Franklin Forum Roundup: Tips to Help Organizations Tread Water in Rough Seas

Do you feel like your organization is barely treading water?

In the session "Help! My Development Team Comes to Work in Lifejackets!" at the Franklin Forum, sponsored by the Association of Fundraising Professionals Greater Philadelphia Chapter, in Philadelphia in late April, presenters discussed the signs and symptoms of organizations in distress and solutions to weather the storm.

Martha M. Buccino, senior vice president of strategic development for Philabundance, the Philadelphia area's largest food-relief charity, discussed her organization's experience merging with the struggling Greater Philadelphia Food Bank in 2005.

If it's come to the point that your organization is considering merging with another local organization, she said questions to consider are:

• Why do you want to merge? Is it a financial situation? Does your board want it?
• Do the two organizations have like missions?
• What is your long-range plan?
• Are the organizational cultures at the two organizations the same or different? This is key, Buccino said, stressing the importance of being sensitive to the internal cultures at both organizations.
• Are the database programs for both organizations compatible?
• Is reporting the same for both organizations? (e.g., does one rely on grants while the other relies on individual gifts?)
• How will you handle staffing changes as a result of the merger?

Philabundance made a plan around which programs could be merged, which would stand on their own and which would develop into something else. It made offers to some staff members for early retirement, and others took the opportunity to go back to school, start a family, etc.

Buccino said the merger process from pre-planning to full effect took about 18 months. She said due diligence is vital to making a merger work, as are candor, finesse and time. She also urged attendees to set a breaking point for the merger, i.e., something that would stop it from happening. Philabundance established a dollar figure of a loss that it wouldn't be able to sustain, and that was its breaking point. Teams met on a weekly basis to report on their findings and keep track of whether they hit that dollar loss.

In the end, Buccino said, the merger has benefited the community in that the organization can now provide better, more comprehensive services and has the opportunity to grow and expand.

Joanne Bursich, director of the Philadelphia program for the Nonprofit Finance Fund, said mergers or co-programming are options small organizations with budgets under $500,000 that are having difficulty managing through these tough times should seriously consider.

She also said organizations need to understand two key things during this economic downturn: 1. it will be a sustained recession lasting at least two years; and 2. once things look like they've gotten better, they won't look the same as they did before.

She encouraged organizations to use this time as an opportunity to proactively restructure themselves, recommending they look at:

• Mission fit of programs.
• Organizational structure. "Restructure so that you can deliver programs and services more efficiently," she said.
• Budget and finance.

She left attendees with three pieces of advice:

1. Focus on mission. Why are you in business?
2. Be honest about your financial picture, internally and externally.
3. Don't start anything new — e.g., a capital campaign — unless you have a really good plan in place. Focus on strengthening existing fundraising sources and programs.

Patricia Wellenbach, president and CEO of Sandcastle Strategy Group, recommended nonprofits find opportunity in the economic challenges. She added that accountability and leadership will be tested in this economy. Bottom line: Don't panic.

Wellenbach also recommended the following tips and best practices:

• Consider the board as your partner in getting through this.
• Determine what your organization's competitive advantage is, think strategically, and be crisp in how you articulate it.
• If something you're doing isn't working, don't keep doing it. "Sunset it respectfully," Wellenbach said. This requires taking a step back and deciding what is mission critical and what isn't.
• Be candid about your financial picture. You have to understand it if you're going to fix it.
• Come up with financial and programmatic contingency plans. As an exercise, ask those in charge of each program within your organization to define their purpose so that you can look at the big picture and determine where purposes overlap. That way your programs will have more impact, and you'll be working smarter and leaner.
• Come to the table with solutions to problems.
• Ramp up fundraising. There is no better time, Wellenbach said. Keep funders in the loop, reach out to past donors and engage new friends. While many may not give, they might become future donors, board members, volunteers, etc.
• See if the board can tighten its belt. Take a look at the compensation structure of the board. "It's not 'how do we cut expenses,' but 'how do we balance our budget,'" Wellenbach said.
• Be a mission guardian. This involves really understanding the "why." Why do you exist? Should you continue to exist? If not, why not? Should you think about a merger?

Organizations that are being bold and asking these questions will be the ones that not only survive, but thrive during this time, attracting the support of leaders who want to be a part of their missions, as well as donors, Wellenbach said.