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Mergers, Strategic Alliances, and Collaborations: Six Ingredients for Success

Message from Don Crocker, CEO of the Support Center

Once a prohibited utterance in the nonprofit sector – The “M” word (Mergers), is not only becoming more common in conversation, but is also something we are learning more about.  Groups such as the James Irvine Foundation, BoardSource, La Piana Consulting, and others have expanded on early experiences to understand more about strategic restructuring – including mergers, strategic alliances, and collaborations – to enable our sector to embrace options for change.

Why are we now more open to such conversation?  An uncertain and volatile economy, the competitive funding environment, and dramatic cuts in government funding are upon us. The confluence of these trends are spurring a growing number of nonprofits to examine the potential of strategic alliances or mergers with other nonprofits to strengthen their organization’s impact, to sustain critical services to their constituents, or sometimes in more dire circumstances, as the best means of survival!

Although new alliances are taking shape, the conditions for success are often not reviewed.  Those who are helping with organizational assessment and restructuring (like the Support Center, La Piana Consulting, and others) know–from the nonprofits and funders we work with–that there are key predictors of success that go beyond the obvious criteria of a good fit between the two organizations’ programming.  Some of these ingredients include:

  1. Trust. There must be a high degree of trust among both organizations’ leadership–if the leaders do not trust each other, the talks can fall apart quickly.
  2. Prior Experience. When the two organizations have had success in collaborating with one another in the past there will be a higher likelihood that a merger will work.
  3. Communication. Continuous clear and honest communication and openness between the partners is key– the opposite is a real red flag.
  4. Teamwork. If there are strong staff teams that can manage the process, they can play a big role in making a merger or strategic alliance successful–it can make all the difference.
  5. Involve Key Donors. If you have funders who are committed to your organization, don’t be afraid to talk to them about what is not working well. They often can be your best partners in supporting and guiding you towards a new path for your organization.
  6. Don’t Go it Alone. Get competent assistance in the process.  Not just from a consultant who has experience with nonprofit alliances and mergers, but also from the other professionals you may need, such as legal and marketing assistance, etc.

In the current environment, discussing the “M” word and examining restructuring options needs to be a basic element of every organization’s regular assessment and strategic planning process.  As the leaders of nonprofit organizations, we owe it to our clients and the communities we serve.  Please share your thoughts, learning, and experiences with us.

Securing the Social Safety Net: Can We Create a Better Flashlight?

Economic volatility continues its strangle-hold on our daily news – locally, nationally, and globally.  The news is not good – shrinking financial resources; increasing human needs – urging us to consider a different future.  Futurist, Thomas Frey, has said, “Much like walking through a dark forest with a flashlight, the future only comes into focus a short distance in front of us. So how do we create a brighter flashlight?”

Last week the Support Center hosted a conversation among leaders of the nonprofit and philanthropic sector.  The discussion focused on the question “how we will be able to secure an eroding social safety net in our region in the midst of significant government funding cutbacks?”  Our panel – representing the fields of grantmaking, research, advocacy, service, and merger/collaboration, set the stage for what we hope will be an ongoing conversation.  At the Support Center, we think about the “social safety net” as being far more than just simple benefits and entitlements for those who are vulnerable.  We see the safety net as an integrated system of partners – government, philanthropy, nonprofits, and communities – all working together to insure a just, safe, and healthy life for all, including those who are living in poverty and who are the most vulnerable in our neighborhoods.

Spurred by keynote speaker Doug Bauer from the Clark Foundation, panelists agreed that “the current social safety net is not the one we need”.  The economics of the current model do not work – the need has gone up, public resources have gone down, and both will continue to do so.

According to reports from the Fiscal Policy Institute, poverty rose sharply during the recession, increasing by well over one percentage point in New York City, New York State, and in the United States from 2008 to 2010. The official poverty rate is now about 15 percent in the state and 20 percent in New York City.

The human/social cost of high unemployment is the biggest threat today.  It affects everyone, but is concentrated among low income communities.  Individuals receiving food stamps have increased by 70% in last four years – from about 1.1 million to 1.8 million.  The economic outlook is clear–pressures will continue for the foreseeable future, challenging the safety net in ever greater ways.

So the question was posed, “How do we get to the 2.0 Social Safety Net and what might it look like?”  All presenters agreed that we need a different structure, a renewed vision.  Also agreed, it is important that nonprofit leaders –those of us working, day-to-day, trying to deliver these services– take the lead in constructing it. The voices and perspectives of those closest to the needs will be critical to changing the current models.

