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In July of 1997, Parents Anonymous of Maryland and the Child Abuse Prevention Center (CAPC) merged to form The Family Tree. Parents Anonymous and CAPC were small, respected, volunteer-driven agencies headquartered in Baltimore, Maryland with complementary programs to prevent child abuse and neglect. Driven by the organizationsí desires to reduce competition for funding and heighten their already strong standings in the community, the merger resulted in a new, even more positive image, a more diverse staff and the ability to better serve families with an expanded continuum of services. While the merger was successful, The Family Tree has continued to uncover and address the challenges associated with forming unified leadership from two senior staffs and Boards of Directors, nearly doubling the size of an agency and achieving economies of scale.
Parents Anonymous of Maryland was founded in 1978 as a chartered member of the National Organization of Parents Anonymous to implement free, volunteer-driven support groups for parents and advocacy to prevent child abuse in Maryland. To facilitate the delivery of the Parents Anonymous Program throughout a larger area, the agency opened a satellite office in Prince Georgeís County. In 1995, the Board of Directors hired a new Executive Director with a background as a government official. By 1996, Parents Anonymousí 15 staff members and 150 volunteers were running support groups at locations throughout Maryland, and its operating budget had reached nearly $950,000.
The Child Abuse Prevention Center (CAPC) was founded in 1981 in Baltimore City as a center of the National Exchange Club Foundation for the Prevention of Child Abuse. CAPC provided free, volunteer-driven services for families and advocacy to prevent child abuse and neglect. Building on the success of its programs in Baltimore, CAPC established satellite offices in nearby Harford and Anne Arundel Counties. By 1996, CAPC had a staff of 11, 110 volunteers and an annual operating budget of almost $700,000. CAPCís Executive Director had a background in social work and had held this position for four years.
While the programs of Parents Anonymous and CAPC were effective, child abuse and neglect remained one of the biggest threats to the lives of children in Maryland. Both agencies continually sought grants, sponsorships and donations that would enable them to expand and improve their services. Parents Anonymous and CAPC often provided letters of support to each other for proposals and frequently competed for grants.
In the early summer of 1996, the Executives Directors of Parents Anonymous and CAPC ran into each other at the Maryland State office as they were both submitting proposals for the same funding. Although the agencies had exchanged letters of support for the proposal, this unplanned meeting emphasized the extent to which the two organizations were competing for funding for the same cause. The Executive Directors decided to meet for lunch to discuss how their agencies might work collaboratively instead of competitively.
When they met, the Executive Directors were immediately struck by the degree to which their agencies were similar, yet complementary. Whereas CAPCís principle programs were a structured, 12-week parenting curriculum and an in-home program for mothers over the age of 18, Parents Anonymousí focus was on on-going support groups for parents and an in-home program for teenage mothers. It was apparent that there was potential for some type of strategic alliance. The Executive Directors agreed to meet for lunch once a month to explore the possibilities.
As the Executive Directors continued to investigate the compatibility of their organizations, they discovered that in addition to having complementary programs, they also had complementary strengths and geographic presence. Parents Anonymous had invested heavily in its infrastructure, while CAPC was programmatically strong and in need of a development director and a volunteer manager. Parents Anonymous had a satellite office in Prince Georgeís County, and CAPC had satellite offices in Harford and Anne Arundel Counties.
Despite their differing backgrounds, the Executive Directors established trust and became excited about the potential to strengthen their organizations through a strategic alliance. They began to believe that merging the two agencies would enhance their abilities to serve their missions, strengthen their infrastructures, increase their cost-effectiveness and improve their images in the community. Both agencies were interested in creating new names and images that would better portray the supportive nature of their programs and avoid the implication that all of the participants are abusers. One of the Executive Directors expressed a willingness to step down to Deputy Executive Director in the event of a merger.
Both Executive Directors had positive relationships with their Boards of Directors. The Boards were active and proprietary, with strong attachments to their agenciesí missions and pride in their successes and reputations. The Executive Directors communicated to their Boards that they were discussing a potential strategic alliance with the other, but knew that they had to assess the readiness for and potential impact of a merger in the community before making a formal proposal.
The Executive Directors worked with CAPCís Program Advisory Committee to analyze the impact of the potential merger on external stakeholders, including program participants, funders and policy makers. The Committee concluded that the merger would have a positive impact on the community by (1) enabling parents and families to choose from a wider array of integrated services; (2) filling gaps in services; (3) increasing accessibility of services for program participants; (4) enabling Parents Anonymous and CAPC to create a statewide presence; and (5) consolidating Parents Anonymousí and CAPCís public policy and advocacy into the single most respected authority on child abuse prevention in Maryland.
In November 1996, the Executive Directors proposed the merger of Parents Anonymous and CAPC to their Boards. The Boards were wary, but they trusted their Executive Directors, who had done their homework and presented a convincing proposal that showed numerous potential benefits and few drawbacks. Both Boards agreed to begin merger proceedings. Because the Boards had no existing relationships or trust, ensuring equal decision-making was a priority for both agencies. They formed a merger committee with equal representation from each Board that included the President and two additional members from each agency.
