My organization funds a charity to carry out programs that serve both our missions. We have been giving core support plus project funding, some of it multi-year, for about ten years now. Our priorities have changed and their programs are no longer a fit. I have to stop funding them, but how do I ease the pain?

This situation involves both a long-term partnership and a contract.

The partnership

You have a deep and lengthy relationship based on a common cause, and presumably a good record of collaborating toward that cause. While you have the money, they have the skills, experience, reputation, client base and/or whatever other attributes caused your organization to choose them in the first place, and stick with them. Your name is linked to theirs in the community, so whatever happens will affect how people perceive both organizations.

You will likely implement a much more ethical change if you think of them as equal partners. Once you do that, you will quickly see that you have to engage them in discussions and mutual decision-making. A unilateral decision about whether and how to wind down the relationship would be unethical. Based on your question, your organization has not, in fact, decided to end their funding. It has decided to end funding to the type of programs they have been delivering. That decision leaves a number of options on the table.

The contract

Is there a signed contract? Even if you have to find it in long-term storage, look for it now. Any good contract will contain terms, conditions and procedures – mutually agreed upon at the time – for how to terminate the contract. Those contract clauses become your legal minimum standard for how to act now. The initial contract has probably been amended by addendums and subsequent actions, such as a letter pledging multi-year funding. Even an oral conversation pledging multi-year funding is a contract, and your organization cannot end the funding prematurely unless your organization itself has no monies at all to distribute. Its change in priorities will have to be phased in after it meets its legal obligations.

The process

I think your first step is to communicate your new strategic plan and your commitment to meet with them and discuss options. The new priorities should not be coming as a complete surprise since, surely, you consulted with such a good partner during the planning. Also, whatever driving forces cause your organization to change direction may be affecting the charity as well. Unless the reasons for change are entirely internal to your organization, the charity should be aware of the situation through its own environmental scanning and strategic thinking.

What options can be on the table once you have eliminated an abrupt end to funding as too unethical to consider? The first and most obvious is changing together. You could fund research and development of new programs that meet the new priorities and continue to serve the common cause. The charity may need funding for skills development and other capacity building changes, but that may be a more effective use of your funds than trying to establish new partnerships. This charity has proven its ability to deliver results and be accountable. If the charity is not willing or able to change in the direction of your new priorities, then you must respect its autonomy and constraints. Have a dialogue about what might happen to its programs. If they are still needed in the community, perhaps you can help them find another organization that would take over the funding. Calls from a major funder, giving them positive referrals, could open doors that the charity might be unable to open, or even find, for itself.

Separately, you might also be able to provide short-term funding or expertise to help make the programs more self-sufficient. For example, a new web-based system of program registrations might both grow the programs and reduce the labour costs of intake.

As you know, it is much more difficult for a charity to replace core funding than project funding. If the charity will have to close its doors, would that affect your organization’s thinking? You can take the question back to your organization. At minimum, you need to phase in the reduction if at all possible and provide whatever support you can.

The future

Ending the funding need not end the relationship, if you handle the situation with respect, honesty, transparency and mutual understanding. You may still make a common cause on public policy issues, or within community collaborations. The charity can also give your organization positive word of mouth, encouraging charities that can serve your new priorities to submit proposals. If you treat one charity badly, the word will spread, and charities will not be willing to make the effort to form a partnership with you. Proposals and relationship building take time, especially time at the senior level, and they cannot afford to waste resources.

Overall, since you desire to be ethical, strive to maintain the same standards of conduct that have guided the partnership throughout, and end on a high note. Remember, the next round of priority-setting at the two organizations might bring them back into alignment. If no bridges have been burned, a new partnership will be easy to negotiate.

Since 1992, Jane Garthson has dedicated her consulting and training business to creating better futures for our communities and organizations through values-based leadership. She is a respected international voice on governance, strategic thinking and ethics. Jane can be reached at jane@garthsonleadership.ca.

To submit a dilemma for a future column, or to comment on a previous one, please contact editor@charityvillage.com. For paid professional advice about an urgent or complex situation, contact Jane directly.

Disclaimer: Advice and recommendations are based on limited information provided and should be used as a guideline only. Neither the author nor CharityVillage.com make any warranty, express or implied, or assume any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.