Panelists and nonprofit leaders in the room offered these thoughts as ways to begin action toward making the changes that will be needed:

  • Advocacy – Our biggest challenge is how we mobilize sector to think in terms of “change” – to really rethink the safety net given limited resources at the government level.  Unemployment, poverty, and homelessness are problems that impact all of us – and we are a country of great wealth that needs to collectively rethink our investment in “caring” for our communities.  We must prepare our leaders, including board members, to be strong advocates.
  • Be Proactive and Expand the Definitions – We have to demand more of ourselves and elected officials. If we’re going to attack poverty and not attack racism and sexism, we might as well not do it. We can’t attack poverty until we address these problems as part of the root cause of poverty.
  • Employment and Entrepreneurship – The human and social cost of high unemployment is the biggest threat today.  It affects everyone, but is concentrated among low income communities.  It’s time for the nonprofit sector to adopt an “entrepreneurial” mindset at all levels, as many of our old models do not work.   There are clearly emerging opportunities for combining services in different ways, collaborating with other organizations, or creating more earned income.
  •  Working Capital – Philanthropists need to think more broadly about the use of their endowments and go beyond grants.  Access to working capital is a confounding issue for many service organizations and is a major obstacle to creating a nimble, efficient system.  Program related investments that free up cash to help organizations manage through cash flow crises are critical.
  • Sectors Working Together – Government, philanthropy, and nonprofits need to collaborate more regularly and more deeply.  This is a real challenge – because we all live in silos.  We can’t get too stuck in our old ways–we need to let go – sometimes it is our identity and autonomy that gets in our own way.  Boards and key leaders need to get beyond the idea that “someone has to give something up” if we collaborate and find ways to create innovative win-win partnerships.  This will take some time, and some pain, but history suggests it can be done.
  • Increased Board Engagement –Board and organizational leaders must be willing to step back from their day to day work and ask hard fundamental questions – Why do we exist? What are we trying to change?  What is our role in this?  While evidence-based outcomes and other metrics are important to nonprofits and their funders, sometimes the strong focus on providing “good outcomes” can inadvertently move nonprofits away from serving the most vulnerable (hardest to turn-around) populations.  Boards can partner with staff to keep mission and service focus clear and consistent.
  • Capacity building – Experience shows that “high touch” capacity building works best—this means funders will need to be more engaged with their grantees around building organizational capacity, understanding organizational life cycles, and determining new and effective organizational structures.  Good capacity building work means more than just giving advice; it means guiding assessment, planning, and helping with implementation to ensure successful outcomes.

So where are we headed from here?   Some funders are already providing funding for nonprofit collaborations.  An example of a fund that was developed specifically for that purpose is the New York City Merger, Acquisition, and Collaboration Fund (NYMAC), a presenter and participant in our conversation.

It is good to know that there is some early thinking and resources being contributed to change, but the question remains “What will our future look like”?  In closing, I offer a few additional quotes from Futurist Thomas Frey to fuel the conversation: “Until now, ours has been a dance with the ordinary”, “We only value that which we struggle to achieve”, and “The past is past, so get over it.”  Let us know your thoughts!

 

 

Don Crocker

CEO

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The Support Center works with grantmakers and nonprofit organizations to effectively manage change including Organization Assessments, Turnarounds, Restructuring and Executive Transitions.

Change – Do We Have a Choice? – Five Key Elements for Managing Change through a “Transitions Management” Approach

Change….  The one constant in our life is change but, despite the relentless charge of change, we never seem to embrace it, do we?

A few years ago, the State Department of Transportation started a comprehensive renovation project on one of the main routes I take to work each day.  The rationale was that the road needed to be widened to reduce congestion and improve safety.  The road was to be closed for 13 months.  Worst of all, this meant I needed to find another Dunkin’ Donuts at which to secure my morning coffee.  I was not happy.  I guess sometimes we just don’t have any say in change.

And now, many of us in the nonprofit and philanthropic sector are faced with huge changes.  Nonprofits, particularly those funded by government are facing significant budget cuts and “competition” for all dollars is increasing daily.  Grantmakers and other donors wonder if their donations are risky investments in organizations that might not be viable in the long-term.  For many of us, there can be growing feelings of resentment, anger and/or fear.   Change…do we have a choice?

