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.

Ownership is very different in the nonprofit sector than it is in the for-profit sector. The reality in the nonprofit sector is that no one individual or group such as a management team or board can own a nonprofit organization.  There are no stock shares to be owned or traded. Any assets owned by the nonprofit must remain with the nonprofit.  If a merger of a nonprofit takes place, the assets of the nonprofit must remain within the surviving corporation.   (Similarly, if a nonprofit dissolves independent of a strategic restructuring process any assets remaining after resolving all liabilities must be transferred to another nonprofit serving a similar mission.)

Nonprofits hold special tax status in order to accomplish their mission with the resources developed under that tax status. Therefore, in a sense, through this special tax status, the nonprofit is owned by the public – this is why nonprofit corporations are sometimes referred to as “public benefit corporations.”

Board members, staff, clients, and the public have a profound interest in the organization’s future success and its ability to provide needed programs/services.  The board and staff have the responsibility to manage and make decisions for the organization that are in the best interest of the community and the mission served.

When an organization considers a potential strategic restructuring partnership, the leadership must consider this decision from the perspective of what is in the best interest of the mission and the people or issue it serves – first and foremost.  Clearly, the roles of employees and board representation are important factors in the process of considering the most appropriate organizational design.  But ultimately, the nonprofit’s mission and ownership by the public must be the priority in decision making.

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.

More recently, my colleague Bob Harrington, Director of our firm’s Strategic Restructuring practice was invited to blog about the role strategic restructuring can play in arts organizations.  Bob’s blog highlights our recent case study on administrative consolidations.

In addition to my presentation, the workshop featured a panel with Don Crocker discussing a failed merger attempt the Support Center for Nonprofit Management undertook and Ralph Rogers describing a successful one the Food Bank of New York City engineered.

Presenting a balance of examples was a great way to stimulate good discussion. Too often we focus just on the success stories but it is just as critical for us to understand why sometimes a merger is not the right move.

First, despite my initial reservations around the format – 8 plenary sessions over 2 days, no breakouts – it really worked.  The presentations were high quality and the speakers offered diverse perspectives. It also helped that there were generous break periods, where the real work of any conference – networking – gets done. Plus, the venue and weather cooperated very nicely.

The event was a huge success for me because of the fantastic speakers the Institute had recruited. I usually cannot sit through an entire hour-long conference session, call it ADHD or boring speaker overload, but I surely didn’t have that problem the past two days.

What most struck me was the entirely cross-sector conceptualization of social innovation.  Peter Hero, the former community foundation CEO, spoke about the future of philanthropy both capital P foundation philanthropy and small p individual giving. Stanford’s distinguished Professor Hayagreeva Rao discussed interventions in a hospital setting that ultimately saved over 122,000 lives. I spoke to the nonprofit sector about partnerships, mergers, and collaborations. You don’t get that mix at most conferences.

I appreciate that SSIR thinks across sectors, in the nonprofit sector we are far too often sector-bound in our approach to problem-solving. I also found the mix of people in attendance fascinating. There was a strong and diverse international contingent and a great variety of size and type among the American nonprofits present. That mix made for great discussion during the breaks, and I learned quite a bit from several younger nonprofit leaders who shared their perspectives.

I am sure there will be more as I digest the sessions, but that’s the quick download.