Kenneth Grounds McCormick Group October 17, 2012 Non-Profit Merger: A Key to Building Capacity and...
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Transcript of Kenneth Grounds McCormick Group October 17, 2012 Non-Profit Merger: A Key to Building Capacity and...
Kenneth GroundsMcCormick GroupOctober 17, 2012
Non-Profit Merger:A Key to Building Capacity
and Survivability
Finance and AdministrationRoundtable
What Is The McCormick Group And What Are They Doing Here?
Formed in 1982 by Dan McCormickThree primary competencies:
1. Create/establish new NPOs2. Assist organizations with structural change/collaboration & merger3. Guide NPOs through best practices screening and Modeling
Clients include: American Cancer Society; Girl Scouts of the USA; The Arthritis Foundation; National Hemophilia Foundation; John Denver’s Windstar Foundation; United Way Worldwide and hundreds of others.
Paraskevidekatriaphobia:
Big Word
No one knows why.
As many as 21 Million people in the USAhave some fear of Friday the 13th.
Paraskevidekatriaphobia:
Connotes a fear that cannot usually be substantiated.
Fear comes largely from anecdotal information:stories we have heard.
“Not sure what the issue with Friday the 13th is allabout but it pays to be careful.”
Perceptions: What Do We Hear?• “I’m not sure what is going to happen”• “There seem to be many unanswered questions.”• “I’m worried something bad will happen.”• “I’m feeling a sense of potential loss.”
Perceptions: Other Drivers• Family and friends whose company merged• Stories about what a mess mergers can be• Fears that longtime staff will be fired• Concern that ‘bigger is not always better’
Perceptions: NPO Merger
Many NPO merger fears and misconceptions arise from an
assumption that non-profit merger is the same as for-
profit merger.
For-Profit Not-For-Profit For-Profit Not-For-Profit
Money MissionMoney Mission
Perceptions: Understanding NPO Merger
For-Profit merger is about money: The value proposition can be determined clearly on the front end.
NPO Merger is about mission: It is not about trying to live up to an artificial financial pro-forma.
For-Profit Not-For-Profit For-Profit Not-For-Profit
Perceptions: Understanding NPO Merger
Positioning for the future
Increasing Capacity/scale
Acquisition/hostile takeover
Money/shareholder equity
Downsizing staff
Economies/cost cutting
Management Control
Positioning for the future
Increasing Capacity/scale
Never, all must agree
Mission impact
Not usually
Yes, but not a primary driver
Sharing governance
CollaborationsLots of optionsSome involve trading/sharing excess capacities
Program/marketing/expertise/backroomSome involve gaining economies of scale
Combined purchasingSome involve helping donors
Combined campaigns/recognition
CollaborationsSome involve helping other agencies
Shared mission prioritiesAll should lead to greater impact for our causesAll collaborative forms are on a continuum
THE COLLABORATIVE CONTINUUM
COMPLEXITYPOTENTIAL BENEFITS
INITIATIVES
INSTRUMENTS
CommunicationShared
ServicesJoint
VenturesShared
Governance Merger
MOU/LOA* Contract LegalFiling
*Memo of Understanding / Letter of Agreement
Courting Your Partner
Flirtingo Identifying a Partnero Exploring Synergieso Establishing Trust
Datingo Exploring “What could it look like”o Learning about Wartso Building Trust
Meet the Parentso Volunteer Involvemento Community Discoveryo Building Trust
Moving in Together (optional)o Shared Serviceso Collaborative Ventureso Discovering Warts
Courting Your Partner
Engagemento LOI (“Letter of Intent”)o Due Diligence (wart hunt)o Corrective Action (if needed)
Dowryo Promise -- Vision
Courting Your Partner
Marriageo Merger Agreemento Board Votes
Announcemento Launch Strategy
Filing the Licenseo Closingo Fulfilling Conditionso Regulatory Filings
Courting Your Partner
Making it Work (integration)o Cultureo Development & Marketing o Mission Impacto Systemso Finance
Courting Your Partner
All collaborations are on a continuum The exploration/discovery process is nearly the same for all forms of collaboration NPO mergers are not the same as for-profit mergers (mission vs. bottom line) While efficiencies will be gained, mission impact is the key driver It all starts with a “conversation”
Key Takeaways…