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Facing cost pressure, Fieldstone Alliance gets an overhaul and a virtual office

Nonprofit consulting and publishing firm considers new staffing models, revenue streams.

Fieldstone Alliance, a nonprofit consulting and publishing firm, is going through a major restructuring, driven in large part by economic pressures.

The organization recently lost two big contracts and has had to lay off employees, said President Carol Lukas. Staff has dropped from approximately 16 a year ago to 10. In a cost-saving move, its office is going virtual soon and it is rethinking how it contracts with staff.

“You can only tweak revenue and expense so long before you have to start thinking about structural changes,” Lukas said. “To cut back different programs by 10 percent or 15 percent or to cut salaries by 5 percent, those kinds of changes only take you so far. … We need a more sustainable business model.”

Lukas already has heard rumors that Fieldstone is going out of business. They are not true, she said. She puts the organizational best foot forward, saying the change will be a creative, positive process that will help Fieldstone have a greater impact in the nonprofit sector.

Lukas herself is stepping down Oct. 31. (She had planned to leave next spring, but moved the timing up six months.) “It seemed like a good time to make way for new leadership that really has the energy and the vision to go into this re-creation process,” she said.

Rethinking the employer-employee relationship
Fieldstone had a $4.3 million budget in 2008.  Because of the economy and the loss of contracts, its budget is down 20 to 25 percent. It gets money through earned income, both book sales and consulting work with nonprofit organizations. It also gets foundation grants to run specific projects — and that money in particular has dropped.

Most of Fieldstone’s consultants travel, rarely using the office, Lukas said. That means it pays for space it doesn’t need. So at the end of this month, Fieldstone will give up its St. Paul office. Staff will work from their own homes or offices, connecting online. That will save $100,000 a year in rent. (Fieldstone will keep a small office presence at a site yet to be determined.)

In its effort to get “a little leaner and more agile,” Fieldstone also is looking at different staffing models. One possibility is hiring its consultants as independent contractors. Another option is continuing to have consultants on staff, but paying them less base salary and paying a commission based on revenue they generate. The organization benefits by not carrying as much overhead costs, Lukas said. The employees benefit because they could make more than they used to make.

New revenue
Fieldstone also is looking for new ways to make money. It is seeking investors to add a digital publishing system. It wouldn’t give up print, but it would supplement it with greater on-line access.

It’s also trying to develop new products. For instance, under work with the Kellogg Foundation, Fieldstone developed a College of Consultants, [PDF] a national, vetted database of consultants available to work with nonprofits on capacity building. That database has been restricted to Kellogg grantees. Fieldstone plans to make it widely available to other grant makers on a subscription basis.

“Projects like that will become central in our new business model,” Lukas said.

Fieldstone’s leaders have talked about restructuring for more than a year, she said. They had been too busy on a day-to-day basis to do much about it. They are now taking the time, stepping back and rethinking.

Fieldstone spun off of the Amherst Wilder Foundation in 2005.

In other nonprofit news:

The Children’s Defense Fund-Minnesota recently issued its annual KIDS COUNT data book. Among its findings, 140,000 Minnesota children lived in poverty in 2008. That is more than a 20 percent increase since 2000. For the full report, go here.

• As part of the Clean Water, Land and Legacy Amendment passed in 2008, the Minnesota Historical Society is launching a grant program to preserve Minnesota’s history and cultural heritage. Over the next two years, it will award $6.75 million statewide for projects of enduring value. The deadline for first grant application is Oct. 30. More here.

• Catherine Jordan, the first president and CEO of AchieveMpls, is leaving the organization to work for the Bush Foundation on leadership and community engagement. AchieveMpls is a nonprofit organization dedicated to supporting Minneapolis students.