grow their services. The collective has also attracted something of a unicorn in the nonprofit world: a three-year commitment from a national funder to specifically address pay equity. Another local funder that currently supports the four members separately has asked for a proposal specifically to support Hub ONE.

When it comes to interacting with funders, being able to push back against an impromptu, disruptive site visit hasn’t been Hub ONE’s only benefit. Thanks to the financial stability the collaborative seeks to help its members to achieve, Sielatycki said it’s now easier for them to decide not to chase smaller and/or heavily labor-intensive grants, like that $5,000 grant with the 15-page application. Leaving such grants on the table, she said, has the side benefit of making them available to smaller nonprofits that may need them more.

Sielatycki didn’t say this, but I found myself wondering: If more nonprofits were to form collaboratives allowing them to push back against unreasonable grant requirements, how long would it take for funders to realize that they really don’t need that 15-page application or 12 page post-grant report after all? 

Nor is Hub ONE finished. Future tentative plans include finding a way to save specifically on health insurance, providing fiscal sponsorship and back-end support to smaller area nonprofits, and contracting with DEI consultants. The collaborative also hopes to provide seamless services to the community — for example, when Prevention Works encounters families with children who would benefit from Big Brothers/Big Sisters, Hub One may be able to provide a way for Prevention Works to help that family connect with Big Brothers/Big Sisters without first having to navigate yet another application process.

Perhaps most importantly for the nonprofit sector as a whole, Hub ONE is looking to share its example. While a fully collaborative model like Hub ONE may not work for nonprofits whose work is radically disparate, Sielatycki believes that many nonprofits may well be able to benefit from joining forces on the kind of back-of-house operations that make up the collaborative’s backbone. “We're here to help,” she said. “Our answer isn't always the right answer, it's not the best for everybody, or maybe somebody tweaks it and moves differently. But you don't always have to start over from scratch.”

A trust-based approach

The Hub ONE model is exciting, and has particular promise, because the member nonprofits themselves have been at its helm since its inception. They decided to pursue the collaboration in the first place, they have chosen the level of interconnectedness that works for them, and they continue to steer its course. Their ability to spearhead the process is possible because the Stryker Johnston Foundation supported Hub ONE through a trust-based philanthropic process that allowed the collaborative to change course as needed. In fact, a case study about the collaborative cites the Trust-Based Philanthropy Project’s approach as the inspiration for how Stryker Johnston went about supporting of Hub ONE.

Looking at the administrative savings costs that such a collaborative can secure, it’s possible to imagine a situation where overhead-averse funders attempt to force grantees to pursue a Hub ONE model whether or not such a model works for them. That would be a grave mistake. Instead, we hope that Hub ONE’s example will serve as yet further proof that the best course of action is often to write checks, get out of the way, and allow nonprofits to choose the innovations that let them serve their missions without shortchanging the employees who make the work possible.