Administrative Consolidations and Management Service Organizations

Bill Coy and Vance Yoshida, Senior Associates at La Piana Associates set the framework for these discussions in their article, “Administrative Collaborations, Consolidations, and MSOs,” by first defining nonprofit administration as human resources (e.g., recruiting, personnel policies, and compensation), finance (e.g., accounts payable/receivable, cash management, and forecasting), information technology (e.g., software, database administration, and website management), and other areas (e.g., marketing, office space, and grant-writing). From a macro viewpoint, organizations focus on these functions at three levels: transactional, managerial, and strategic. Coy and Yoshida state organizations seeking to share administrative services have four options available: an administrative collaboration, administrative consolidation, MSO, or external service provider.

Coy and Yoshida describe an administrative consolidation as a more formal agreement than a collaboration that “involves the sharing of specific functions to increase administrative efficiency.” It is a “commitment to continue, for the foreseeable future, shared decision-making power” but does not, however, change the corporate structure of the organizations. Examples may include standardized human resources practices and training, shared accounting systems, shared IT professionals and other key staff, or shared marketing/development staff such as a grant writer.