William Bridges begins his book Managing Transitions by saying that “It isn’t the changes that do you in, it’s the transitions”.  Change he says is situational; Transition is psychological.  Many of our best nonprofit organizations are going through change (executive turnover, downsizing, merging, closures, new structures) and unfortunately, they are being bashed and bruised by the changes and missing the opportunities available when the people who are experiencing the change are not engaged through the psychological process.

We have discovered five key elements critical to successfully navigating the executive and organizational transitions we facilitate:

1)  Acknowledge Change:  First, it helps to acknowledge change is happening and that individual responses (shock, anger, fear) are natural.  Denying that change is happening will just make the “transition” more painful and will limit exploration of opportunities for a healthy future.  Guided discussion about the changes and potential opportunities are essential.

2)  Recognize loss:  It’s often hard to embrace new beginnings if we don’t recognize and acknowledge the loss resulting from the change.  Expressions of sadness, grief, anger, confusion, and fear often come first, before those impacted can begin to think about new beginnings.

3)  Take Time to Reflect and Plan:  Don’t rush!  Organizational and individual risks are increased by rushing through change.  When a CEO retires or funding is suddenly cut back, there is often a knee-jerk reaction to make the change quickly, without much reflection.  While timely responses are often needed, this rapid knee-jerk response will inevitably lead to bad results, including increased frustration, isolation, anger, and skepticism. Rushing may lead to bad decisions that lose resources and damage the reputation of the organization.  Bridges points out that a thoughtful process can cultivate discovery, optimism, and creativity.  “Interim” solutions can often help the organization to pause in the process of change and make the most of this neutral zone “discovery” period.

4)  Don’t Isolate:  Often when organizational leaders experience unwanted change they withdraw and attempt to hide the changes from staff, community partners, donors, and other investors.  This behavior leads to rumors, misunderstandings, and negatively impacts trust.  It helps to see the change process as a learning and “life cycle” event.  Communicating with and hearing from staff, partners, and investors on how best to navigate the changes can increase commitment and enthusiasm, and relieve some anxiety and worry.

5)  Celebrate the past along with the new beginnings:  New beginnings can bring excitement, but other emotions, too, can arise.  For those most ready to embrace the new, enthusiasm and impatience may set in.  Others may remain skeptical.  It provides perspective to celebrate the history of the organization along with the new beginnings and change.  Such an approach allows those who are impatient to see that there is movement and progress.  Simultaneously, others can see that past efforts are honored and appreciated.

Well, enough said – back to the Department of Transportation and my route to work.  I was angry and resentful for sure – especially when the trip took me an extra twenty minutes each way!  But now, two years down the road, there is some good news.

Even though I hate to admit it, now that the route is wider, more smoothly paved, and better lit, it is indeed a safer, more enjoyable, and even faster route – regularly about 8 – 10 minutes faster; and far less of the once routine one-hour congestion delays!   More importantly, I did find an alternative Dunkin Donuts to fill my short term need and it has now become my favorite!  I wonder if the former Dunkin Donut folks miss me?

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The Support Center works with grantmakers and nonprofit organizations to effectively manage change and transitions, including Executive Transitions , Organization Assessments, Turnarounds, and Restructuring.

Dreaming Spring Training, Mariano Rivera, and…… Interim Executive Directors?

Okay, by now you know I’m a Yankees fan – even you New York Mets and Philadelphia Phillies fans who have vowed never to come to a Support Center event again.  Oh, those early childhood memories at the ballpark!

So, anyway, what do Mariano Rivera and Interim Executive Directors have in common? I want them both on my team!  Watching a few innings of baseball in March always wakes up my senses and helps me to welcome in spring. If only I could be at spring training in sunny Florida!

I always marvel at the precision of the game, a nuance only true fans of the game can appreciate. Not only does baseball have specialists for each position, but also for each situation. Take pitchers for example. We have starters, relievers, and closers. Each has specific skills to move the game forward and position the team to score.  While the purpose and duration of play of the different types of relief pitchers has changed over time, the benefit to their teams is clear-they help stabilize the game and (hopefully) kick-start it back into a positive mode-getting the team back on track to win. Of course, baseball and relief pitchers also make me think about one of our most critical programs here at  the Support Center – Executive Search and Transition Managementt(ESTM) and the role of our relief pitchers-our Interim Executive Directors.

