8/29/2017. Collaboration enhances the capacity of participating organizations for mutual benefit and to achieve a common purpose.
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1 September 6, 2017 Strategic Restructuring for Nonprofit Organizations: Options/Process/Case Examples CALIFORNIA ALLIANCE OF CHILD AND FAMILY SERVICES Bob Harrington, Partner If you want to go fast, go alone If you want to go far, go together. - African Proverb The Multiplier Effect Collaboration enhances the capacity of participating organizations for mutual benefit and to achieve a common purpose. Page 3 1
2 The Collaborative Map Collaboration Alliance Strategic Restructuring Page 4 Collaboration Collaboration Coordinated Action Joint Advocacy Collaborative Learning Network Page 5 Alliance Alliance Administrative Consolidation Fiscal Sponsorship Joint Programming Joint Earned Income Venture Affinity Group Coalition, Consortium, and Association Page 6 2
3 Strategic Restructuring Strategic Restructuring Joint Venture Corporations (including MSOs) Parent-Subsidiary Structure Merger or Acquisition Page 7 Case Study: Joint Programming Ready Set Parent! Case Study: Management Services Organization MACC CommonWealth 3
4 Case Study: Administrative Consolidation The Chattanooga Museums Case Study: Joint Programming Domestic Violence Programs and Federally Qualified Health Centers Success Factors Mission focus Flexibility in pursuing mission Not in an immediate crisis A lack of divisiveness Clarity regarding desired outcomes Positive relations with potential partners Page 12 4
5 Roadblocks Autonomy concerns Lack of trust Self-interest Organizational culture Page 13 The Strategic Restructuring Process Page 14 Self-assessment Motivators Desired outcomes Critical issues Organizational factors or red flags Financial assessment Page 15 5
6 Partner Assessment Level of trust Past experiences Usable skills and assets Cautions and challenges Mission and program compatibility Financial condition Page 16 Negotiation Corporation A Corporation A Board of Directors Board of Directors Decision Tasks: Negotiations Committee Negotiation of Issues Due Diligence Process Implementation Integration Corporation B Corporation B Board of Directors Board of Directors Decision Page 17 Issues to be Negotiated in a Merger Governance Financial Human resources Capital Programmatic Communications Page 18 6
7 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 Page 19 Financial Due Diligence Documents to review: Organizational Tax Insurance Personnel Financial/Funding Capital/Real Estate Others? Page 20 Legal Implementation Vote by boards of directors Finalize Agreement and Plan of Merger (or similar guiding plan) File documents with government agencies Page 21 7
8 Areas to be Integrated Page 22 Cultural Integration Be intentional about the process Maintain two-way communication Celebrate successes Resolve disagreements immediately Make communication/decision-making style explicit Monitor internally and externally Page 23 Integration Pitfalls Mergers do not fail because organizational leaders can t integrate their financial systems or IT Mergers can fail because people tend to hold onto their individual cultures and identity rather than create a new organization. Page 24 8
9 Lessons Learned Page 25 Be Prepared The process will take time People may leave There are both costs and benefits (intermediate and long-term) Reach out to donors, supporters, membership early on Page 26 Success Factors A champion Shared mission Positive experiences with collaboration Board support/encouragement A risk-taking/growth orientation Positive board-executive relations Page 27 9
10 Build Change Management into Culture Change is hard Change creates both excitement and anxiety Talk openly about the needed changes Page 28 Managing a Strategic Restructuring Relationships Trust Mutual Respect Shared Purpose Working Relationship Skills Match Relationships Process External Assessment Self-Assessment Partner Assessment Negotiations Implementation Process Results Results Mission Enhancing Program Strengthening Legally Sound Financially Viable Publicly Supportable Page 29 Questions and Comments Page 30 10
11 Thank you. Page 31 Panelists Joelle Gomez, CEO Children s Home of Stockton Former CEO Women s Center, Youth and Family Services Page 32 Stronger Than Before: Women s Center-Youth & Family Services Building stronger families and a safer community The merger of the Women s Center of San Joaquin County and Family and Youth Services (FAYS) 11
12 Women s Center- Youth & Family Services It is not the strongest species that survives, not the most intelligent, but the most responsive to change -Charles Darwin Why merge at all? What are the benefits? Both agencies are healthy, strong organizations with more than 70 years of combined experience serving the community. Both agencies bring unique skills, strengths and experience to the new organization. FAYS services for runaway and homeless youth and the Women s Center s services for domestic violence and sexual assault survivors are complimentary % of all FAYS clients have been victims of domestic violence or sexual assault. The merger will give clients better access to a wider range of coordinated supportive services. We will have an even stronger platform to advocate for victims of domestic violence and sexual assault, and runaway and homeless youth. Our New Structure 8 sites 4 offices and 4 shelters More than 75 staff/combined board Combined annual budget of $3.6 million Services and shelters for victims of domestic violence and sexual assault Services and shelters for homeless and runaway youth 12
13 Programs and Services Peer Counseling Therapy Support groups Parenting classes Assistance with TROs Shelter Drop-in Center Advocacy & accompaniment Life skills training Job readiness program Reunification 24-hour crisis lines Outreach Prevention education Food & clothing 24-hour hospital response Diverse staff serving our community Women's Center - Youth & Family Services Staff 18% 8% 36% 38% Caucasian Hispanic African American Asian What we ve learned Use consultant to facilitate negotiations process, financial and legal due diligence and merger agreement. Consistent and constant communication is key! New branding resulted in tremendous support from community. The merger was just the beginning of the real work before us! Change is constant 13
14 Challenges Integration of services Integration and development of board and staff Implementation- work plans and deadline Anticipating merger costs Loss of funding from shared funders Human Resources Cross training and education Creating a new organization - a new culture Stronger Than Before Merger announcement at the Women s Center s 32 nd Annual Luncheon in March 2012 Stronger Together Post-merger all staff retreat and team building day July
15 Questions and Comments Page 43 15
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