Can’t We Skip the Contract?

Our nonprofit wants to collaborate with another organization on an event.  We trust each other and have agreed on who’s doing what. We don’t need a contract, do we?

If you care about the success of your collaboration, then take it seriously. Make use of the trust between you to clarify the work you plan to do together, ownership and use of materials, financial commitments, and the possibility of things not working out.  These items, put together in writing, are essentially a contract. So, yes — you need one, and here’s why.

A Dog’s Chance

Imagine sitting down with three of your closest friends and asking everyone to draw a dog. Everyone knows what a dog looks like, right? But you draw a Collie, one friend draws a Yellow Lab, and the other friend draws a creature that looks like it just blew through a Q-Tip factory.

Well, if a small group of friends sitting together in a room make entirely different assumptions on the details of what a “dog” is, there’s little chance that the folks at the other organization will share your organization’s vision and understanding of the details of your collaboration.

Now’s the Time

Now is the perfect time to confirm that you have the same assumptions — when you’re feeling great about each other and before the work begins.  Now is moment to address any conflicting assumptions you may have and keep your relationship on a sound footing.

Talking through the details of your collaboration and sharing concerns—including the worst “what if” scenarios —may actually increase the trust between you.  Your discussion may bring up important issues that neither of you had considered.  And the process of working through the issues now may illuminate how each of you manages negotiations, which can help you develop joint problem-solving strategies for the future.

Put Some Teeth into It

A contract will set out the details and expectations to which you’ve agreed. It doesn’t have to be impenetrable. A good lawyer will make sure it is clear and easy to understand. A certain amount of “legalese” may be necessary to protect you, but contrary to popular belief, carefully considered legalese can make a real difference. It can put teeth into the terms of the contract, hold parties accountable to each other, and describe how risks will be shared.

Your relationship is worth it. With a well-crafted contract, you’ll end up with a puppy you both can love.

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Ellen Lubell provides guidance to nonprofit leaders on a wide variety of transactions, as well as risk management, governance, fundraising, and practices to preserve tax-exempt status and assure the proper expenditure of resources.