Collaboration in the Non-Profit Sector: Legal Issues and the - - PowerPoint PPT Presentation

Collaboration in the Non-Profit Sector: Legal Issues and the Utilization of Collaboration Agreements

Presented by Dana Malkus,

• St. Louis University School of Law Legal Clinic

May 1, 2013

Today’s Agenda

• Collaboration: What, Why, and

Why Not

• Identifying and Negotiating

Potential Collaborations

• Collaboration Agreements
• Lawyer: Yes or No?
• Practice: Let’s Try It

Collaboration: What, Why, and Why Not

• What is it?
• Why do it?
• Access to funding or grants
• Expertise of the partner organization
• Increase the human resources devoted to an

event/cause

• Risk diversification
• Access to established infrastructure
• Accomplish more with less

Collaboration: What, Why, and Why Not (cont.)

• Why not do it?
• Can be significant time/resource cost

(relationships, logistics)

• If benefit is not clear
• “Does not play well with others”

personality

• If motivation is to use as end in itself

(rather than as tool)

Competition Cooperation, Coordination, Collaboration Strategic Restructuring Dissolution, Merger or Acquisition

Informal Formal

Arrangements and relationships with no change in

• rganizational structure of participating entities. Can range

from informal/uncomplicated to more formal/complicated. Examples:

• Committee, task force, joint initiative, or informal network
• Information sharing
• Referrals
• Joint purchasing
• Share staff (e.g., bookkeeper, development)
• Co-locate
• Program coordination
• Joint marketing campaign
• Joint grant proposal

Decision-making power is shared; new structure may be created. Examples:

• Formal joint venture (limited to a certain

project or to a certain time period)

• Forming a confederation, coalition, or

more formalized network A formal arrangement in which two organizations become a new entity or

• ne absorbs the other.

Organizations compete with each other for funding and risk duplication of efforts.

Collaboration Spectrum

Identifying and Negotiating Potential Collaborations

• Identify the unmet need: Should be able to be clearly

expressed in writing

• Strategic/business planning is key
• What makes a good partner (aka: risk management)?
• Shared values
• Shared goals
• Reliability, ethics, reputation (perform due

diligence)

• Invested in outcome
• Willing to sacrifice time and resources to achieve

joint goal

• Compatible corporate purpose

Identifying and Negotiating Potential Collaborations (cont.)

• Pre-Negotiation
• Planning: your goals,

expectations, strengths/weaknesses, roles, and duties

• What do you bring to the table?

What does the other org bring?

Oral Agreement Informal Writing Letter Agreement MOU Traditional Contract

Dissolution, Merger, or Acquisition

Informal (More Autonomy) Formal (Less Autonomy)

Based on discussions. A “handshake” deal. (And, sometimes a deal even without the handshake, so be careful!) Example: e-mail correspondence Letter that is:

• confirmation of

discussion (if only one party signs) or

• binding or nonbinding

agreement (if countersigned). Usually less formal than a traditional contract. May be either binding or nonbinding. Examples:

• Contract to buy or sell

services

• Creation of a joint

venture (which may create new entity) Formal agreement (most complicated)

Collaboration Agreements (Types)

Collaboration Agreements: Content

• Who?
• What?
• Where?
• When?
• Why?
• How?
• Conflicts/disputes: What is the procedure?
• Liabilities/debts and ability to bind other: Does each party

remain liable for its own liabilities/debts? Can one party bind the other?

• Common reason for collaboration failure is

disagreement/uncertainty re how collaboration will work.

Collaboration Agreements: Some Considerations

• Think about the purpose behind the agreement
• To reduce possibility of misunderstanding and

memory loss?

• To provide legal protection of the org’s

interests?

• To allocate risk and create greater certainty?
• To provide a mechanism for settling disputes?
• Examine your
• Bargaining strength
• Risk tolerance
• Objectives

Collaboration Agreements: Some Considerations (cont.)

