TPF was initially interested in exploring how La Piana might provide training and education focused on strategic restructuring to both Foundation staff and the nonprofit and funder communities in the area. That work began in April of 2010. Almost immediately, TPF fielded several requests for financial support for assessment and exploration, including requests from two local community foundations and two disability service organizations – both were interested in assessing the potential for partnership. Thanks to support from TPF’s Collaborative Restructuring Initiative (or CRI, officially launched in the spring of 2010) La Piana worked closely with both groups as they did so. As a result of their explorations, the organizations learned a lot about themselves and the two community foundations have identified a way they can support and strengthen community-wide philanthropy.

The Patterson Foundation’s interest was not limited to providing educational opportunities and financial support, however. Upon learning about our consultant training programs, Jacobs and CRI Initiative Manager Pam Truitt attended a one-day introductory training in Fort Wayne, Indiana. That session, sponsored by the Foellinger Foundation, covered the fundamentals of consulting to organizations exploring or negotiating collaborative restructuring arrangements. Several months later, Truitt participated in the second phase of our program – a three-day intensive combining and extended role-play with case studies and in-depth discussions around contracting, the negotiations process, human resources, external communications, and implementation and integration. TPF realized that building local capacity among consultants was critical to its long-term success, and decided to sponsor a series of trainings in its own region – and then make available ongoing education and support, including mentoring, for consultants who choose to make the facilitation of collaborative restructuring efforts part of their practice. As Truitt said in her blog after the three-day intensive:

As Initiative Manager, I have gone through the training and emphatically state that, at least in the beginning, I could not do this work alone. In addition to learning and being skillful in the technical aspects…consultants must be effective facilitators, understand how to deal with difficult personalities, handle icebergs that invariably surface, guide discussions when appropriate and keep the process moving without favoring one organization over the other. If Wonder Woman were facilitating a nonprofit merger, she would need help!

TPF is also connecting with national funders in the collaboration space, such as the Lodestar Foundation, The Forbes Funds, and The Community Foundation for Greater Atlanta, to learn and share information.

Over the past two years our relationship with TPF has evolved into a true partnership – one that is collaborative, productive, and extremely rewarding. We continue to work with TPF staff to understand and address the specific needs of their community, providing workshops, training, consulting, facilitation, and mentoring to nonprofits and local consultants alike. As a result of TPF’s commitment and our work together, more Florida nonprofits are aware of and actively exploring options for collaborative restructuring – and able to draw on local resources, both financial and technical, as they do so.

But many nonprofits are so accustomed to working in adverse conditions – doing more with less, making compromises, and inhabiting a reality in which the stretch goal is to be “sustainable” rather than to truly thrive – that they may be desensitized to what urgency really feels like. Like the proverbial frog in the pan of boiling water, these organizations have adapted so well to an increasingly hostile environment that perhaps the impetus to do something about it comes too late.

Take strategic restructuring. It is encouraging that partnerships are now viewed as a positive strategic choice rather than an option of last resort, but the flip side is that we now see more nonprofits coming to the table with the view that collaboration is “nice, but not necessary.” Many of these are on solid enough footing to continue working on their own, but fail to recognize that this also makes them better positioned to engage in restructuring and more attractive to potential partner organizations. Lacking a sense of urgency, they may hesitate to own the process or really invest in moving it along. The risk here is that the window of opportunity to proactively choose a collaborative strategy rather than being compelled to it may not be open for long. Should they find themselves facing a real crisis, they may wish they had acted sooner.

Succession planning is another good example. Five or six years ago, reports like “The Leadership Deficit” touched off a sense of real urgency across the sector. The Boomers are retiring! Who will be left to lead our organizations? The mass exodus didn’t exactly manifest as predicted, as we all now know, but how many nonprofits have taken advantage of the reprieve as an an opportunity to engage in recruiting talent and developing leadership for when the day does come – as it surely will – when new leaders must take the helm?

