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)

Collaboration Spectrum Decision-making power is shared; new structure may be created. Examples : • Formal joint venture (limited to a certain Organizations compete project or to a certain time period) with each other for funding • Forming a confederation, coalition, or and risk duplication of more formalized network efforts. Cooperation, Dissolution, Strategic Competition Coordination, Merger or Restructuring Collaboration Acquisition Informal Formal Arrangements and relationships with no change in A formal arrangement in organizational structure of participating entities. Can range which two organizations from informal/uncomplicated to more formal/complicated. become a new entity or Examples: one absorbs the other. • 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

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?

Usually less formal than a traditional contract. May be either binding or Example: e-mail correspondence nonbinding . Formal agreement (most complicated) Dissolution, Oral Informal Letter Traditional MOU Merger, or Agreement Writing Agreement Contract Acquisition Informal (More Formal Autonomy) (Less Letter that is: Examples: • confirmation of Autonomy) • Contract to buy or sell Based on discussions. A discussion (if only one services “handshake” deal. (And, party signs) or • Creation of a joint sometimes a deal even • binding or nonbinding venture (which may without the handshake, agreement (if create new entity) so be careful!) countersigned). 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/