Mission + Strategy = Social Value

Nonprofit Mergers: New Donor Quality Metric? No. Carolina Story May Indicate So

A very interesting story popped up in my Google search engine dated Sept. 28, 2009 from the Charlotte Observer. A county commission of very prestigious government and foundation institutions including the United Way of Central Carolinas and the Foundation for the Carolinas, have formed to identify strategies for addressing the funding losses for the  Charlotte-Mecklenberg community. There simply isn't enough money to support the same number of nonprofits today as there was in the past; one estimate is that funding is down $171M for nonprofits. The most popular suggestion from Charlotte residents and commission members is for nonprofits to merge; "There are absolutely too many nonprofits in Charlotte," says Jennifer Roberts who chairs the commission. With area unemployment at 12%, local experts expect donations to continue to decline. "Given where we are in our community, and where we are in our society, it does make sense for the nonprofit sector to look at ways it can restructure itself, County Manager Harry Jones says. "As a donor, I'm going to want to know that an agency I'm giving money to is not duplicating." Is this the beginning of donors looking for evidence of collaboration strategy in a nonprofit's portfolio as a quality metric? Will the evidence of multiple nonprofits doing the same kinds of work in the same community turn off donors and make them feel like it's a duplication of effort? Time will tell.

News Round-Up on Nonprofit Strategic Re-Structuring from Summer 2009

Here are the news and other stories about nonprofit collaborations, mostly mergers, that I pulled off the Internet from all over the country.

Merging Administrative Functions, posted on the site: Butts in the Seats, Musings on Practical Solutions for Arts Organizations, July 21, 2009. The posting links four separate articles written by the Nonprofit Law Blog related to back office collaborations. You may have seen these postings elsewhere, they are very good.

Goodwill Merger Art for our sake at the Kimmel Center tonight, Philadelphia City Paper, July 23, 2009. Article about a joint fundraising event to celebrate a new merger between Centro Nuevo Creacion and Lutheran Settlement House.

Charlotte Shelters to Merge, WFAE 90.7FM, story aired July 24, 2009. Radio story text regarding two shelters, Uptown Men's Shelter and Emergency Winter Shelter which are merging after operating separately for 20 years. A move even the shelter clients say makes perfect sense.

OPINION: Putting Clients over turf is bold first step, The Charlotte Observer - McClatchey Tribune Information Services, July 26, 2009. An article about the merger of two shelters in Charlotte, NC.

To Respond to Downturn, Two Museums Join Forces, New York Times, July 24, 2009. The story describes the impact of the economy on arts organizations and strategies they are devising to deliver programming including 6 New York museums which have formed an alliance to allow any of their members to have visiting privileges for all of their establishments.

Pending merger could trigger another blood bank war, Orlando Sentinel, July 29, 2009. An article discussing the impact of a potential merger between two blood banks and its potential to create a "blood war," in the market.

Merger with Arts Group Will Preserve Ticket Subsidy Program, New York Times, July 31, 2009. Article about the merger of two arts organizations in NYC: Arts Connection and High 5 Tickets to the Arts.

Group faces big change, goerie.com, Erie Times News, Aug. 2, 2009. Two refugee relief organizations, The International Institute of Erie is merging with its national affiliate the U.S. Committee for Refugees and Immigrants, based in Arlington, Va.

Youth Villages, Georgia-based Inner Harbour to merge, Memphis Business Journal, Aug. 3, 2009. Two Georgia-based nonprofits providing residential and social services announced their decision to merge by the end of 2009.

Dayton United Way rejects Cincy merger, Business Courier, Aug. 4, 2009. The United Way of Greater Dayton rejected the opportunity to merge with the United Way of Greater Cincinnati and the United Fund of Dearborn and Ohio counties in southeastern Indiana.

Nonprofits and Corporate Counsel partner in Merger Success, The Metropolitan Corporate Counsel, Aug. 5, 2009. An article about free legal services from a nonprofit called Pro Bono Partnership, based in the states of Connecticut, New Jersey, and New York, which assisted with nonprofit merger transactional services.

County Habitat moves to Baltimore, The Capital Hometown Annapolis.com. Two Maryland Habitat chapters, Arundel Habitat for Humanity and Chesapeake Habitat for Humanity merged on July 1st.

New North American recycling group forming, PlasticsNews.com, Aug. 4, 2009. An article describing the creation of a new national recycling coalition, RONA, created in reaction to the merger of the National Recycling Coalition and Keep America Beautiful.

