In a two-year period, the Foundation Center logged in a total of 679 coalitions/collaborations with 499 of these in the area of developing, offering and delivering projects, programs and services between two or more organizations. That is almost 500 of these types of collaborations in only two years. Building the right coalition model is understanding the outcomes being sought as well as what can your organization do with another organization that it can’t do by itself. It must be mutually beneficial and fill a gap for one or more organizations. For the sake of this article, we are only looking at mergers or partnerships.
Areas Outside Of Common Ground
It is very easy to identify areas of common ground when considering a form of a coalition, for example a partnership or merger, where they are mutually beneficial. It is even more important to identify right up front what is “outside of common ground” in this relationship. Or, what are the “deal breakers” that will make it impossible to move forward? In a recent merger facilitation between two state organizations, we found the following areas that needed strong attention before the merger could move forward:
- Staffing– Can we agree on staffing moving forward and leave the emotional out of the business decisions we have to make (i.e. two Executive Directors to one)
- Organizational Structure– There are many items to consider including if the membership composition needs to be merged and the effect (i.e. more business members vs. those from the healthcare industry, the Board composition, etc.)
- Loss of Focus– Will the two organizations lose focus and dilute its concentration in its area. If there are two state organizations, will there be a loss of state focus? If an international and a national association, will there be a loss of focus on international or national issues? Where else will losses of focus happen? Important to understand up front than later into the process
- Loss of Identity– Will one or the other organization lose its identity? Here is another question, which organization will dissolve legally? Dissolution is mostly a legal process but one organization will have to put it to an official vote (review your state statutes on mergers). Knowing that this may happen will help avoid major issues in the future as it is an emotional issue to dissolve an organization that has been in existence for some time
- Member Buy-In– What will the members think of this partnership or merger? How do we message it to them in a methodical fashion? Member buy-in needs to be considered and perceptions managed. Also, joint communications to the members of the merging organizations is important. Create and execute a communication strategy together. Timing is everything in order to effectively communicate the joint message. Finally, ensure there is a way for members to ask questions by creating an FAQ page on the Website, a merger hotline and establishing frequent communications
Successful Coalition Building
So, you have now identified issues and have found a suitable partner, now what? The next steps are critical to ensuring the merger or partnership a success.
- Merger or No Merger– Before anything happens, all parties need to formally sit down and agree that a merger or partnership is the direction that is being taken. If not, then there is no need to spend resources (time and money) to move forward on discussions. A collaboration may be the best route and that is what the organizations can move towards without all of the legal and accounting issues and costs
- Professional Guidance– Hire an accountant as well as an attorney as there will be stages in this process where you will need legal and financial advice. Also, hire a consultant that has experience in nonprofit mergers or partnerships. It is important to find professionals that can work within your budget to get the job done and help to guide staff and volunteers in preparatory work to defray costs
- Structure & Finances– The organizations involved in the merger or partnership need to sit down and discuss the structural and financial implications of the merger or partnership (i.e. combined budget, programmatic changes, membership dues & requirements, etc.). Once this is done, the work should be shared with an accountant and attorney for review. Important, as much work as possible should be done by the leadership and staff before professionals are engaged so that fees are at the absolute minimum
- Constituent Analysis– Another key item is to ensure that constituent interests are synchronized to make sure that there isn’t misalignment. We advise clients that a profile of all of the member types in both organizations are developed to determine their key value needs (member value analysis). Once that is developed, the data can be compared to the other organization. The best outcome is to identify commonalities with both organizations, which would not necessitate creation of new services. In addition, are there efficiencies in place that will help strengthen the bottom line (i.e. combining annual meetings, Webinars, programming, etc.)
- Strategic Planning– In the case of a merger, it is recommended that the newly combined organization conducts a strategic planning session to create a strong mission, vision, goals, strategies, tactics and budget for each area of priority. This should be done after the official papers are signed
- Key Performance Indicators– It is recommended that key performance metrics be established. This could, and more than likely, should be a priority during the strategic planning session. Key performance indicators (KPIs) in market share, net income, reserves, etc., should be evaluated
It Is All About The Fit
In considering a merger or partnership, there may be many commonalities and reasons to work together but more than 50% of the decision revolves around the fit with the personalities on both Boards of Directors that at some point will be one body that looks different than it currently does. Many mergers and partnerships fall apart at the negotiating table when the two or more Boards do not mesh. If there is not a fit, it is very palpable in the room and can be overcome with proper planning and compromise on issues. Where there is not a fit is if the personalities at the Board table are so vastly different that no matter how good the partnership or merger looks on paper, it cannot move forward.
The advice is to conduct your due diligence and take your time to review both organizations “books”, members, practices, structure, finances and other key items thoroughly. You only get one shot at it and you want it to be as successful as possible as the members will be the direct recipient of either a successful merger or partnership or a botched one.
Bill Pawlucy, MPA, CAE, IOM, is founder of Association Options, Inc. a company that focuses on practical strategic planning (corporate and nonprofit), management assessments, Baldrige Award process implementation, AMC search and evaluation, facilitation, and governance modeling. He is also the executive director of the International Association of Interviewers and is an appointee to the U.S. Department of Commerce Board of Examiners for the Baldrige Presidential Award.