Tag Archives: Nonprofit organization

Nonprofit Merger and Collaboration: Open the Discussion

bvu

Post by BVU Staff:  Brian Broadbent, President & CEO

Two-and-a-half years ago Cleveland-based Business Volunteers Unlimited (BVU) and Akron-based Center for Nonprofit Excellence (CNE) merged into one organization, BVU: The Center for Nonprofit Excellence.  Looking back, this was a positive step for our organizations due to the strengths of each.  Although the merger process was not easy, we are enjoying the fruits of a vision led by our boards.  The CNE board reached out to BVU’s board to get the ball rolling.  A small task force of both boards and senior staff drove the process by openly discussing any roadblocks.  Because of its success, we have been asked to speak on the subject and help other organizations through the process.  Many community leaders want to see mergers happen but sadly they are a rarity.

Why are boards and staff resistant to explore options?  The Chronicle of Philanthropy published an article last month, “Mergers Might Happen More Often If Nonprofits Focused on Workers’ Needs,” authored by Katie Smith Milway and Maria Orozco.  This article gives valuable insights to what we have seen.  While the Great Recession of 2011 led corporations to pursue mergers at a fast pace, the nonprofit world did not follow suit.  They cite two facts: 1.) Few organizations exist to make matches between prospects, and 2.) Little money is available to ensure that the senior staff have financial incentives in that they may lose their jobs.  In 2009, Denise Zeman, President & CEO, St. Luke’s Foundation, and Deborah Vesy, President & CEO, Deaconess Foundation, invited 80 nonprofits in Northeast Ohio to discuss the spectrum of collaborations.  They were concerned about the decreasing availability of dollars from funders and the need to consider alternatives, one of which is mergers. These foundations offered to provide consulting support to nonprofits interested in exploring collaborations. The foundations’ leadership opened dialogue on a sensitive topic which resulted in three mergers and one consolidation.  However, since then it has been quiet.

Why the unwillingness to open this type of discussion?  Is it the loss of leadership roles for board and staff?  The daunting amount of work? Anxiety in negotiating with funders to prevent cuts in funding when two entities are combined with no loss of services?  Founders’ (board and staff) lack of flexibility? Name, mission, and branding of the new entity?  All are emotionally charged issues.  An unwanted outcome is that mergers could be reactive due to a depletion of cash reserves and lack of capacity — rather than being a proactive step.

In the next 10 years, hundreds of baby boomer nonprofit chief executives will retire.  This is an opportunity for new leadership to consider a merger or collaboration.  When conducting strategic reviews, we must always ask the question, “Are there better ways to advance our mission by working with another organization?  If so, what are the possibilities in aligning ourselves more effectively?”    It is up to the board and chief executive to determine if it a merger or collaboration is warranted. Remember that the act of an initial investigation does not equal commitment to moving forward.

The Foundation Center's nonprofit collaboration resource page provides a wealth of information on nonprofit mergers, joint programming, and other forms of collaboration.

The Foundation Center’s nonprofit collaboration resource  provides a wealth of information on nonprofit mergers, joint programming, and other forms of collaboration.

Considering a merger or collaboration?  Where do you start? Best practice is to look at complementary organizations serving different geographies or finding a continuum of services that could be expanded with the same constituency, with both leading to savings in administrative costs.  There are three stages of review.

1.  Feasibility – looking at the ‘fit’ of mission, service offerings, board structure, staff organization, geographic reach and culture.

2.  Due diligence – financial sustainability, HR policies and benefits, by-laws, etc. This is where the attorneys and accountants need to be involved.

3. Pre and post-merger integration – all of the steps that help the board and staff to integrate.

BVU and CNE addressed 66 integration steps.  Although daunting at the time, our merged organization has supported us in growing and delivering on our mission.  A valued, but unanticipated, outcome has been the respect of the community.

Get the Governance Right – It Matters!

Post by BVU Staff:  Elizabeth Voudouris, Executive Vice President

Governance = Strong Nonprofit BoardOne key element of a healthy nonprofit organization is a strong board.  A strong board:

1. Can clearly identify its work and its role for a particular nonprofit at any point in time.

2. Is comprised of people who bring the relevant skills, expertise, diversity, networks and passion to get the job done.

3. Doesn’t just happen. It requires a tremendous amount of attention, creativity, strategy and patience.

Through our work with hundreds of nonprofit boards each year, we see that the strongest boards continue to develop and evolve good governance practices in order to provide relevant leadership.