New Recycling Org. Launches, Kab/NRC Merger Pending, Earth911.com, Aug. 6, 2009. An article on the launch of a new, national recycling coalition in reaction to the decision by Keep America Beautiful and the National Recycling Coalition to merge.

Lending Merger is Sensible, My SA Business, Aug. 15, 2009. An article discussing the merger of three small, community lending institutions in San Antonio, Texas.

Merger aims for 'friendlier' housing plan, The Salem News, Aug. 15, 2009. Two local housing organizations have decided to merge to maximize their development capacity in Salem, MA.

Finances prodding nonprofit mergers, Mankato Free Press.com, Aug. 18, 2009. An article about three nonprofit women leaders involved in promoting mergers in the sector.

Boys and Girls Town part of merger, News-Leader.com, Springfield, Missouri, Aug. 28, 2009. The Springfield Boys and Girls Town of Missouri has announced a merger with another youth agency.

Crain's Chicago Business: Nonprofit Mergers - Not Happening That Much

The topic of nonprofit mergers, and whether or not they are happening to the degree they have predicted in the sector, was discussed in an article in Crain's Chicago Business in the Aug. 24th issue. Yours truly weighed in saying "not so much," which is what it feels like. That unscientific response is more or less corroborated by the demand for collaboration dollars at the Chicago Community Trust, our local community foundation which provides much of the philanthropic support for nonprofit mergers in our sector, and also, a survey by the Nonprofit Finance Fund found that only 5% of the respondents said that they planned to seek a merger, or already had merged with another nonprofit. The reporter got a couple things wrong in my quotes. First, I believe one of the problems with nonprofits seeking mergers and collaborations is the lack of knowledge about collaborations; one way to address this is to create dedicated funding sources that can help educate grantees and walk them through the process of becoming familiar with the strategies. In communities where such dedicated grant programs exist, there is more collaboration activity going on. Second, I don't believe we should wipe out the entire nonprofit sector; but given the opportunity to think creatively in our current circumstances, we might do things differently, including not maintain the status quo. If you'd like to read the article, go here.

How to Legally Dissolve a Nonprofit

Occasionally I get a phone call from people wondering what the process is for shutting down a nonprofit. Believe it or not, there are forms you need to fill out with the IRS and your state to dissolve a nonprofit organization. I recently ran across a great blog posting by by someone named Don Griesman, who wrote a detailed explanation about what you have to do when ending the operations of a nonprofit organization or foundation in all the various situations: mergers, transferring assets, or simply shutting the door. Don also provides hyper links to IRS forms and sites that you might need to refer to for dissolving a nonprofit. Go here for the posting.

"Round-Up of the Week's News on Nonprofit Collaborations"

At the suggestion of a fellow blogger and friend, Celeste Wroblewski at studio 501c, I am going to add a new feature to my site: a news round-up. Every day google alert sends me news stories about nonprofit mergers, partnerships, and all things related to nonprofit strategic re-structuring. I have far more material than I have the space (or time) to write about. So instead of trashing the stories, I am going to send you the links to the more interesting alerts and let you decide which ones to read. I will still post blog entries about the evens I find interesting, too. If you like, let me know what you think of this new feature by sending me a comment. Also, let me know if you found a story particularly interesting, and I'll check it out. Happy reading!

"Thinking like Businesses," by Hartfordbusiness.com, an editorial supporting the decision by some nonprofits to start considering mergers. An overview of some notable examples in the state of Connecticut.

"Anxiety on the rise at area's nonprofits," by Warren Wolfe, StarTribune.com, Minneapolis-St. Paul, MN. An overview of merger activity in the Minneapolis-St. Paul area due to the decline in finances for nonprofits.

"Area nonprofits feel urge to merge," by Laura Crimaldi, BostonHerald.com. An article covering a report by the Boston Foundation detailing the financial woes of the Boston nonprofit sector and their efforts to get organizations to consider mergers.

"Nonprofit Mergers: Putting the Best Foot Forward," by Scott Russell at the Minn.Post.com; an overview of Minnesota mergers and one merger in particular between COMPAS and Young Audiences of Minnesota. The article goes on to talk about a free publication on mergers, among other things interesting.

"Merge Ahead," by Bruce Boyd, On Philanthropy. A balanced opinion piece about nonprofit mergers by a consultant in the field, which begins by citing a recent study by the Nonprofit Finance Fund on nonprofit collaboration activity.

"Social services agencies ACHIEVA and Arc of Westmoreland County merge," by Kris B. Mamula, Pittsburgh Business Times. An article covering the decision by two notable social service agencies in the Pittsburgh, Pennslyvania community, to merge.

