3/1/2018

1

Nonprofit Alignment for Impact: Exploring How to

Survive and ThriveMarch 2018

Hello!

We help leaders make better decisions.

3/1/2018

2

Why We Are Here

Our Objectives for the Session• Understand how the current environment is prompting

leaders to shift their perspectives

• Introduce a tool to help assess your organization’s current health

• Introduce the continuum from coordination to collaboration to consolidation

• Suggest strategies for developing a path forward

3/1/2018

3

Change in Context

• Low to moderate uncertainty

• Environment with many opportunities

• Low threat

• High uncertainty• Environment with

few opportunities• High threat

FROM: TO:

Shifting Perspectives &

Actions

Change in Perspective• From seeking opportunities for growth to maintain

status/quo or manage decline

• From means: How should we improve? ….To ends: what should we do?

• From change largely driven by internal reality to change as an external response

• From a long planning horizon to a short planning horizon

• From lower stakes change in manageable increments to, potentially, high stakes decisions about survival

3/1/2018

4

Change in What We Need to Do

• Determine impact on current work

• Assess risk and sustainability

• Determine what decisions need to be made…and by who?

• Manage stress

• Execute strategyThis Photo by Unknown Author is licensed under CC BY-NC-ND

Decision Making in Nonprofits

Recognition of Range of Relationships

Board

Staff

Funders

Stakeholders

Clients

Community

Partners

…and Shared

Power Model

3/1/2018

5

Influence of Group Dynamics and History

Dynamics of Board and

Staff

Decision Making History

Engagement of Decision

Makers

Knowledge of Current

Environment

Organizational Culture

What does success look like?

Informed with objective information

CONFIDENT IN CHOICES

Clear Next Steps

Key stakeholders engaged in the process

Understanding of Shared Reality

What are strategies to ensure this for your decision making efforts?

• Strengthen social cohesion at Board level and knowledge of current environment

• Support Board leadership in ensuring healthy, production conversation in Board meetings

• Engage staff and other stakeholders in informing the assessment of the organization and environment

• Explicitly address issues of interpersonal conflict

Other ideas?

3/1/2018

6

How to Assess Our Situation

Don’t wait too long

Hand out 1: Early Warning Tool: to assess corporate vulnerability and determine whether stronger measures, such a consolidation,

should be considered now.

3/1/2018

7

Two segments

• Assess financial red flags to assess financial vulnerability in anticipation of revenue loss

• Determine whether the entity is a viable core post revenue loss

Exploring Financial Red Flags

Defining the Core

3/1/2018

8

Understanding Your Options

Continuum: Cooperation to Consolidation

CollaborationCoordination Consolidation

Verbal

AgreementsMergers

Increasing central authority

Reduction in autonomy

CollaborationCoordination

Coordination vs. Collaboration

• Exchange information

• Avoid duplication

• Orchestrate efforts

• Cross referral

• Support advocacy efforts

• Complexity of the work is greater

• Number and kind of organizations involved may be greater

• Magnitude of the purpose rises in significance

• Number of levels that must be coordinated increases

3/1/2018

9

…vs. Consolidation

• Alterations of legal links between organizations

• Significant increases in complexity

• Higher risk (liability and financial)

• Longer duration

The implications for decision-making, process elements, and

anticipated costs for each approach are different.

Continuum of Options

Joint venture or partnership

Management Service Organizations

Parent Corporation

Merger or acquisition

High risk, high cost to create, reduced autonomy

Lower risk, lower cost to create, retained autonomy

Service Networks

Coordination

Collaboration

Purposes for partnerships/joint ventures

• Knowledge sharing or market access

• New product or program development

• Joint management of otherwise unstable programming

• Creation of referral continuums

3/1/2018

10

Joint Venture Models JOINT VENTURE MANAGER

INCORPORATED JOINT VENTURE

NPO 1 NPO 2

NPO 3Contractual

NPO 1 NPO 2 NPO 3

Partnership

Agreement

NPO 1 NPO 2

NPO 3

JV

Purposes for MSO’s• Reduce cost by

consolidating overhead

• Third party negotiations

• Joint purchasing

• Personnel management

• Facilities management

• Fiscal services

• Fund raising

• Planning

• Contracts management

• Marketing

• Quality Assurance

Management Service OrganizationsEqual representation

Board of the MSO

NPO 1

NPO 2

NPO 3

MSO STAFF

LARGE NPO

NPO 1 NPO 2 NPO 3

CONTRACTS

MSO DIVISION

3/1/2018

11

Types and purposes for networks

Coalition models• Joint advocacy involving cross

sector partners• Sharing information

Policy Strategy Network (Trade associations)