Nonprofits face an increasingly complex set of challenges and opportunities, from major demographic shifts to competition from for-profit providers to political pressures and global economic uncertainty. The water’s getting warmer.

Do you feel the heat? Is it time to make a leap?

As the facilitator of this merger (and a former executive director with experience in behavioral health), the most compelling outcome was the creation of a seamless service delivery system to address the needs of clients in a more holistic way. By unifying services to address substance abuse addictions, mental illness, homelessness, and to provide job training and primary health services, this merger will help to ensure that client needs do not slip through the cracks of a fragmented delivery system.

In the mainstream dialogue about nonprofit mergers, the focus is often on efficiency and cost-savings, but ultimately these alliances must make sense from a mission perspective: How can services be integrated and provided in a more effective manner? What will payers – in this case the City and County Department of Public Health – find attractive for contracting?

The landscape of services in San Francisco is fragmented, with many separate organizations providing numerous different services addressing specific client needs.  However, in most cases, they are not comprehensive, integrated services. The merger of Haight Ashbury Free Clinics and Walden House creates a more seamless approach, such that clients do not have to go in search of services from multiple entities to get the care they need.

AbilityFirst is a Southern California nonprofit serving people with developmental disabilities.   They came to La Piana Consulting at the height of the Great Recession in 2009 in order to think about strategies for responding to economic change.  Our Real-Time Strategic Planning (RTSP) process was a perfect fit for their needs because they wanted to know how to make good decisions in the face of change, and RTSP focuses on creating a Strategy Screen—or list of criteria—to guide decision making.

The challenge: the state of California provided approximately 50% of AbilityFirst’s funding either directly or indirectly—and the state was in the throes of a major budget crisis.  The last state budget process had resulted in significant cuts to state funded services, and the prospect for additional major cuts in coming years was certain.  AbilityFirst knew they had to be prepared to survive these cuts.

Over a period of two months we used the RTSP process with a committee of board members and senior managers to develop critical elements of the Strategy Screen and to analyze information about other providers in the field.

For AbilityFirst, the process focused extensively on identifying the organization’s competitive advantages and using that as primary criteria to guide decision making.  These competitive advantages included specialized facilities for both camping and after school programs that no one else could match, as well as a significant financial reserve.

On a sunny winter day in a meeting room overlooking the Santa Monica beach, the full board of directors gathered for a planning retreat.  The specific agenda was to confirm the Strategy Screen that had been developed by the RTSP committee, then apply that screen to the Big Question facing AbilityFirst: which programs would receive priority protection as funding diminished?

The board quickly approved the Strategy Screen and systematically applied the tool to consider the organization’s ten programs.  The discussion was focused, but rich in details that staff would later use in executing on the board’s decisions.  By the end of the day, the board had identified two programs as not core to fulfilling the organization’s mission.  The staff had its marching orders: consider how to shed these programs over time in a responsible way.

Over the next six months, one of the two programs was easily transferred to another agency, ensuring that clients received ongoing services.  The second involves complex and long-term financial and legal agreements and could not be eliminated in the short term.  That said, the organization continues to negotiate a possible transfer of the program to another nonprofit specializing in the field.

The State of California continued to face major budget challenges in the 2010-11 and 2011-12 fiscal years, resulting in further cuts in funding for the developmentally disabled.  AbilityFirst was ready and continues to thrive.

The result: AbilityFirst continues to be a highly focused nonprofit providing the most effective, high quality services possible to meet the needs of its clients and to fulfill its mission.  In the face of financial pressures, it is operating in a manner that is sustainable over the long run and now has decision making tools at its disposal to continue to develop and refine future strategies.

PHOTOS: Courtesy AbilityFirst and Jim Douglass

I will be leading the keynote at the Ohio Grantmakers Forum Annual Conference in October on the topic of Nonprofit Strategy in the New Abnormal and check out my recent guest blog at the Stanford Social Innovation Review.

Tell me what you think. Is any of this new or normal?

Leadership requires more than the confidence to stand up and offer to lead. In fact, there are three skill areas that must be built or honed for someone to truly claim the mantle of leadership.

