Like many best practices from the for-profit world, clustering is one that would greatly benefit those in the nonprofit sector. Think, North Carolina’s Research Triangle, one of the earliest examples. Created in 1959, the region now boasts 11 world-leading, technology-based clusters, offering a critical mass of companies, leading-edge research from some of the world’s top research universities and private labs, business support, and specialty services that help cluster companies move to the next level.
Another example given by the Charitable Program Clustering in Canada, published by Lund University School of Economics and Management, is the film cluster in Hollywood, comprised of everything from actors, writers, film producers, make‐up artists, animators, and others.
You might even consider strip malls a retail cluster – sharing real estate, utilities, advertising expenses, parking spaces, etc.
In the simplest terms, clusters are groups of similar or connected companies located in close geographical proximity to each other.
It’s a business model easily transferrable, and highly beneficial to the nonprofit sector. The Lund University uses the example of three organizations in the social sector; one providing an after-school drop-in program for at-risk youth, another organization which pairs at-risk youth with adult volunteers as part of a mentorship program, and a third organization which organizes camping trips and outdoor activities several times a year, also targeted towards at-risk youth.
None of these programs disrupts the other, and it could be most beneficial for youth to participate in all three programs.
The main difference in for-profit clustering versus nonprofit clustering is for-profits cluster primarily to impact their profitability, whether through shared resources, productivity, or innovation; while the primary motivation for nonprofits to cluster is to more holistically address constituents’ needs. And clustering can improve accessibility to programs. That is an important aspect of service provision, since many services deal with economically challenged, disabled, or immobile populations.
The nonprofit finance and accounting experts here at Abila predict we’ll see more clustering in the nonprofit sector in the coming year and beyond.
In our 2017 Nonprofit Finance and Accounting Predictions, we foresee nonprofit organizations will band together to share resources, overhead, and personnel to serve a common demographic. Additionally, many will focus on specialization in a particular area or service versus considering expansion.
We encourage nonprofit leaders to look at other nonprofits with similar missions in your local or regional area to determine if joint events, working space, personnel, etc. might make sense and help reduce costs and increase awareness and effectiveness.