Strategic Restructuring for Nonprofit Organizations. Conference

Transcription

1 Strategic Restructuring for Nonprofit Organizations Cal / Neva, Region IX, Annual Conference April 18, 2012 Cal/Neva, Region IX, RPIC Annual with Bob Harrington Conference Partner Cal/Neva, Region IX, RPIC Annual Conference 5900 Hollis Street, Suite N Emeryville, CA

2 Agenda Overview of Strategic Restructuring Research on Collaborations The Strategic Restructuring Process Case Studies La Piana Consulting

3 Introductions La Piana Consulting

4 Today s Nonprofit Challenges La Piana Consulting

5 Economic pressure drives interest in nonprofit collaboration Funding Shortage 2 miles Caution Competitor s Ahead Merge Here

6 Nonprofits compete for more than just funding. La Piana Consulting

7 Compete or Collaborate?

8 Corporate Example: Lead the market and inspire people. La Piana Consulting

9 Corporate Example: Partner with others to improve your success. La Piana Consulting

10 Nonprofit Example: Lead the sector and inspire people. La Piana Consulting

11 Case Study: Shared Fund Development AIDS/LifeCycle San Francisco AIDS Foundation Los Angeles Gay & Lesbian Center

12 Overview of Strategic Restructuring What is Strategic Restructuring? The Partnership Matrix Case Studies La Piana Consulting

13 What is Strategic Restructuring? Continuum of partnership options for nonprofits Use of partnerships to more effectively achieve an organization s mission Different from collaboration: change in the locus of control Valuable tool for nonprofit leaders La Piana Consulting

14 The Partnership Matrix See Handout Collaboration Information sharing Program coordination Joint planning Administrative Consolidation Contracting for services Exchanging services Sharing services Joint Programming Single focus or program Multi-focus or program Integrated system Parent/Subsidiary Corporation Management Services Organization Joint Venture Corporation Corporate Merger/ Acquisition Greater Autonomy Greater Integration Contract or MOU Change in Corporate Structure No permanent organizational commitment Decision-making power remains w/ individual organizations Involves a commitment for the future Decision-making power is shared or transferred Is agreement-driven Involves changes to corporate control and/or structure, including creation and/or dissolution of one or more organizations Collaboration Strategic Alliance Corporate Integration Collaboration La Piana Consulting 2011 Strategic Restructuring 14

15 Why Strategic Restructuring? Strategic Restructuring Trends and Research Critical Success Factors Reasons to Consider Collaboration Roadblocks to Strategic Restructuring La Piana Consulting

16 Reasons Why Nonprofits Consider Strategic Restructuring Economics Pursue New Opportunities Build Capacity Greater Impact Greater Access to Funding Increase Efficiency and Reduce Costs La Piana Consulting

17 Current Trends in Strategic Restructuring SR as a competitive strategy Increased interest and activity across sectors Dramatic increase in mental health and social services Significant increase in interest among national organizations Increased interest in MSOs and administrative consolidation La Piana Consulting

18 Collaboration and Strategic Restructuring by Field 2008 Data* 176 nonprofit collaborations, alliances and mergers *2010 Collaboration Prize database, the Lodestar Foundation 18

19 Why Do Nonprofits Consider Collaboration? 2008 Data 19

20 Case Studies La Piana Consulting

21 Administrative Consolidation Chattanooga Museums See Handout La Piana Consulting

22 Case Study: Joint Programming Ready Set Parent! See Handout La Piana Consulting

23 Case Study: Merger Crittenton Women s Union See Handout La Piana Consulting

24 Eight-Party Environmental Exploration La Piana Consulting

25 Critical Success Factors Alliance and Integration Study Staff/board member championed the alliance (80%) Positive past experiences with collaboration (74%) Board support/encouragement (73%) Organization risk-taking/growth orientation (70%) Positive board-executive relations (64%) Source: Strategic Restructuring for Nonprofit Organizations, Kohm, La Piana, La Piana Consulting

26 Other Success Factors Mission focus Flexibility in pursuing mission Clarity regarding desired outcomes Positive relations with potential partners La Piana Consulting

