Strategic Restructuring Presentation


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Describes the various partnership options available to nonprofit organizations including mergers, joint programming, administrative consolidation, management service organizations, parent-subsidiary, etc. He will present the findings of landmark studies on mergers and alliances in the United States, and discuss the benefits and challenges of restructuring as well as the phases of the strategic restructuring process

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  • --------ANSWER CONTINUED --------But one big difference we saw when looking at the strongest proposals was that the number of joint programming shrunk and mergers grew because they were the strongest proposals.
  • Is this slide to help with transition to talking about Self-Assessment and Partner Assessment?
  • Add Handout Icon: Implementation Options Handoutin your packet.
  • Implementation Options Handoutin your packet.How do you legally structure the organization? ImplementationHow do integrate the organizations after legal? Integration
  • Strategic Restructuring Presentation

    1. 1. Strategic Restructuringfor NonprofitsNational Alliance for Media Arts and CultureMay 28, 2010<br />with<br />Bob Harrington<br />Director of Strategic Restructuring Practice<br />5900 Hollis Street, Suite N Emeryville, CA 94608<br />
    2. 2. About Us<br />2<br />La Piana Consulting © 2010<br />Practice Areas<br />Strategy<br />Leadership<br />Strategic Restructuring<br />Consulting Services<br />Trainings and Workshops<br />Research Initiatives<br />
    3. 3. Agenda<br />Overview of Strategic Restructuring<br />Why Strategic Restructuring?<br />Strategic restructuring process<br />Assessment<br />The Negotiations Process<br />Implementation <br />Funders and Strategic Restructuring<br />3<br />La Piana Consulting © 2010<br />
    4. 4. What is Strategic Restructuring?<br />Continuum of partnership options for nonprofits<br />Use of partnerships to more effectively achieve an organization’s mission<br />Different from collaboration: change in the locus of control<br />Valuable tool for managers and consultants<br />4<br />La Piana Consulting © 2010<br />
    5. 5. See Handout A<br />Administration<br />Management Services Organization<br /><ul><li>Contracting for services
    6. 6. Exchanging services
    7. 7. Sharing services</li></ul>Administrative Consolidation<br />Collaboration<br /><ul><li>Information sharing
    8. 8. Program coordination
    9. 9. Joint planning</li></ul>Parent /Subsidiary<br />Corporation<br />Corporate Merger<br /><ul><li>Single focus or program
    10. 10. Multi-focus or program
    11. 11. Integrated system</li></ul>Joint Programming<br />Joint Venture<br />Program<br />Greater Integration<br />Contract or MOU<br />Change in Corporate Structure<br />Greater Autonomy<br />The Partnership Matrix<br />5<br />La Piana Consulting © 2010<br />
    12. 12. Examples of Administrative Collaboration and Consolidation<br />6<br />La Piana Consulting © 2010<br />See Handout B<br />
    13. 13. Research on Collaboration and Strategic Restructuring<br />2000-2003 Data<br />Landmark Study of 192 respondents from the nonprofit sector<br />“Strategic Restructuring: Findings from a Study of Integrations and Alliances Among Nonprofit Social Service and Cultural Organizations in the United States”<br />Kohm, La Piana, and Gowdy, June 2000<br /> <br />2008 Data<br />644 nominations received <br />Statistical analysis<br />Searchable database of 173 nominations<br /> <br />7<br />La Piana Consulting © 2010<br />
    14. 14. Why Do Nonprofits Consider Strategic Restructuring?<br />Internal decision to increase efficiency/efficacy of organization (83%)<br />Increased competition for funding (60%)<br />Increased overhead expenses (47%)<br />Pressure from funders was mentioned least often (30%)<br />Source: Strategic Restructuring study; Kohm, et al.<br />8<br />
    15. 15. Why Do Nonprofits Consider Collaboration? 2008 Data<br />9<br />