• Planning is key; do not skip over;

account for all costs

• Anticipate what could go wrong
• Ensure the activity furthers your tax-

exempt purpose

• Are any third-party consents needed

(e.g., lenders, landlords, gov’t agencies, funding sources)?

• Insurance issues

Collaboration Agreements: Some Considerations (cont.)

• Employment issues
• Careful about forms: May not know

what is missing and may end up with disadvantageous provisions that are worse than having no written agreement at all

• Careful about use of term “partnership”
• Sign only what you understand

Lawyer: Yes or No?

• Complexity of the proposed

collaboration

• Complexity of the organizations

involved

• Amount of money involved
• Amount of risk involved in the

collaboration

• Potential for disputes

Lawyer: Yes or No? (cont.)

• Uncertainty re whether the collaboration’s

activities are “legal” or could jeopardize the tax-exempt status of a collaborator

• Duration of the collaboration
• One-time event
• Ongoing collaboration
• Whether the proposed collaboration involves a

for-profit

• Whether the proposed collaboration involves

creating new entity

Practice: Let’s Try It

• Facts
• Agency A is a nonprofit housing developer.
• Agency B is a nonprofit “senior services” provider.
• Agency A is developing senior housing and would like “senior

services” to be available to its residents.

• Instructions
• Planning Stage (in pairs):
• Your goals, expectations, strengths/weaknesses
• Proposed roles and duties
• What do you bring to the table? Other org?
• Negotiation (groups of 4):
• Step 1: Collaborate or not?
• Step 2: Form of collaboration (structure)?
• Step 3: Type of agreement? Content?

Resources

• Foundation Center’s Nonprofit Collaboration Resources:

http://foundationcenter.org/gainknowledge/collaboration/;jsessionid= KRV5FZ4ZYEVWZLAQBQ4CGXD5AAAACI2F

• Business/Strategic Planning:

http://www.councilofnonprofits.org/strategic-business-planning-for- nonprofits

• Managing Collaboration Risks:

https://www.niac.org/AMSCentral/ResourceDocuments.cfm?var_PageA ction=View&var_ID=63

• Cautions re Partnerships:

http://www.ssireview.org/articles/entry/the_reality_underneath_the_b uzz_of_partnerships/

• Partnership Frameworks:

http://www.acf.hhs.gov/sites/default/files/ocs/partnerships.pdf

• MOUs: http://www.ecomii.com/business/memorandum-of-

understanding and http://www.nonprofitrisk.org/library/enews/2007/enews052307.htm

• Community Builders Network of Metropolitan St. Louis (Collaboration):

http://216.197.104.36/index.php/collaboration/

Resources (cont.)

• Collaborative Agreement Questions:

http://dongriesmannsnonprofitblog.blogspot.com/2009/05/nonprofit- collaborative-or-partnership.html

• Collaboration Resource Guide:

http://www.clevelandsvp.org/attachments/190_Nonprofit%20Collabor ation%20&%20Mergers%20Finding%20the%20Right%20Fit.pdf

• SLU CED Legal Clinic: http://slu.edu/school-of-law-

home/academics/legal-clinics/civil-advocacy-clinics

• Legal Services of Eastern Missouri CED Project:

http://www.lsem.org/Home.aspx?ContentID=339

• Washington University Nonprofits/IP Legal Clinic:

http://law.wustl.edu/clinicaled/pages.aspx?id=6835

• Bar Ass’n of Metropolitan St. Louis (lawyer referrals):

http://www.bamsl.org/displaycommon.cfm?an=1&subarticlenbr=7&ut m_source=site&utm_medium=sidebar- button&utm_campaign=homepage

• Missouri Bar (lawyer referrals): http://www.mobar.org/lrs/clients.htm

Dana M. Malkus Attorney & Assistant Clinical Professor Community & Economic Development Clinic

• St. Louis University School of Law

321 N. Spring Ave., St. Louis, MO 63108 (Note: moving downtown Summer 2013) 314.977.2778 millerdl@slu.edu http://law.slu.edu/