• Joint advocacy, sharing information, mutual support

• As a platform for joint ventures, demonstration projects

Regional Network• Place based• Create single points of

entry to multiple services• Integrate services across

organizational boundaries for single consumers

Types of Networks

Service Networks or “systems of care”• Capture continuums of care• Create single points of entry to multiple services• Integrate services across organizational boundaries for

single consumers• Improve quality across multiple agencies at once• Create efficiencies for state government and providers

• Reduce number of contracts• Reduce reporting requirements

Contract with state or managed care entity

Networks: many models

Lead Agency

CEO

Net

Administration

NPO 1 NPO 2 NPO 3 NPO 4 NPO 5

Contracts with providers

3/1/2018

12

Contract with state or managed care entity

Networks: many modelsLead Agency

CEONetwork

Administration

NPO 1 NPO 2 NPO 3 NPO 4 NPO 5

Network Administration

Board of NetworkContracts with providers

Bylaws and operating agreement

Purposes for Parent Corporations

• Phased merger

• Service integration

• Create financial stability for large, related entities

• Creation of subsidiary corporations within one large non-profit

Contract with state or managed care entity

Networks: many models

Board of the MSO

NPO 1

NPO 2

NPO 3

NPO 4

NPO 5

NPO 6

Staff of the MSO

3/1/2018

13

Traditional

PARENT CORPORATION

NPO 1 NPO 2 NPO 3

PARENT

CORPORATION

NPO 1

NPO 3

NPO 2

FOUNDATION

IP

TRUST

MSO

Non-Traditional

Parent

Subsidiary

Subsidiary

Foundation

Subsidiary

Parent Corporations

Purposes for Mergers/acquisitions

• Elimination of excess capacity

• Economies of scale

• Reducing competition

• Diversification of sources of revenue while maintaining economy of scale in management

• Reduce duplication of effort

• Capture multi-disciplinary approaches

• Invent organizations that previously were not needed

Acquisition, Merger, AmalgamationRESULT IS A LARGER NPO #1 SOMETHING ENTIRELY NEW IS CREATED

NPO 2

NPO 3

NPO 1 NPO 1

NPO 2

NPO 3

LARGER

NPO 1

3/1/2018

14

Continuum of Options

Joint venture or partnership

Management Service Organizations

Parent Corporation

Merger or acquisition

High risk, high cost to create, reduced autonomy

Lower risk, lower cost to create, retained autonomy

Service Networks

Coordination

Collaboration

Developing a Path Forward

Clarity of Internal Objectives• How do we expect the

environment to change around us?

• How will those changes, change expectations of our organization?

• Of the areas below, which will be most heavily affected?• Cost effectiveness

• Outcome accountability

• Quality assurance

• Collaboration• Social impact or public policy

• Increasing dependence on fundraising

• Adaptation of program models…fundamental redesign

• Need to establish for profit enterprises

• Outreach

3/1/2018

15

Clarity of Internal Objectives• Why are we considering an alliance or collaborative venture?

• Given the specific environment in which we operate and the challenges we face, can we more efficiently and effectively deliver on our mission statement by working together with one or more partner organizations, or by working alone?

Considering Your Options

Financially Vulnerable?

• Assess the Core• Consider

retrenchment and/or consolidation

• Partner Search

Financially Healthy?

• Consider options for partnership, collaboration, and or merger of smaller organization to enhance mission

Not sure where/how you could partner?

• Assess current programs and look for opportunities to partner

Not sure of structure?

• Financial health

• Understand type of work

Assessment Internal Clarity Strategic Options

Developing a Path Forward• Develop a solid base of information to inform your decisions

making

• Develop an approach for engaging range of stakeholders in understanding your financial health and initial options available to you

• Set a schedule of standing meetings with stakeholders over 3-6 months to monitor progress

• Acknowledge the ambiguity in these efforts and normalizediscomfort, while consistently focusing on mission and impact

3/1/2018

16

Questions?

Thank You!www.fiopartners.com