1. Self-Awareness.

You must have an understanding and appreciation of who you are as a person, and how you manage yourself. This includes:
•   Knowing skills, limits, strengths, and competencies through realistic self-appraisal
•   Developing control, self-regulation, and an ability to “live in the response, not the stimulus,”
•   Understanding time vs. energy management
•   Maintaining a deep commitment to personal and professional growth
•   Having the ability to monitor and regulate self-efficacy

2. Understanding of Others.

Another key element of leadership requires your ability to connect and influence others.  These skills include your:
•    Capacity for deep listening
•    Development of personal voice and an ability to influence others
•    Aptitude to affirm, connect with, and correct others
•    Ability to have difficult conversations
•    High level of cultural competency
•    Ability to forge and deepen interpersonal relationships
•    Improvisational skills

3. Organizational Impact.

Leaders need to understand how to create and direct an organization beyond standard operations.  These skills include:
•    Understanding how organizations work
•    Creating organizational engagement and alignment
•    Building and directing teams
•    Thinking strategically

Given these key elements above, leadership development programs require a combination of:

Self-reflection: participants must be given an opportunity to see themselves as others see them in order to build their strengths and minimize any weaknesses in their self-presentation, communication style, or other behaviors.

Peer learning and networking:  sessions must include time for participants to connect as peers through both structured activities and exercises and through open discussion.

Hard skill development: participants must learn something new and useful during each session, such as how to manage a troublesome staff member, develop a personal performance plan, or more effectively run a board meeting.

Through research and practice, we have found that there are 5 essential program elements to build multi-dimensional leaders in a setting that builds hard skills, creates a strong peer network, and allows for self-reflection and personal growth.

The 5 essential elements of a leadership development program are:

1. Community. Both seasoned organizational leaders and emerging leaders achieve transformative learning when part of a community of peers.  The shared experience of self-examination and skill development creates a sense of shared identity for moving forward together and a mutually supportive community to draw on once the formal program ends.

2. Context. The individuals in the program must be able to leave behind for the moment their organizational context in order to explore issues, solutions, and new skills that will help them to address their work challenges. In this way they will return to their organizational home ready to practice what they have learned.  The workplace then becomes a real-life learning laboratory where new skills and confidence can be applied.

3. Clinic. Each time the learning community gathers “the clinic” provides a vital connection between practice and learning.  Based upon case study methodology borrowed from the social science/educational/  disciplines, individuals have the opportunity to present a current issue or problem they find challenging.  The community becomes a problem solving resource that sheds light on the underlying issues and provides an opportunity for problem-solving engagement for all participants.

4.  Coaching. Strong leadership programs include assessment tools as well as qualitative feedback to build self-knowledge.  Incorporating individual executive coaching allows each participant to translate data and feedback into actions to address weaknesses and reinforce strengths.

5. Curriculum. The curriculum must choose from among the wide array of topics and sub-topics related to leadership and management.  Topics must inform and build upon each other while integrating solid, proven nonprofit management and leadership practices.  The curriculum must also be applicable and understandable from a range of diverse perspectives and delivered in a manner that connects with adult learners.

We have used this holistic approach towards leadership development programs and learning communities from Honolulu Hawai’i to Fargo North Dakota. What elements do you think are most critical to a leadership development program?

I cringe every time I read about a celebrity joining the board of an organization.  Board members are trustees and each board member is equally accountable for insuring that the organization is properly governed. These roles include:

• Determining the Organization’s Mission and Purpose
• Selecting the Executive
• Supporting the Executive and Reviewing His or Her Performance
• Ensuring Effective Organizational Planning
• Ensuring Adequate Resources
• Manage Resources Effectively
• Determine and Monitor the Organization’s Programs and Services

I doubt if most celebrities realize that if the organizations fails to pay its payroll taxes the individual board members are legally liable or if the organization is in debt and has to close, the board is the body to blame.  If an organization wants to engage a celebrity they should consider asking them to be on an honorary board or co-chair of an advisory body to the board.

