Article at a glance:
Most large US nonprofits operate as federations: legally independent entities that share a mission and a national brand. In recent years, the federation model has come under strain as affiliates competed for funds and squabbled over donors. Many federations can’t get affiliates to agree on ways of evaluating their performance, much less improving it. Meanwhile, controversies at the United Way and the American Red Cross have demonstrated the risk of sharing a brand that is only as trusted as the least trusted affiliate. Has the federation model for nonprofits outgrown its usefulness?
The take-away
The way federations manage themselves needs an overhaul. While the model offers significant advantages to local affiliates, too few of them take advantage of it. The national offices of nonprofit federations can achieve their full potential only by giving affiliates four tangible benefits: a valuable national brand, a reliable system for measuring performance, shared administrative services, and coordinated fund-raising.