The merger committee hired a neutral facilitator whose role was strictly to guide their meetings. This facilitator did not have, nor was hired to offer, expertise on the merger process. The committee decided up front that for the first two years after the merger, a Board member of Parents Anonymous would serve as President for one year and a member from CAPC would serve for the other year. The merger committee issued a memo to the staff of both agencies announcing the merger proceedings and assuring that no staff would be let go immediately following the merger.
The first joint meeting of the Boards was held in March 1997. The concerns of Board members included loss of independence and power, the expense of implementing the merger, and the opportunity cost of sacrificing other activities to dedicate Board and staff time to the merger. Each Executive Director met with Board members individually to discuss their specific concerns.
Because the agencies were already successful, the Boards wanted to ensure that the merger would not jeopardize their operations. As a result, the merger committee spent a great deal of time over the next year ensuring the compatibility of the agenciesí strategic directions, doing financial projections, consulting the agenciesí national organizations, estimating the cost of a merger and raising funds to cover merger expenses. The agencies raised about $150,000, mostly from one-time foundation grants, to cover merger expenses such as: the facilitator, moving staff offices, new letterhead and public relations materials, and an integrated telephone system. An attorney who sat on one of the Boards provided in-kind legal services.
The agencies postponed the identification of a name for the new organization so that they could get input from the community. Temporarily, they simply combined the names and called the organization Parents Anonymous/Child Abuse Prevention Center of Maryland. Agreeing on the mission of the new organization was not difficult since the missions of Parents Anonymous and CAPC had been so similar. The mission of the new organization would be: Parents Anonymous/Child Abuse Prevention Center is a statewide non-profit organization committed to strengthening families and preventing child abuse and neglect. Parents Anonymous/Child Abuse Prevention Center provides free, volunteer-driven services which support, educate and nurture individuals, families and communities in Maryland.
When the merger committee broached the topic of leadership, both Executive Directors expressed interest in becoming the Executive Director of the new organization. Not surprisingly, each member of the merger committee voted for his or her agencyís Executive Director, and the committee was faced with resolving this impasse. In an effort to avoid offending either Executive Director, the merger committee decided that the Executive Director of CAPC would become Deputy Executive Director of the new agency. The Executive Director of Parents Anonymous would serve as Acting Executive Director, and a search would be conducted for a permanent Executive Director to lead the new organization. This arrangement was received negatively by both Executive Directors, and to ensure that someone with their shared vision would lead the new organization, the Executive Director of CAPC volunteered to step down to Deputy Executive Director. The merger committee then appointed the Executive Director of Parents Anonymous as the permanent Executive Director of the new organization.
The Board of the new agency would consist of the current membership of both Boards, although some members took the opportunity to step down.
The Executive Directors created excitement among their staffs by telling them that after the merger they were going to be part of the most exciting non-profit in Maryland. They held special joint meetings to allow the staffs to get to know each other. As a result, the staffs were accepting of the merger and their new colleagues.
Even though the Boards supported the merger from an operational standpoint and were driving the merger process, many of the members were uncomfortable with the amount of time and money being spent on the merger. In addition, the two Boards were having a difficult time establishing rapport. During the merger proceedings it became apparent that one of the most significant cultural differences between Parents Anonymous and CAPC was the nature of Board/Executive Director interaction. One agency was more Board-driven while the other was more Executive Director-driven. The Boards struggled with these issues over the next couple of years. The Executive Directors continued to meet individually with Board members to alleviate specific concerns.
The Boards agreed that CAPC would merge into Parents Anonymous. Simultaneously, the name of Parents Anonymous would be changed to Parents Anonymous/Child Abuse Prevention Center. Parents Anonymous was chosen as the surviving organization to avoid the need to reapply for permission from the National Organization of Parents Anonymous for use of the trademarked Parents Anonymous Program.
The lawyer drafted the Articles of Merger, which amended Parents Anonymousí articles of incorporation. Parents Anonymousí bylaws were updated to reflect the new Board size, the change of Parents Anonymousí fiscal year, and other minor adjustments to resolve differences between the two agenciesí bylaws. On May 20, 1997, the Boards approved the merger affective July 1, 1997.
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Just prior to the approval of the merger, CAPC was selected from 50 applicants to receive $200,000 of pro bono work from Eisner & Associates, an advertising agency in Baltimore. Eisner selected CAPC because the merger presented a new challenge for its staff who would create a name, logo, brand and advertising strategy for the new organization. |
Eisner and Parents Anonymous/CAPC worked together to solicit input from the community on the name of the organization, and in the fall, the Board approved the organizationís new name: The Family Tree. On the advice of Eisner, the names of the former organizations would appear in small text on public relations materials for three years. Next, Eisner helped design The Family Treeís new logo and form its advertising strategy, which included direct mailings, billboards, radio announcements, and a 30-second television public service announcement. In addition, The Family Treeís printer provided complimentary design and production services for a new capabilities brochure and semi-annual newsletter. Within a year after the merger, the agencyís image and impact was already stronger, and The Family Tree was selected by Eisner as its pro bono client for the next two years.
