Strategic Restructuring Quiz. Agenda. Beating the Odds in an Economic Downturn Options for Strategic Restructuring. The Partnership Matrix

Transcription

1 Beating the Odds in an Economic Downturn Options for Strategic Restructuring September 29, 2010 with HeatherGowdy Senior Manager Agenda What is Strategic Restructuring? Quiz Options for Strategic Restructuring Group Discussion Why Consider Strategic Restructuring? The Strategic Restructuring Process Q&A 5900 Hollis Street, Suite N Emeryville, CA 94608, U.S.A. 2 What is Strategic Restructuring? The Partnership Matrix See Handout A Continuum of partnership options for nonprofits Use of partnerships to more effectively achieve an organization s mission Different from collaboration: Change in the locus of control Collaboration Information sharing Program coordination Joint planning Administrative Consolidation Contracting for services Exchanging services Sharing services Singlefocus or program Multi-focus or program Integrated system Management Services Organization Parent /Subsidiary Corporation Joint Venture Corporate Merger Valuable tool for managers and capacity-builders Greater Autonomy Greater Integration Contract or MOU Change in Corporate Structure 3 4 Why Do Nonprofits Consider Collaboration? Strategic Restructuring Quiz 5 6

2 Why Do Nonprofits Consider Collaboration, cont. Strategic Partnership by Type The Collaboration Prize Data: 644 nominations Achieve administrative efficiencies 8 7 Strategic Partnership by Type The Collaboration Prize Data: Top 176 nominations Roadblocks to Strategic Restructuring Other (coalitions, confederations, etc.) Lack of trust Not specified Administrativ e Consolidation Autonomy concerns Self-interest Organizational culture and Administrativ e Consolidation Merger 9 10 The Partnership Matrix See Handout A Options for Strategic Restructuring The Partnership Matrix Case Studies Current Trends Collaboration Information sharing Program coordination Joint planning Administrative Consolidation Contracting for services Exchanging services Sharing services Singlefocus or program Multi-focus or program Integrated system Management Services Organization Parent /Subsidiary Corporation Joint Venture Corporate Merger Greater Autonomy Greater Integration Contract or MOU Change in Corporate Structure 11 12

3 Examples of Administrative Collaboration and Consolidation See Handout B Option Human Resources Information Technology Finance Other Sharing policies, Sharing policies, Sharing policies, Sharing governance procedures, best procedures, best procedures, best models Collaboration practices practices practices Coordinated longrange Cross-training (e.g. Coordinated IT analysis Joint finance training planning spending time in each and assessment for staff and board other s office[s]) Joint training of staff on Shared recruiting, new software training Mentoring Shared database and Shared accounting Advocacy training for server systems boards Consolidation Standardized HR practices, training Shared IT professional Shared CFO, key staff Joint marketing/ Development of a and other key staff One organization branding common recruiting One organization provides accounting Bulk purchasing, pool provides IT services for services for another translation services another Shared HR professional Shared employment Intranet Centralized finance Centralized facilities Creating an MSO Co-employment Common Help Desk staff and systems management report generation, Coordinated grants Single benefits Shared accounting cash management, program software billing management and reporting Benefits Centralized servers administration Administrative Consolidation Chattanooga Museums Admin Consolidation Ready Set Parent! Management Support Organization MACC Commonwealth in Minnesota Joint Venture ARCH: Alliance for Rural Community Health Merger Oakland East Bay Symphony, Oakland Symphony Chorus, and Oakland Youth Orchestra 17 18

4 Current U.S. Trends in Strategic Restructuring Increased interest and activity across the sectors SR as a competitive strategy Promotion by funders and funder collaboratives presents new opportunities Significant increase in interest among national organizations Increased interest in administrative consolidation Funder interest in multi-organization partnerships or mergers (e.g. not 2 but 5 organizations coming together) Group Discussion What examples of strategic restructuring have you seen in your community? What factors led to the formation of those collaborations? What benefits have resulted? Or, if there aren t examples Why do you think this is the case? What factors might be making it difficult? Why Consider Strategic Restructuring? 10 minute Break Today s Nonprofit Challenges Benefits Critical Success Factors A Caution Economic pressure drives interest in nonprofit mergers Today s Nonprofit Challenges Funding Shortage 20 m Caution Competitor s Ahead Merge Here 23

5 Nonprofits leaders make dire predictions for % expect more demand for services 89% expect 2010 to be as financially difficult or more difficult than in % expect to operate above break-even in 2010 Giving Trends Shifting Sources: Chronicle of Philanthropy, March 15, 2010;The Next Generation of American Giving research report byedge Research, Convio, and SeaChange Strategies, March 2010 Source: Nonprofit Finance Fund State of the Sector Survey, Nonprofits compete for more than just funding. Other Converging Trends 27 La Piana Consulting Restructuring Furthers Strategic Goals Positions organization to better serve the community Strengthens competitive position and influence Achieves greater scale Expands professional and board capacity Increases market and fundraising share Creates a seamless service delivery system Increases efficiency in administrative functions Research on Collaboration and Strategic Restructuring Landmark Study of 192 respondents from the nonprofit sector StrategicRestructuring:Findingsfrom astudyofintegrations and AlliancesAmong Nonprofit Social Service and Cultural Organizations in the United States Kohm, La Piana, and Gowdy, June nominations received Statistical analysis Searchable database of 173 nominations Data

6 Critical Success Factors Other Success Factors Alliance and Integration Study* Staff / board member championed the alliance (80%) Positive past experiences with collaboration (74%) Board support / encouragement (73%) Organization risk-taking / growth orientation (70%) Positive board-executive relations (64%) Mission focus Flexibility in pursuing mission Not in an immediate crisis A lack of divisiveness Clarity regarding desired outcomes Positive relations with potential partners *Source: Strategic Restructuring study; Kohm, etal Mission comes first. Finances follow.