Transitions of nonprofit chief executive officers – whether the position is called Executive Director, President, or CEO, can lead to one of the most challenging periods for a nonprofit.  Funder and staff concerns and community confusion often take the organization off-course and can stall out the success of even the best organizations.

But it doesn’t have to be this way.   When professionally managed, a chief executive transition can be one of the most valuable periods of time in a nonprofit’s life cycle.  Important new approaches and mergers or alliances can be explored, and the board can reconnect with critical stakeholders through the transition process. Increasingly, nonprofit board leaders are choosing ESTM services and the placement of a professional Interim ED to guide the organization through its transition period.  A stronger alternative to traditional search services, ESTM consultants and an Interim ED work to help an organization and its board seek a harmonious ending for the departing CEO and a healthy, focused beginning for the new one.

Similar to a relief pitcher, the Interim ED becomes part of the organization’s team of professionals –working to strengthen a nonprofit during a time of uncertainty.  An Interim ED not only stabilizes the organization through the transition, but also provides the board with the time needed to carefully examine the aspirations and direction of the organization so that the new leader can effectively move the organization forward. With the help of local and national foundations, the Support Center has helped to prepare a large pool of Interim EDs who stand ready to take the mound to help organizations navigate the potentially rough innings of executive transition.

No, I’m sorry, Mariano Rivera is not yet available in our bullpen of Interim EDs! But who knows, he may be available next year for a new career.  Learn more about our Executive Search and Transition Management services here and let me know your thoughts (about either ESTM or baseball).

Here’s to an exciting and fun 2012 season!

Don Crocker

Don Crocker

CEO

dcrocker@supportcenteronline.org

“Sharpen the Saw”: Even My Cat is Learning New Tricks

My wife has now proven to me and my friends that even a pretty old cat can learn new tricks.  Mudpuddle (this is my cat’s name…don’t ask) has recently learned “Stay!”, “Jump!” and other assorted tricks.  I’m sure with this experience of success, my wife now has some “training” plans in store for me.

Actually, more than 20 years ago, as a newly appointed Executive Director of a local community development corporation, I came to the realization that, if I truly wanted to succeed, I needed a place to sharpen my skills and gather with others striving to serve their communities.  That was when I was first introduced to the Support Center.

According to Stephen Covey, in his book The Seven Habits of Highly Effective People, “Sharpen the Saw” means “preserving and enhancing the greatest asset you have–you.  It means having a balanced program for self-renewal in the four areas of your life: physical, social/emotional, mental, and spiritual.”

Now, more than 20 years later, I have the privilege to invite you to “sharpen the saw” here at the Support Center.  As a hub for nonprofit leaders and managers, the Support Center offers the opportunity to connect with like-minded people, refresh your confidence and motivation, and build your expertise through the more than 100 hands-on workshops and events each year designed with you in mind.  There is no other place like the Support Center where you can get away from the day-to-day grind to get some perspective on the important work you are doing and learn ways to succeed more effectively and efficiently.  The Support Center provides a unique opportunity to find and build a peer network that can help you create the energy you need to meet the challenges of the volatile environment within which we work.  Thousands gather here each year to network and learn with us and with each other.

Whether you are looking for in-depth instruction in a subject area such as fundraising, board governance, or nonprofit accounting – or you are hoping to hear about strategic changes from foundation or corporate grantmakers – we have the right experience for you. Choose from half or full day courses, certificate programs, customized training, or attend our forums and panels.  Each facilitator at the Support Center is chosen based on their experience in their field, commitment to creating an open learning environment, and dedication to sharing and passing along their knowledge.  Each forum or panel is created based on the suggestions and requests we receive from you!

Please take a few minutes out of your busy schedule to explore our course and service offerings, and please feel free to contact us if you have any questions about what might be right for you or your staff:

  • Board Development
  • Financial Management – coming in April 
  • Fundraising
  • Marketing & Communications
  • Staff Development
  • Certificate Programs in Fundraising, Management & Supervision, and Executive Leadership
  • Meet the Grantmakers – New Strategies in Grantmaking  Series in New York and New Jersey
  • Personalized services – development of leadership skills through personalized services such as one-on-one executive coaching, or the short- or longer-term use of a consultant to develop a specific professional capacity
  • Custom Training  – designed to meet your organization’s individual needs taught at your site or ours

We look forward to working with you and your organization in 2012.  Please think of us as your hub, your resource for sharpening the saw.

