2d. fiscal: strategies for sustainability – shared ... · 2d. fiscal: strategies for...

2D. Fiscal: Strategies for Sustainability – Shared Services, Collaborations and Mergers

CAPLAW 2011 National Training Conference

Thursday, June 16, 2011 8:30 a.m. - 10 a.m.

Minneapolis, MN

Mr. Adrian Fassett President & CEO EOC of Suffolk County, Inc. 31 West Main Street, Suite 300 Patchogue, NY 11772 [email protected]

Mr. Joel L. Kaleva, Esq. Partner Crowley Fleck 305 S. 4th Street E Missoula, MT 59801-2701 406-523-3600 [email protected]

Ms. Renae Oswald-Anderson Director of Project ReDesign MAP for Nonprofits 2314 University Ave W, Suite 28 St. Paul, MN 55114 651-647-1216 [email protected]

Mr. Gale F. Hennessy, CCAP (Workshop Monitor) Executive Director Southern New Hampshire Services CAPLAW Treasurer

Handouts: 1. Oswald-Anderson PowerPoint Slides 2. Oswald-Anderson Sample Merger Due Diligence Handout

© MAP for Nonprofits 2010 1

Strategies for Sustainability –

Shared Services, Collaborations and Mergers

CAPLAW National Training Conference

June 16, 2011


MAP for Nonprofits

� A 30-year-old nonprofit organization founded by Twin Cities area corporations and community leaders to unleash the power of nonprofit organizations through effective management.

� Supporting nonprofit organizations in the exploration and implementation of mergers, program transfers, joint ventures, or parent-subsidiary relationships.


Our Objectives Today

� Learn about the different forms of realignment and partnership

� Learn about the critical factors that need to be addressed by board and leadership staff

� Learn about the importance of best practice


The Need

Funding cutbacks from all sources

Increasing:

� operational costs

� demand for services

� competition for charitable dollars

� demand for accountability


The Opportunity

� Nonprofits are beginning to view mergers and other forms of realignment as strategic decisions to expand programmatic or geographic scope, while strengthening their competitive position.

Potential Benefits

� Improve service sustainability

� Use funding more effectively

� Increase stability

� Increase capacity

� Acquire expertise

� “Back room”efficiencies

� “Front room”efficiencies

�Staff retention and morale

�Community visibility and fundraising


Collaboration Highlights

�Collaboration or realignment is the means, not the end.

�Weigh the pros and cons carefully against the goal of the collaboration to come up with a “Go – No Go”decision.

�Mission - Money - Merger


---Contract or MOU

__Change in corporate structure

Definitions

�Merger: Previously separate organizations completely combine program, administrative, and governance functions.

�Program Transfer: One organization spins off or transfers administration of one or more of its programs to another organization.


Definitions cont…

� Joint Venture Corporation: An integration that includes the creation of a new organization. Partner organizations share governance of the new organization.

�Parent-Subsidiary: An integration of some administrative functions and programmatic services. The identity of the original organization remains intact.-Definitions in part from www.lapiana.org



Project ReDesign’sRealignment Model

�Step-by-Step Process–Initial Assessment with Board Chair/Executive Director

–Leadership Team

–Joint Committee

�Common Understandings–Organizational Name

–Governing Structure

–Staffing and Management


Organizational Realignment Survey

� The Organizational Realignment Survey is a face-to-face interview tool designed to assess organizational readiness, and organizational capacity.

Board Attitudes Toward

Organizational Realignment

�Board members must see realignment as an opportunity

�The decision must be strategic- not simply operational

� It must be board driven and mission compatible


Functional Systems Integration

• Due Diligence Checklist

• Human Resources Overview

• Merger Costs and Savings Worksheet


Pitfalls, Potholes and Bumps� No clear understanding of your agency’s needs

� Selecting the wrong partner

� Underestimating cultural differences

� Assuming everything worth knowing is known

� Insufficient attention to a communication strategy

� Giving answers you don’t have

� Reassuring staff around change

� Allowing staff to become distracted

� Losing momentum


Which do you believe is harder for

people- dealing with uncertainty or

adapting to change?


Cultural Collision

�Pay attention to the people issues

�Growing pains

� Loss of team play

� Impact to productivity

�Day to day management challenges-who is on first

�Communication is the key


Getting to Know the Other

Organization�Create new teams- including an integration team

�Assemble a communications working group

�Create a board integration plan

�Focus on mission: program and services integration; staff, interns, and volunteers


Continuing positive, productive

work in the community�Use the merger as an opportunity for growth- help others focus on mission

�Review and reflect on lessons learned

�Continually invest in board and staff development

“Keep the best, leave the rest”


Moving Forward: Managing the

Early Integration Process

� Leader’s role in change management

�Communicate often!!!

�The process takes time- we all adapt to change differently



Best Practices

� Create a clear vision of the new organization.

� Pay attention to organizational culture and integration issues.

� Strong board and staff leadership is a must.

� Deal with key issues early and directly.


Best Practices

� Use a structured realignment model with a defined decision making process

� Anticipate cost in time and dollars to complete the process

� Involve outside experienced neutral party

� Develop a communications plan

��

�

(Org 1) and (Org 2)

Merger Due Diligence (Date)

�

Timeline: Month xx – Month xx

Item Requested Org 1 Org 2 Complete

Finance

3 years of Audits

Form 990

Current Financial Statements and Budget

Fund Development

Fundraising Plans

Foundation and Corporation Donor List/History

Government Grants List

Sampling of Current Proposals

2010 Grant Submissions and Results

Individual Donor Summary List – Sorted by amounts in

categories with counts & three year history

Organizational/Program/Governance

Organizational Chart

History & Commitment of collaborative partners

Bylaws

Review of key programs, performance outcomes and intended

results

Conversation about culture/program/merger details

Board of Directors-roster, governance and committee structure

Personnel/Administration

Provide documentation of staff salaries/benefit plans

Provide Personnel Manual/Handbook for review

Meet with key staff of each organization

Create joint staffing plan

Understand staffing changes

Timeline: Month xx – Month xx

Initial Real Estate Assessment

Provide written overview of real estate

Property assessment and/or valuation

Provide audit and current financials for real estate

Host tour of site(s)

Real Estate Assessment

Fund Development

Submit joint proposals for merger integration funding

Legal

Make decision on legal counsel

Create joint merger work plan and timeline

Make decisions on legal structure, governance, advisory roles

Stakeholder Conversations

Auditor

Funders and key donors

Community Partners

Merger Progress and Status Check

Other Items:

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