Strong boards:

  • Focus on the best way to achieve the mission.  A crisis nursery developed a strategic plan that included a significant expansion project to serve more children and keep more families together. The success of the plan was dependent on using the strong marketing and business background of the CEO together with the board, whose duties were to expand networks and visibility of the organization in the broader community. The board also provided sound oversight for the growing programs and finances.
  • Concentrate on the larger opportunities and challenges facing the organization, and allow staff to manage the day to day operations.   A board identified and pursued potential strategic partners to ensure that their mission was preserved; they formed a strategic alliance with a similar organization, and eventually they merged.   Board members with the relevant skills and expertise led this process and ensured their good work continued.
  • Understand the relationship between board and staff, and the significance of a positive and healthy partnership.   Establish structures and practices to work effectively together.  Monthly communications from the chief executive to board members, annual individual meetings to help board members identify new ways to engage with the organization, constructive and thoughtful annual performance reviews, and open and transparent communications to build a culture of trust.
  • Plan for the board’s future.  The board develops annual succession plans and is always grooming future leaders.  Future leaders serve as committee chairs so that they can demonstrate their leadership to the board and staff, learn more about an important aspect of the organization, and determine if they have the time and/or interest to move into leadership.
  • Build committee structures that utilize board and staff time effectively.  Meaningful work is accomplished in strong working committees.  Strong working committees have an effective committee chair, strong staff support, annual calendar of meeting dates, annual priorities, and relevant agendas and publish minutes for the full board to view.  Strong committees are comprised of people who bring relevant experience, expertise, networks and diversity to the work of the committee.
  • Ensure that there is a viable business model and financial systems in place.  If this is not already in place, consider engaging a pro bono consultant.   BVU engaged a pro bono consultant to help a local nonprofit, and the consultant restructured all financial systems and reports, and developed a business model to sustain the organization’s diverse programs.  The pro bono consultant worked closely with the chief executive and the board, and eventually joined the board. This project gave the nonprofit the ability to attract larger grants and sustain programs that meet the needs in the community.
  • Prepare carefully for board and committee meetings.  Agendas and materials go out 4-7 days in advance.  Board meetings do not consist exclusively of presentations by committee chairs or staff, but instead are used to engage board members in meaningful discussions around topics that are relevant to the mission and vision.  Board members leave these meetings feeling informed, engaged, and confident that they are vital contributors to the future of the organization.
  • Regard each board seat as precious. Written board member expectations are clear to all current and future board members.  Board members are held accountable to those expectations annually.  Board member terms are not renewed automatically, but considered carefully based on the changing needs of the organization and interests of the board member.

There is no magic bullet or “one size fits all” solution for stronger boards.  BVU’s work with nonprofits over the years has given us great insight into effective practices and policies that can help strengthen an organization.  Strong boards take work, but by staying focused on your mission, the work of your board, and ensuring that you have the right board members sitting around the table,  your nonprofit can position itself to navigate today’s challenges and leverage future opportunities.