Don Crocker

Don Crocker

CEO

dcrocker@supportcenteronline.org

P.S. Beyond our workshops and forums, we offer a full spectrum of nonprofit change-oriented consulting and executive search and transition services.  Visit us now to learn more!

Nonprofit Mergers & Turnarounds: When Restructuring Makes Sense in the Non Profit Sector

Don Crocker, CEO of the Support Center, talks about mergers, turnarounds and strategic alliances in the nonprofit sector—when it is right and when it is not; what’s involved in getting the process started and what makes a success. This timely and informative recorded interview on Not for Profit eXchange radio – http://bit.ly/vvEEYG – targets a subject that is gaining momentum in this tight economy, but not often talked about.

Categories: Don Crocker, Turnaround

Support Center Expands Executive Search & Change Consulting Services for Area Nonprofits – Grantmakers Contribute to Ensure the Health and Stability of their “Mission-Critical Grantees”

The economy remains volatile and government cuts are upon us.  The needs in our communities are growing and even the strongest nonprofit organizations are struggling to “steady the ship.”  Executive Director and CEO transitions, too, are disrupting the ability of nonprofit organizations to remain effective.

As nonprofit funding changes, community need incDon Crockerreases, and executive directors transition, it makes sense that the most caring and connected foundations and corporations are looking for ways to ensure the health and stability of their own “mission-critical” grantees.  Karen Brown (Support Center Board Member and Fairfield County Community Foundation VP of Programs), in a recent interview in Philanthropy News Digest’s Philantopic said, “We’ve been urging grantees to continue to invest in staff and professional development and not to look at those kinds of investments as frills…funders need to consider supporting these programs in order to help organizations hold the line on their budgets without sacrificing effectiveness.”

Many private and corporate funders are investing in efforts to ensure the health and well-being of the nonprofit groups and communities they care about.  JPMorgan Chase Foundation, the Altman Foundation, and the Prudential Foundation are just three of the many foundations that are demonstrating a real commitment to nonprofit effectiveness and impact, and are partnering in the Support Center’s efforts to guide nonprofit change and transition.

While we know that some of our readers have worked directly with us and have experience with all of these services, we realize that many of you may not be as familiar with our full scope of offerings.  Here is a brief overview:

Executive Search and Transition Management (ESTM)

A change in leadership, whether from a founder, long-time executive director, or a mismatched hire, can be a pivotal time in the life of a nonprofit—presenting an opportunity to examine organizational challenges and make decisions for future directions. Here at the Support Center, we use the proven techniques of Executive Search and Transition Management  to address organizational needs and work to strengthen the whole organization, while also successfully managing the hiring of a new leader. Our three-phase process addresses a nonprofit’s needs through an organizational assessment, facilitates the hiring of the new executive, and guarantees a successful outcome with “on-boarding” consulting for the new leader. Throughout the process, our consultants work hand-in-hand with board members, staff, funders and other stakeholders in the community.

Change Consulting and Turnaround Services

In addition to facing leadership changes, NYC nonprofits—like many others nationwide—have been hit by significant declines in funding in the wake of government shortfalls and the volatile economy. Nonprofits—from arts and culture groups to human service organizations—are undergoing painful reassessments and restructuring, including mergers, acquisitions, collaborations, cutbacks and closings. Adjusting to this new economy means increasing effectiveness and sustainability for many small to mid-sized neighborhood based nonprofit organizations. Increased funding from foundations this year allows us to reach out to more nonprofits and provide critical Change Consulting  services that can help them assess current programs, improve financial management, increase board engagement and fundraising effectiveness, while keeping our fees affordable to NYC-area small and mid-sized nonprofits.

Professional Development and Cohort Learning

Each year we strive to develop the best course offerings, listening to your requests and needs for professional development. As we plan for 2012, increased funding will allow us to expand the range of workshops, tailor them to your time-frames (half-day, full-day and evening offerings), and add more custom programming at affordable rates. In addition, we also will be developing new opportunities for cohort learning. The Trajectory Leadership Group we formed this year has confirmed our belief that cohort learning is an effective means for executive directors and other senior nonprofit professionals to learn new skills and learn from one another in a supportive atmosphere outside of their offices and daily activities.

Find out more about our work and partnerships by visiting us at www.supportcenteronline.org.