    16. 16. Why Do Nonprofits Consider Collaboration, cont. 2008 Data<br />Achieve administrative efficiencies <br />10<br />
    17. 17. Strategic Partnership by TypeThe Collaboration Prize Data: Top 176 nominations<br />2008 Data<br />Other (coalitions, confederations, etc.)<br />Not specified<br />Joint Programming<br />Administrative Consolidation<br />Joint Programming and Administrative Consolidation<br />Merger<br />11<br />La Piana Consulting © 2010<br />
    18. 18. Roadblocks to Strategic Restructuring<br />Autonomy concerns<br />Lack of trust<br />Self-interest<br />Organizational culture<br />12<br />La Piana Consulting © 2010<br />
    19. 19. Collaboration and Strategic Restructuring by Field 2008 Data* <br />13<br />176 nonprofit collaborations, alliances and mergers <br />*2010 Collaboration Prize database, the Lodestar Foundation<br />
    20. 20. Current Trends in Strategic Restructuring <br />Mergers and collaborations as a competitive strategy<br />Increased interest and activity across the sectors<br />Dramatic increase in mental health and social services <br />Increased interest among national organizations<br />Increased interest in administrative consolidation<br />Funder interest in multi-organization partnerships or mergers (e.g. not 2 but 5 organizations merging)<br />14<br />La Piana Consulting © 2010<br />
    21. 21. Other Reasons Why Nonprofits Consider Strategic Restructuring<br />Economics <br />Opportunities<br />Leadership challenges <br />A tired board<br />To better serve the community<br />Reasons specific to each nonprofit<br />15<br />La Piana Consulting © 2010<br />
    22. 22. Critical Success Factors<br />Alliance and Integration Study*<br />Staff / board member championed the alliance (80%)<br />Positive past experiences with collaboration (74%)<br />Board support / encouragement (73%)<br />Organization risk-taking / growth orientation (70%)<br />Positive board-executive relations (64%)<br />*Source: Strategic Restructuring study; Kohm, et al.<br />16<br />La Piana Consulting © 2010<br />
    23. 23. Other Success Factors<br />Mission focus<br />Flexibility in pursuing mission<br />Not in an immediate crisis <br />A lack of divisiveness <br />Clarity regarding desired outcomes<br />Positive relations with potential partners<br />17<br />La Piana Consulting © 2010<br />
    24. 24. The Strategic Restructuring ProcessAssessment<br />18<br />La Piana Consulting © 2010<br />
    25. 25. Self-Assessment<br />Motivators<br />Desired outcomes<br />Critical issues<br />Organizational factors or “red flags”<br />Financial assessment<br />19<br />La Piana Consulting © 2010<br />
    26. 26. Partner Assessment<br />Level of trust<br />Past experiences<br />“Usable” skills and assets<br />Cautions and challenges<br />Mission and program compatibility and complementarities<br />Financial condition<br />20<br />La Piana Consulting © 2010<br />
    27. 27. Competition and the Market<br />Which organizations are most related to you?<br />Offer same/similar programs and services<br />Have geographic or “consumer” overlap<br />Seek funding from the same sources<br />Compete for media attention, staff, or board members<br />What’s the overlap? <br />21<br />La Piana Consulting © 2010<br />
    28. 28. The market, your current place in it, and how you got here<br />Other organizations in the market—their strengths and weaknesses (with an eye toward potential partners)<br />The forces—social, economic, technological, political—that have created your current position in the market<br />22<br />La Piana Consulting © 2010<br />Are you aware of. . .?<br />
    29. 29. The Strategic Restructuring ProcessNegotiation<br />23<br />La Piana Consulting © 2010<br />
    30. 30. 24<br />La Piana Consulting © 2010<br />The Negotiations Process<br />See Handout C<br />Integration<br />Corporation A<br /> Board of Directors<br />Corporation A<br /> Board of Directors<br />Negotiations Committee<br />Joint Legal <br />Counsel<br />Decision<br />Corporation B<br />Board of Directors<br />Process<br />Corporation B<br />Board of Directors<br />Due Diligence <br /><ul><li>Determine potential problem
