2D. Fiscal: Strategies for Sustainability – Shared ... · 2D. Fiscal: Strategies for Sustainability – Shared Services, Collaborations and Mergers CAPLAW 2011 National Training
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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 afassett@eoc-suffolk.com
Mr. Joel L. Kaleva, Esq. Partner Crowley Fleck 305 S. 4th Street E Missoula, MT 59801-2701 406-523-3600 jkaleva@crowleyfleck.com
Ms. Renae Oswald-Anderson Director of Project ReDesign MAP for Nonprofits 2314 University Ave W, Suite 28 St. Paul, MN 55114 651-647-1216 roanderson@mapfornonprofits.org
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 2010 2
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.
© MAP for Nonprofits 2010 3
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
© MAP for Nonprofits 2010 4
The Need
Funding cutbacks from all sources
Increasing:
� operational costs
� demand for services
� competition for charitable dollars
� demand for accountability
© MAP for Nonprofits 2010 5
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
© MAP for Nonprofits 2010 7
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
© MAP for Nonprofits 2010 8
---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.
© MAP for Nonprofits 2010 9
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
© MAP for Nonprofits 2010 10
© MAP for Nonprofits 2010 12
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
© MAP for Nonprofits 2010 13
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
© MAP for Nonprofits 2010 14
Functional Systems Integration
• Due Diligence Checklist
• Human Resources Overview
• Merger Costs and Savings Worksheet
© MAP for Nonprofits 2010 15
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
© MAP for Nonprofits 2010 16
Which do you believe is harder for
people- dealing with uncertainty or
adapting to change?
© MAP for Nonprofits 2010 17
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
© MAP for Nonprofits 2010 18
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
© MAP for Nonprofits 2010 19
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”
© MAP for Nonprofits 2010 20
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
© MAP for Nonprofits 2010 21
© MAP for Nonprofits 2010 22
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.
© MAP for Nonprofits 2010 23
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
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�
(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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