"Nonprofits Forced to Think Differently," by the Seacoastonline.com. An editorial lauding the decision by two Northampton-based nonprofit organizations to merge: Seacoast Visiting Nurse Association and the Massachusetts-based Home Health VNA.

"Literacy Nonprofits Merge" by Pam Allen, The Business Review (Albany). An article about two nonprofit literacy organizations in new York state which decided to merge: Literacy Volunteers of America/Mohawk/Hudson and Literacy NENY.

"A Merger that will Assist the Area's Jobless," by the News & Advance, Lynchberg, Va. An opinion piece supporting the potential merger of two nonprofit organizations providing services to unemployed individuals in Central Virginia: New Lands Jobs and Lynchberg Community Action Group.

Learning from the Nonprofit Merger Trail Blazers: An Interview with Debbie Hinde, CEO of Vital Bridges

As I introduce people to the concept of nonprofit mergers and collaborations, it's hard to remember that for some people, these concepts have been around a long time. Take Debbie Hinde and Vital Bridges in Chicago, Illinois, for example. I recently was re-introduced to Debbie when she was part of a group of HIV/AIDS social service agencies meeting to hear a presentation from me at the AIDS Foundation of Chicago about strategic re-structuring. Debbie could have given the talk and in fact, I asked her at one point in the training to tell her story.

It was 2002 and the AIDS service sector in Chicago was greatly fragmented with over 200 nonprofit agencies, a great many of whom were providing one or two services to a small clientele who were then forced to go from organization to organization to get all their needs met. Many of these small nonprofits, each with their own overhead operations, were financially unstable and inefficient. At the same time, the funding environment for AIDS services had changed dramatically due to the downturn in the economy at that time and shrinking private dollars due to the perception that the disease was now a manageable problem.

Due to these conditions, three HIV/AIDS service organizations decided to merge together: Open Hand Chicago (the organization Debbie was leading at the time); Community Response, Inc.; and the HIV Coalition, Inc., or HIVCO. The goals of the merger were twofold: to expand and enhance client services; and to build financial strength and stability for one nonprofit. The result became Vital Bridges, the combined entity with a budge tof $4.6M, serving a clientele of 2,400 people in metro Chicago living with HIV and AIDS.

Vital Bridges has gone on to improve services to their clients including expanding the availability of fresh fruit and meat throughout their distirbution area, launching 32 units of permanent and transitional housing, and adding mental health therapy to their portfolio of services. Case Managers are now available to clients in a one-stop-shop format in their grocery center sites when people pick up food. And there is now one lean, efficient, financially strong administration running what was once three separate nonprofit agencies.

The Bridgespan study on nonprofit mergers, M&A: Not Just aTool for Tough Times, makes the point that the rate of nonprofit mergers is roughly the same (1.5%) as it is for the for-profit sector (1.7%). People are shocked to learn the nonprofit rate is a shigh as the for-profit sector. That's because a lot of small to medium-size nonprofit organizations are very quietly merging without a lot of fanfare, but with great effect. Vital Bridges is one example of the quiet leaders in the nonprofit sector which some time ago started using strategic re-structuring tools to expand mission for their clients. And seven years later, this merger is still having impact today.

A Podcast on Nonprofit Mergers for your Next Board Meeting

Do you have trouble getting your board members to attend a governance training? Then here is a great solution for you. The Board Star podcasting program On Being Board is designed for busy board members.  This on-line training service provides almost 100 governance topics in 8 to 10 minute brief podcasts which are designed to be played and discussed at board meetings. The podcasts can be downloaded for free via I-Tunes so you really have no excuse not to use this service.  The podcasts are produced by The Nonprofit Management Fund, based in Milwaukee, Wisconsin headed by Pat Wyzbinski, and are funded by the Northwestern Mutual Foundation . Board Star's mission is to strengthen nonprofit boards and On Being Board is only one of their programs. Recently, yours truly was taped for broadcast on the topic of Nonprofit Strategic Re-Structuring. Take a listen here to my podcast and even better, download it for your next board meeting and discuss whether or not strategic re-structuring should be in your nonprofit's future. And while you're at it,  join Board Star and start getting their downloads via e-mail.

Poem for the First Friday of the Month

The Journey
by Mary Oliver

One day you finally knew
what you had to do, and began,
though the voices around you
kept shouting
their bad advice --
though the whole house
began to tremble
and you felt the old tug
at your ankles.
"Mend my life!"
each voice cried.
But you didn't stop.

