Advice on Nonprofit Mergers

September 14, 2010 at 12:20 pm Leave a comment

In today’s environment of limited resources, executive directors and boards are turning their attention to ensuring that their organizations not only excel at service delivery but are sustainable over time. New research in Canada offers a look at various ways nonprofits can restructure and form alliances to address present and future challenges.

Whether set in motion by a sudden change in the status quo, pressure from funders, growing demand, or strategic plans that point to the need for more efficient and effective tactics, organizations are seeking better ways to organize themselves and leverage their available resources.

In 2008, Strategic Leverage Partners was commissioned by Big Brothers Big Sisters of Canada to conduct research into various models for ensuring sustainability, paying particular attention to the means by which successful organizations have extended their services and broadened their client base. The findings of that research are contained in a new Canadian report, titled Local Business Structures within a Federated Model, and a companion Resource Supplement will be made available soon. Some findings from this study are highlighted below.

A Viable Option

Today, agencies are more willing to talk about mergers and consider structural change as a means of meeting goals, and some agencies are actively looking at opportunities to partner and/or merge with others, the report notes. There are numerous approaches to scaling out that allow varying degrees of autonomy and require varying degrees of integration. They range from loose alliances to those that require a change in organizational structure, such as mergers. They run the gamut from arrangements that involve a single community to those that extend to a region or province and involve affiliates of one related organization or many non-related organizations. On the other hand, some of the most successful organizations stay small and create impact by aligning themselves with likeminded, long term partners.

Implementing alliances and integrations is not without its challenges, though. Most of these challenges are around human issues as organizations struggle with the fear of losing what they see as their uniqueness and the cost to their organizations in terms of time, energy, and resources. Organizations need to consider how ready they are for change, whether they have the resources necessary to support the level of change they envision, whether the change will be not only well received but supported by their stakeholders, and the risks and potential rewards involved.

Oftentimes, organizations have found that acquiring resources for scaling out is very different from acquiring resources for their original programs or services. As they look to the rewards, organizations also have to consider the downside to the community, the client, and the organization’s reputation if things do not go as planned and find the best way to balance risk with reward.

Key Ingredients for Successful Mergers or Restructuring

In speaking with people who have gone through major transformations, the three key ingredients to a successful transformation are: collaboration, communication and planning, with an over-riding imperative to keep a focus on the mission.

Focus on the mission. Researchers heard during almost every interview the importance of keeping the mission front and center. It was invariably the answer when interviewees were asked what got them through the difficult times that are part and parcel of any large scale transformation. The individuals that lead a transformation must have a passion for the mission and vision and be willing to put his or her aspirations aside for the sake of the mission.

Collaboration. It is important to collaborate rather than impose. There are many stakeholders to consider and obtaining their buy-in up front will help to ease the transition from one structure to another. Inclusion is an important aspect of collaboration. When people are more involved, they more readily become part of the transformation. These same people should then be included in the celebration when the transformation has been successfully completed. Involve the boards, get their support and keep them in the loop. Also, be open and reassuring to staff and keep funders at the table.

Communication. Communication is tremendously important and a communication plan should be part of the execution plan for any change you are considering. Poor communication will allow rumors to run rampant. You want to assure people that there are no hidden agendas so be transparent and honest. If you give people the right information, they more often than not will make the right decision. It is also important to plan how communication will continue after the restructuring is completed. Bring someone on board to work on communication if necessary.

Planning. There is a need not only for a strategic plan but a business plan in which you quantify objectives before going forward. Keep a close view of what is sustainable in both the short and long term. Ensure that the realities of a satellite or branch office are well researched and that a solid business plan is put in place for developing it.

Source here.

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