    31. 31. Disclose information
    32. 32. Analyze</li></ul>Identify Issues<br /><ul><li>Negotiate financial and legal issues
    33. 33. Record agreements
    34. 34. Communicate progress to constituents</li></li></ul><li>Issues to be Negotiated in a Merger<br />Governance<br />Financial<br />Human resources<br />Capital<br />Programmatic<br />Communications<br />25<br />La Piana Consulting © 2010<br />See Handout D<br />
    35. 35. Due Diligence<br />See Handout E<br />Documents to review:<br />Organizational <br />Tax <br />Insurance<br />Personnel<br />Financial/Funding<br />Capital/Real Estate <br />Others?<br />26<br />La Piana Consulting © 2010<br />
    36. 36. Financial Impact and Analysis<br />Financial Comparison<br />Statement of Financial Position<br />Statement of Activities <br />Analysis of financial health<br />Human Resource Comparison<br />Budget Development<br />Projection for combined budget<br />Cost/savings analysis<br />Donor Comparison <br />27<br />La Piana Consulting © 2010<br />
    37. 37. The Strategic Restructuring ProcessImplementation<br />28<br />La Piana Consulting © 2010<br />
    38. 38. Implementation Options <br />Assets and Liabilities<br />Corporation A<br />Surviving<br />Corporation A<br /> Disappearing<br />Corporation A<br />Surviving<br />1<br />Corporation B<br />Disappearing<br />Corporation B<br />Disappearing<br />Corporation B<br />Dissolving<br />Assets<br />2<br />3<br />Corporation C<br />New<br />La Piana Consulting © 2010<br />29<br />
    39. 39. Management Services Organization Relationship<br />30<br />La Piana Consulting © 2010<br />Before<br />Corporation A<br />Corporation B <br />Corporation C<br />Corporation D<br />
    40. 40. Management Services Organization Relationship<br />31<br />La Piana Consulting © 2010<br />After<br />Corporation A<br />Corporation B <br />Corporation C<br />Corporation D<br />New<br />Management Services Organization<br />(MSO)<br />New <br />Management Services Organization<br />(MSO)<br />
    41. 41. Parent-Subsidiary Relationship<br />Before<br />32<br />La Piana Consulting © 2010<br />After<br />Corporation A<br />Corporation B<br />Corporation A<br />Corporation B<br />controls<br />
    42. 42. Integration<br />Areas to be integrated:<br />Culture<br />Board of Directors<br />Management<br />Staff<br />Program<br />Communications and Marketing<br />Systems<br />Finance<br />Fundraising<br />Human Resources <br />Technology<br />Facilities<br />33<br />La Piana Consulting © 2010<br />
    43. 43. Challenges in Integration<br />Lack of a merger “champion”<br />Scarce resources (time and money)<br />Culture clash<br />Board and staff development<br />Creating reasonable expectations <br />34<br />La Piana Consulting © 2010<br />
    44. 44. Why Merger Integration Can Fail<br />Mergers do not fail because organizational leaders can’t integrate financial systems or IT.<br />Mergers fail because people tend to hold on to their individual cultures and identity rather than create a new organization. <br />35<br />La Piana Consulting © 2010<br />
    45. 45. Feasibility Studies<br />The consultant’s full-employment act.<br />May be needed for an administrative consolidation and/or MSO but not for most mergers.<br />Can make things worse.<br />36<br />La Piana Consulting © 2010<br />
    46. 46. Relating to Funders<br />Foundations support strategic restructuring!<br />Organizations should go to funders with whom they normally work or those involved in organizational effectiveness.<br />Consider a two-phase proposal process that includes negotiations and integration.<br />37<br />
    47. 47. Questions?<br />38<br />La Piana Consulting © 2010<br />
    48. 48. Thank You! <br />Contact Bob at <br /> <br />For more information, visit<br /> <br />39<br />La Piana Consulting © 2010<br />