You knew what you had to do,

though the wind pried

with its stiff fingers
at the very foundations,
though their melancholy
was terrible.
It was already late
enough, and a wild night,
and the road full of fallen
branches and stones.
But little by little,
as you left their voices behind,
the stars began to burn
through the sheets of clouds,
and there was a new voice
which you slowly
recognized as your own,
that you kept company
as you strode deeper and deeper
into the world,
determined to do
the only thing you could do --
determined to save
the only life you could save.

Chicago Tribune Article on Nonprofit Mergers - Minding Your Business: Rivals Become Collaborators to Help Clients, Save Money

The Tribune wrote a piece in the business section yesterday about some local activity about nonprofit mergers and partnerships. In case you missed it, you can go here to link to the article.  The piece mentions BOC, the Back Office Collaborative, and the Alliance to End Homelessness in Suburban Cook County. Oh, and also I get a few quotes in, as well.

An Inspiration to the Nonprofit Sector: The JCC and YMCA of Greater Toledo Area, Collaboration Prize Co-Winners!

On March 5th, the winners of The Collaboration Prize - the national competition with a cash award of $250,000 for the best nonprofit collaboration in the U.S. - were at long last announced by the Lodestar Foundation and AIM (the Arizona-Indiana-Michigan) Alliance. Appropriately, it was a tie! The blue ribbon panel of judges selected the YMCA & JCC of Greater Toledo and the Dallas Museum of Nature and Science to share first place.

One of the most unique mergers I have ever seen is the YMCA & JCC of Greater Toledo. This collaboration of one Jewish nonprofit with a Christian-based nonprofit was truly inspiring to me. I asked Abby Suckow from the United Jewish Council/JCC and Connie Torrey, from the YMCA of Greater Toledo, the current professional leaders of this collaboration effort, if they wold tell us how it came to be.

Mission Plus Strategy: How did this collaboration effort get started?

Abby: We had a long history of working together or in parallel ways. In 1999 we began by doing joint programming and membership. The YMCA expressed interest in building a new facility with a presence in Sylvania, Ohio but we already had a campus with 44 acres, a pool, and a  lot of what the YMCA was looking for in a facility. We realized there was an opportunity to work together to share what we had. We could provide them with a site and space, and enhance our services to our community; the YMCA could save the dollars and the effort from a capital campaign to build a brand new community center.

Connie: We went in steps beginning with an affiliation agreement in 1999, sharing offices, and doing joint programming. We dated, then engaged, and finally married. In January 2004, we signed the actual integraiton agreement.

Mission Plus Strategy: Can you describe your collaboration - is this a merger?

Abby: Technically, we call this an "integration," however it walks and talks like a merger. The JCC of Sylvania, Ohio (outside of Toledo, Ohio), is now a branch of the metropolitan YMCA of Toledo. We have a local board with both Jewish and non-Jewish representation and representation on corporate committees and boards of the metro YMCA board.

Mission Plus Strategy: Did the merger change who you serve?

Connie: The merger allowed each of our agencies to serve who they serve best, drawing from the strengths of each agency. The YMCA could handle all of the recreation activities, and daycare programs, where we are strong.

Abby: And because the YMCA was handling all the recreation and fitness programs, that freed us up to completely focus on Jewish community programming and increase our services from cradle to grave. We now have two synagogues on the campus where we had one before. The United Jewish Council has built a beautiful state of the art facility where the YMCA offers expanded services for children including daycare, and the Jewish Family Service has relocated to the campus.

Mission Plus Strategy: What message do you think your selection as co-winner of the Collaboraiton Prize sends to the nonprofit sector?

Abby: The message is that two faith-based organizations that are well-respected, are honest with each other, communicate openly, and trust each other, can do anything. We were very forutnate that our lay and professional leadership at the time shared all of these qualities plus the vision to see it through.

Mission Plus Strategy: What advice do you want to pass on to other nonprofits considering nonprofit mergers or partnerships?

Abby: it takes a lot of respect, camaraderie, honesty, and open communication to do this. With those things in place, you can build on that. Without the leadership of Joel Beren, former CEO of the United Jewish Council/JCC, Robert Alexander, President and CEO of the YMCA & JCC of Greater Toledo, Paul Schlatter, Chairman of the YMCA & JCC Corporate Board and the many other volunteers from both organizations, this would never have come to fruition.

Connie: With common goals, you can head down the same path. Trust is huge.

I want to congratulate YMCA and JCC of Greater Toledo for their exceptional collaboration and showing us that it's the possibilities we need to concentrate on, not the differences between us. Readers who are interested in finding out more information about this merger can go here. Look for more information about The Collaboration Prize winners to appear in my blog.