Be a Superhero – Think Pro Bono

Post by BVU Staff:  Judy Tobin, Director, Leadership Development

super hero

It is the start of the day and time to make all that magic happen again. You know that you do great work, you are appreciated and you actually enjoy your job, but at times you may, as we all do, struggle with finding inspiration for your work– day after day. I like to run after a long day at work, and recently an old (some of you may think ancient) song streamed into my ear phones. Although the beat was perfect for running, it almost made me stop in my tracks. In their song, Do it Again, The Kinks sing the following lyrics: “And you think today Is going to be better, change the world and do it again. Give it all up and start all over, you say you will but you don’t know when… Day after day I get up and say com on and do it again…” It made me think. What one thing will I do today that is different, interesting and positive compared with what I did yesterday? Many people find inspiration in helping others. Pro bono volunteerism is one way to feel good and share your area of expertise. The week of October 20th is Pro Bono Week. Taproot Foundation is leading many pro bono providers during this week to educate and inspire individuals and organizations to use pro bono services. Pro bono, which means for the public good, has been around for a long time – but it has been on the rise in the last few years! Nonprofit organizations are in great need of various types of expertise, in the form of volunteer consulting, to help sustain and grow their organizations to meet community needs. Business professionals, retirees and college students are jumping on the pro bono band wagon to find a different level of volunteerism. Typical pro bono engagements may be helping a nonprofit develop a technology road map, marketing plan or business plan, or even coaching a nonprofit executive. Engagements such as these require expertise in the areas of finance, marketing, IT, human resources, architecture and legal. Most projects are defined with a beginning and end in mind. WhatWorkersWant_InfoGraphic_800pxMany studies are showing that organizations that offer volunteer opportunities for their employees have greater retention rates and report higher levels of employee satisfaction. Likewise, many job seekers, particularly younger generations, are attracted to employers who make community engagement a company-wide priority. According to the 2011 Deloitte Volunteer IMPACT Survey millennials who volunteer with their organizations are twice as likely to rate their corporate culture as very positive compared to those who do not volunteer. Net Impact’s Talent Report: What Workers Want in 2012 states that they surveyed individuals who spanned the generations from students to baby boomers and found that workers with societal contributions at work reported a higher level of satisfaction at work (49%) compared to those who did not have volunteer opportunities through work (29%). Net Impact suggests that for job seekers, there are non-negotiable attributes (salary, location) and there are differentiators, such as the organization’s position on community engagement. Often times it’s differentiators, such as this, that will set employers apart, allowing them to attract and retain top talent. So, tomorrow when you wake up to “do it all over again” think about it from a different angle. Is there a nonprofit out there that could use your type of expertise? Where can you make an impact using your skills and expertise? To reference an REM song, which is still old but maybe not as ancient as the Kinks, put a new kind of inspiration into your work and be a Superman (or woman)!

Without a Succession Plan, The Mission of Your Organization is in Jeopardy

Post by BVU Staff: Brian Broadbent, President & CEO

succession

What is succession planning, and why does your organization need it?  Succession Planning is  “replacement planning” for key staff roles in your organization. Succession planning for nonprofits is routinely overlooked and yet a vital HR process.  So, why is it often overlooked?

Nonprofit boards often don’t want to consider losing their outstanding chief executive. Also, there may be reluctance on the part of the chief executive (especially if he or she is the founder) to think about transitioning leadership of the organization to someone else.  Whatever the reason, in the end, often neither the board nor the chief executive address it.  However, the day will eventually come when the chief executive retires or resigns and then the scramble will be on to fill the void.

A study sponsored by Washington’s Eugene and Agnes E. Meyer Foundation found that 66% of chief executives are planning to leave their job within 5 years.  Only 17% reported that their organization had a written succession plan.  Ironically, 33% of chief executives believe that their nonprofit board will hire the right successor when they leave.  I recently spoke with a chief executive who is adamant that he will not prepare a succession plan because he is fearful that addressing his succession might hasten his departure.  Bad answer!

Why should your organization prepare a succession plan?

  1. The mission of the organization is in jeopardy without thoughtful leadership transitions. Strong leadership is a critical component of an organization’s success or failure. The board must be prepared for the inevitable.
  2. The board needs time to choose a successor with not only the right leadership capabilities, but also someone that will fit into the culture of the organization. A broad list of candidates should be considered in advance of a transition. Boards have a responsibility to find the best candidate and conduct a thoughtful ‘non-urgent’ review. They need to be comfortable that no stone is unturned and that internal and external candidates are considered.
  3. Internal candidates need time to develop. My personal bias is to give a person who is already employed at an organization the opportunity to grow professionally for a couple of years. Statistics show that nonprofits chose an internal candidate only 40% of the time because boards fear they don’t have the fundraising or financial review expertise. Nonprofits that commit to succession planning give their current staffs better opportunities for advancement.
  4. Thoughtful community connections need to be developed with organizational staff beyond the chief executive.  I have seen organizations where all of the key donor and foundation relationships reside solely with the chief executive. If the chief executive leaves, the organization may suffer a reduction in funding until the next chief executive builds donor and funder confidence.

At BVU: The Center for Nonprofit Excellence, we recommend a succession plan that addresses all of the key leadership positions with candidates for both short-term and long-term succession as well as a process to implement the plan with time for professional development. Sorting this out early prepares your staff and board for orderly transitions.  Succession plans should be prepared for key staff that have deep institutional knowledge and/or are in complex leadership roles.

Don’t put off addressing this critical process.  It is vital for your organization and helpful for your funders, staff and board to know you are prepared. And most importantly, consider the consequences of not putting your organization in the best possible position to serve those that depend on you.