October 2020 NEWSLETTER

And the two became one

merging nonprofit organizations

STORY OF TWO SUCCESSFUL MERGERS

ONCE UPON A MERGER

In 2004 I had the opportunity to participate in what ultimately has been viewed by the Houston nonprofit community as a successful merger of two nonprofit organizations. The first part of the process, exploring the foundational basis for a merger, was easy:

• Similar missions

• Similar or complementary programs

There were some difficult conversations about leadership, organizational structure, and financial resources, to name a few, but even these conversations were a breeze compared to the challenge of painstakingly integrating the two organizations, their cultures and practices, into one. Did I, as the newly appointed executive director, make mistakes? Of course. Did I, at least once or twice, wonder whether I could make it work? A resounding “yes”. Some power struggles were inevitable. However, over time, the merger implementation process led to a series of healthy compromises in both organizations. The questions were rarely “who wins and loses” but “how can we better serve the community together rather than separately?”
 
I’ll never forget a conversation I had with one of my board members whose company had been involved in numerous mergers. I asked her, about one-year post merger: “When does it begin to feel normal?” She quickly responded, “At about three years”. She was right. Over the next three years, systems came together, some of the staff and board members changed, and slowly but surely, the merged entity developed its own unique culture. Strong support for the merger from the two staff leaders and both boards was crucial. The leadership of both organizations agreed that merging was the right thing to do for both the clients and the community and we persisted when we hit unsettling bumps in the road. 
 
Given the challenges that nonprofit organizations are navigating from COVID-19 and its impact on revenues and the related downturn in the economy, the topic of mergers is again resurfacing. A 2020 study by the Stanford Social Innovation Review found that nearly one-fourth of nonprofits are exploring some type of partnership with other nonprofit organizations. There are a number of different types of strategic alliances that bring organizations together to strengthen programs, to streamline management, and to reduce confusion in the donor/business/civic communities when multiple organizations have similar missions. Partnerships represent a continuum of possible alignments from merely coordinating program services to legally merging two organizations into one. 
 
Since that first opportunity to work on a merger in 2004, I have had the privilege of serving as a consultant/facilitator to organizations considering mergers. If you are recognizing the need to explore some level of partnership with another organization, consider reaching out to me to explore the situation and consider: (1) the range of strategic alliances, (2) identifying compatible partners, and (3) what’s involved in designing and facilitating a partnership/merger of two nonprofit organizations. Below are some resources on nonprofit mergers that I recommend as you begin to think through whether such a partnership makes sense at this time.  
 
Sources: 
COVID-19’s Impact on Nonprofits’ Revenues, Digitization, and Mergers
Nonprofit Mergers & Alliances: Aligning for the Future
Merger Secrets to Success

Sources:  The Power of Possibility:  Exploring Greater Impact Through Strategic Partnerships, a collaborative project between BoardSource, The Bridgespan Group, LaPiana Consulting, Propel Nonprofits, The Lodestar Foundation, Lyda Hill, and The Patterson Foundation.

Used with permission from The Power of Possibility Initiative partners:  BoardSource, The Bridgespan Group, La Piana Consulting, The Lodestar Foundation, Lyda Hill, Propel Nonprofits, and The Patterson Foundation, with additional support from The Trustees’ Philanthropy Fund of Fidelity Charitable and the Charles Stewart Mott Foundation.

SOMEONE to GUIDE THE SHIP

STEPS TO FINDING THE RIGHT LEADER FOR YOUR NONPROFIT

With Baby Boomers retiring or soon to retire, many nonprofit organizations have or will soon be going through a leadership change. What does your organization’s board need to consider as your organization approaches this time of transition? Executive transition timelines typically include four steps:

1. PLANNING for the succession of the organization’s leader (1-3 years before it happens)

2. PREPARING for the search (4-6 months out)

3. SEARCHING for the best candidate and new executive identified (3-4 months out)

4. ON-BOARDING new executive (first year of executive’s tenure)

While there is much more to managing a successful executive search process, this gives you a sense that a good outcome does take time and planning. If you think that a leadership change is going to occur in the next one to three years, it’s not too early to begin to prepare for your organization’s succession planning process!

Source: Executive Transition Timeline, BoardSource
Used with permission of BoardSource. For more information about BoardSource, visit www.boardsource.org or call 202-349-2500. Content may not be reproduced or used for any purpose other than that which is specifically requested without written permission from BoardSource.