27 Roadblocks to Strategic Restructuring Autonomy concerns Lack of trust Self-interest Organizational culture La Piana Consulting

28 The Strategic Restructuring Process Assessment Negotiation Implementation La Piana Consulting

29 Non Merger vs. Merger Major Difference Each organization continues to operate as a separate entity with only selected services, operations and programs provided by the partnership. La Piana Consulting

30 Non Merger vs. Merger Major Challenge Determining what will and will not be provided by the partnership Determining who will perform what tasks Coordinating shared activities among different organizational culture La Piana Consulting

31 The Strategic Restructuring Process Assessment La Piana Consulting

32 Self-Assessment Motivators Desired outcomes Critical issues Organizational factors or red flags Financial assessment La Piana Consulting

33 Additional Self Assessment for Sharing Services What could help you to achieve your mission that you do not have access to now? Staff capacity and expertise Services needed by your clients Resources Infrastructure La Piana Consulting

34 Partner Assessment Level of trust Past experiences Usable skills and assets Cautions and challenges Mission and program compatibility and complementarities Financial condition La Piana Consulting

35 Identifying Organizational Matches Organizations with the similarities and differences in Mission and vision Constituents served Types of programs Funding sources Strengths and Weaknesses La Piana Consulting

36 Joining Forces for Greater Impact Which organizations can help you fill your major gaps Provide skills and expertise to increase your operating capacity Provide complementary services needed by your clients Make you more efficient Allow you to seize on major opportunities Give you access to additional resources La Piana Consulting

37 The Strategic Restructuring Process Negotiation La Piana Consulting

38 The Negotiations Process See Handout Corporation A Board of Directors Recommendation Corporation A Board of Directors Negotiations Joint Merger Negotiations Committee Recommendation Decision Joint Legal Counsel Integration Merger Corporation B Board of Directors Process Steps Corporation B Board of Directors Identify Issues Due Diligence Process Negotiate all issues Record agreements Communicate progress to constituents Determine potential problems Disclose information Analyze 38

39 Issues to be Negotiated in a Merger Governance Financial Human resources Capital Programmatic Communications See Handout La Piana Consulting

40 Due Diligence See Handout Documents to review: Organizational Tax Insurance Personnel Financial/Funding Capital/Real Estate Others? La Piana Consulting

41 Financial Impact and Analysis Financial Comparison Statement of Financial Position Statement of Activities Analysis of financial health Human Resource Comparison Budget Development Projection for combined budget Cost/savings analysis Donor Comparison La Piana Consulting

42 Non Merger Analysis Cost/Benefit Analysis Implementation Plan

43 The Strategic Restructuring Process Implementation La Piana Consulting

44 Integration See Handout Areas to be integrated: Culture Board of Directors Management Staff Program Communications and Marketing Systems Finance Fundraising Human Resources Technology Facilities La Piana Consulting

45 Why Integration Can Fail Integration does not fail because organizational leaders can t integrate financial systems or IT. Integration fails because people tend to hold on to their individual cultures and identity and fail to create a new organization. La Piana Consulting

46 Cultural Integration Intentional process Specific events, opportunities, times to reflect Respect the time needed to move through this process Maintain open two-way communication Celebrate small and large successes Resolve disagreements/problems immediately Determine communication and decision making style early Monitor internally and externally La Piana Consulting

47 Key Success Factors Trust Joint Decision-Making Shared Culture Board Engagement Good Facilitation and Process Sustainable Structure La Piana Consulting

48 Understanding Trust Openness Reliability Integrity Benevolence Competence Copyright Xcelle, Inc

49 Joint Decision-Making.

50 Building a Shared Culture

51 Ongoing Board Engagement

52 Good Facilitation and Process

53 Sustainable Structure

54 Resources Foundation Center Collaboration Prize Database La Piana Consulting Strategic Restructuring La Piana Consulting

55 Questions & Discussion La Piana Consulting

56 Thank You Contact Bob at For more information, please visit La Piana Consulting