Prizes can be an effective tool for innovation and can also be used to identify best practices and new levels of excellence, change wider perceptions, build a more effective network of problem-solvers, and mobilize new talent or funding.  Of the organizations surveyed by McKinsey in their report And the Winner is…the majority said that their prizes had been most successful at setting standards of excellence and influencing perceptions of a field.  However, organizations found prizes were less successful in mobilizing talent from unusual sources or improving participants’ skills.  Additionally, they identified that competition for a prize may have the unwanted tendency to deter collaboration.  Nonetheless, prizes may have the capacity to promote changes in skills, outcomes, and behavior.  And with changes in technology, widespread use of the social web, and new concepts like crowdsourcing gaining in traction, we can anticipate that prizes may be able to deliver even more powerful end results.

There are several elements for developing and implementing a successful prize competition. The first and one of the most important steps is for an organization to clearly define the change it seeks.  By developing a finite and measurable statement that defines the problem and the end result desired, an organization can access if a prize is the most effective strategy.  Successful prizes must have concrete and easily measureable goals that can be translated into significant, motivational, actionable, results-focused, and time-bound objectives.  Developing clear prize criteria is also essential to testing whether a prize is a potential solution to a problem.

The right prize design is critical to any prize success. A successful prize will employ one of at least six prize mechanisms:

• Excellence: Focus attention on and/or influence a field or issue
• Best practices+: Highlight best practices, ideas or opportunities
• Network: Strengthen a community
• Innovation: Source innovation and expose additional needs in the system
• Solution: Solve a challenging, well-defined problem
• Participation: Educate & change behavior

After determining if a prize is the right strategy and choosing a mechanism, the next steps are prize and process design.  The nuts to bolts of prize design and process include many complex tasks requiring substantial investment of staff and fiscal resources.  A growing industry of prize facilitators means that some of these activities can be outsourced for a price.  However, even outsourcing still requires substantial staff investment.

There are challenges, however.  Some prizes have expended a great deal of money, but achieved little impact.  Prizes can tax both human and financial resources with high transactional costs including: research and planning, outreach and media, overall administration, coordination of evaluation and selection process (e.g., coordinating judges), and hosting an award event.  An effective prize requires significant resources in the design, process, and implementation stages.

Prizes are a powerful tool that can promote a positive result if matched to the right focus; prizes are not panacea and any mismatch in prize type to the change sought may deliver less than desired results.  Successful prizes can create a demonstration effect for organizations looking for innovations to impact a problem along with increasing visibility for the problem and potential solutions.  However, running a successful prize competition requires extensive work and expenditure of substantial financial and other resources.

Sources for this post included:

And the Winner Is…, McKinsey and Company. 2009

Federally Funded Innovation Inducement Prizes, Congressional Research Service. 2009

Prizes, Challenges and Open Grant-Making, Gail Davenport’s blog. 2010

Promoting Innovation: Prizes, Challenges and Open Grantmaking.  A report from the conference hosted by the Case Foundation, the White House Office of Science and Technology Policy, and the White House Domestic Policy Council. 2010

Citizen Centered Solutions. Lessons in Leveraging Public Participation from the Make It Your Own Awards,  The Case Foundation. 2010

It is not as though Wall Street analysts are watching. And it is certainly not the case that making the announcement speeds up a positive resolution. Instead I think these ill-advised premature announcements usually come from modeling the nonprofit merger on a corporate merger. In the latter the CEOs work out a deal, mostly around finances, the boards quickly approve it, and then the staffs are left to work out the details. The difference of course is that in a nonprofit context subtle political details can kill the deal. Without large sums of money to throw around in an effort to un-ruffle feathers, and with the high degree of loyalty and identification many nonprofit board, staff and donors feel to their institution, there is always risk of a back fire.

In the hundreds of mergers we have advised on at La Piana Consulting we have never to my knowledge had this experience, mostly because we warn our clients not to make premature announcements. It is a pretty simple lesson.