A challenge associated with The Family Treeís new image surfaced during the United Wayís annual campaign. Some donors who had designated their gift to either Parents Anonymous or CAPC in the past, did not know that these organizations had become The Family Tree. In addition, CAPC had not been a United Way member agency before the merger, and The Family Tree had to reschedule some of CAPCís successful, annual fundraising events to comply with the United Wayís request that member agencies refrain from active fundraising during the United Wayís annual campaign. The Family Tree alleviated these challenges by mailing an announcement of the merger to donors.
With more staff, volunteers and clients, The Family Tree was able to implement new programs to enhance its continuum of child abuse prevention programs. Soon after the merger, The Family Tree initiated My Daddy Loves Me, a mentoring program for young fathers, and formed a Department of Teen Services. During its second year, The Family Tree instituted a follow-up program for graduates of the Positive Parenting Program called Project PATH (Parenting And Training in the Home) and an advanced re-parenting education project for senior caregivers that are raising their grandchildren called Project AGAPE.
To meet the accountability requirements of the larger grants that the new agency expected to receive, The Family Tree developed a comprehensive results-based system of accountability and evaluation. The staff identified agency-wide and program-specific objectives and developed a tool for measuring the agencyís effectiveness in meeting these objectives.
After the merger, The Family Treeís staff was located in two different buildings. Some offices were moved so that administrative staff was in one building and programmatic staff was in the other. They began to look for a new building to consolidate the agencies and realize economies of scale.
In the meantime, staff and Board members worked to integrate infrastructures. Initially, the infrastructure was integrated in those areas for which it was vital: financial systems and personnel policies. Staff and Board members discovered that one agency had not performed written, annual staff evaluations. They also learned that the salary structure at one agency had been based on tenure while the otherís was based on the number of people supervised. Other differences to be resolved were discrepant vacation policies and workweeks. The Family Tree instituted annual staff evaluations, made some minor salary modifications, created a new vacation policy for new employees while allowing current employees to keep their existing policies, and reduced former CAPC staffís workweek from 40 to 35 hours to be consistent with that of former Parents Anonymous staff.
Thanks to the thorough budgeting and fundraising efforts during the merger process, The Family Tree finished its first year on budget.
The senior staff and Board members who had been intensely involved in the implementation of the merger lost momentum during integration efforts. As a result, The Family Treeís growing pains became apparent during its second year. As more staff came in contact with each other, they began to realize differences in their vacation policies and salaries. In some cases, individuals were being paid more than their supervisors. Former CAPC supervisory staff felt that significantly less work could be accomplished during a 35-hour workweek than a 40-hour workweek, especially when the geographic reach and the number of programs was expanding.
In addition, The Family Tree had outgrown its financial systems, and they were no longer serving as useful management tools. It looked like The Family Tree would not complete the year on budget. Further, the agency could not find a building to meet its needs and still was maintaining two sites in Baltimore City.
The initial excitement of forming a new organization waned. Instead, staff found themselves struggling to maintain operations. The Board hired a consultant to assess the organization and make suggestions for improvement. Then, the Executive Director resigned unexpectedly in November 1998. Several other members of the senior staff followed suit. The Board decided to hire a new Executive Director before considering the consultantís suggestions.
The Board and staff of The Family Tree learned that signing the merger agreement is only half of the battle. Continuing integration efforts and maintaining the commitment of staff are as important to the success of a merger as the negotiations prior to its implementation. In addition, they learned that when nearly doubling the size of an agency through a merger, more formal policies and procedures may be necessary for managing the larger organization. The Board and staff believe that conducting a more detailed due diligence process during negotiations and hiring an attorney or consultant with expertise in mergers would have alerted them to some of these issues earlier.
Despite these challenges, The Family Tree has successfully integrated the staffs of the former two organizations, greatly enhanced public relations and marketing, expanded the geographic reach of services, initiated new programs and implemented an agency-wide system for accountability and evaluation.
In July of 1999, the Board of Directors hired a new Executive Director from outside of the organization. As a leader who does not represent either of the former agencies, the Executive Director is committed to building an appropriate infrastructure for The Family Tree. For the first time, the Board held an election for President in which there were no requirements about the nomineeís prior affiliation. Thanks to a timely donation, the organization completed its second year on budget. In addition, The Family Tree recently purchased a building for its headquarters.
By focusing on the creation of an infrastructure appropriate for the organization that it has become, The Family Tree will continue to make progress towards the goals of the merger: a continuum of integrated programs to prevent child abuse, a strong standing in the community and cost-effective services.
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This case study is one of a number of case studies, quick references and directories in the Philadelphia Health Management Corporation's Non-profit Strategic Alliances Project Materials. These materials were created to assist non-profit executives and Boards in the Philadelphia area explore how strategic alliances can help them address the growing challenges faced by their organizations. For more information on the Philadelphia Health Management Corporation or to purchase the Strategic Alliances Project Materials, contact Nancy Katz at nancyk@phmc.org. |