Group meeting in conference room talking about mergers

Mergers Up Close

As discussed last month, mergers and strategic restructurings can make a lot of sense if two organizations have similar missions and see opportunities to improve operations as well as program delivery by combining forces. In the past year, several of my past clients have been involved in mergers and strategic restructurings:

Having worked with these organizations in the past, I have some understanding of the strategic reasons why the nonprofit organizations chose to merge, but in the case of SMART Reading and The Children’s Book Bank, I was involved in the critical initial phases of the merger as the interim executive director at The Children’s Book Bank. I would like to provide some insight and lessons learned from that experience.

I began working at The Children’s Book Bank in the fall of 2021. Shortly after arriving, I discovered that the board of directors of SMART Reading and The Children’s Book Bank had begun formal discussions about merging a few months before my arrival at the organization. The informal discussions about how the organizations could work more closely with each other had been ongoing between the two executive directors for several years.

The departure of one of the executive directors provided an optimal situation in a merger situation. Hiring an interim executive director allowed for the discussions to continue in a thoughtful manner without a break in operations.

When I became involved in the process, the organizations were involved in a due diligence process. Each organization shared key documents with the organization including board minutes, financial statements, articles of incorporation, bylaws, organizational charts, etc. At this point in the process, the purpose of sharing information was to allow each organization a transparent view of the other organization. After all this information was gathered and teams from each organization had had a chance to review, several meetings transpired with representative board members from each organization and the executive directors participating. This process took place over the span of about four months

Once both organizations felt comfortable with the mission alignment, organizational cultures and finances, they entered into a formal letter of agreement to examine the possibility of merging. It was important to both organizations at this point to be clear that each organization was in the position to back out if they saw any reason why the merger would not be feasible.

Only after the letter of agreement was signed were the remaining staff of each organization informed of the discussions and brought into the process. As was anticipated, the first question asked was: “What does this mean for me?” Staff wanted to know if they were still going to have a job and would it be a job they wanted. Staffing had been discussed thoroughly before filling in staff and in this case, we were able to tell every member of the staff that we did not anticipate any layoffs as a result of combining forces.

We were also able to tell staff that they would be involved in the next step in the process which was to look at the feasibility of the merger. We needed to be sure that a merged organization would be financially sustainable, determine how operations would be combined, and examine how joint programming would look. Structurally, this next step included a Joint Committee made up of leadership from each organization and four subcommittees to examine particular issues. Staff and board members served on each of the subcommittees looking at Programming, Operations, Development and Communications. By involving staff in the process, they had more of a sense of ownership in the process alleviating some of the concern about what their jobs would look like when this was all over. This step took about four months with each of the boards of directors separately approving moving forward with the merger with both organizations recognizing that combining the organizations would ultimately improve service to the children of the community in line with both of their missions.

Quote by Henry Ford

The two organizations co-wrote a well-developed communication plan that included the creation of talking points and notification of a few key stakeholders prior to the public announcement. A later phase will involve actual implementation of the merger including meeting the legal requirements of combining the organizations, merging systems (ie. payroll, donor database, email, branding, shared database platforms). This process may take as much as a year to complete.

Here were some of my observations from being involved in the process and from what I know of the other mergers in my orbit:

  • Having a process is important. As noted last month, The Nonprofit Mergers Handbook by David La Piana, is an excellent resource for creating a thoughtful process.
  • The process of bringing together one or more organizations is going to take time and should not be rushed. The process is a little like dating before marriage. One needs to be sure that the outcome will be positive for all parties involved. As with all relationships, this takes time and builds a fair amount of trust.
  • Even when there is close alignment between the organizations and good reasons for merger, there are likely to be hiccups throughout the process. Relying on trust and a dose of grace will serve everyone well.
  • The more people who can be involved in the discussions, the more likely you are to have buy-in at the end. That does not mean a committee made up of every board member, staff and volunteer, but all should feel like they are represented and have an opportunity to ask questions and raise concerns.
  • The actual merger of organizations is not like flipping a switch that magically makes two organizations into one. Not every step in the process has to happen at the same time. Department staff can begin meetings and systems can be combined before the official paperwork is filed.

In the competitive environment of nonprofits, seeking public support, combining forces can improve program delivery and operations. Given the number of nonprofits that I come in contact with that have made this move in the last year, there appears to be a trend. You should examine whether this might make sense for your organization and one or more of your natural partners. That conversation starts with the board of directors. Understanding and evaluating all the areas of such a big transition will minimize the surprises and help you determine if the merger is in the best interest of the community you serve.


building blocks

Mergers and Strategic Restructuring

“Alone we can do so little, together we can do so much” ~ Helen Keller

According to the National Center for Charitable Statistics, more than 1.5 million nonprofit organizations exist in the United States. Many organizations have very unique missions or serve very specific geographic areas, but we can all think of examples where organizations with similar missions or serving similar clients are competing for limited resources. But there are organizations recognizing the benefits of cooperation among organizations.

Writing notes

Combining resources through a merger or other strategic restructuring may be one way to increase the strength and reach of an organization while increasing administrative efficiency. But how does one go about exploring and/or actualizing such a significant endeavor? According to La Piana Consulting, it can be one of the most strategic efforts a nonprofit can make. 

There are three areas to such an endeavor and the firm provides an excellent toolkit to help guide the process. One of the first steps is to create a team to shepherd the research and plan development. The makeup of the group should include one or two board members, the executive director, and key leadership team members.

  • The Evaluation – Start with Why

    There are many ways for nonprofits to partner in a strategic way and one is to combine all resources to level up services.  However, understanding the end goal by assessing the intention and viability is key to determining if a merger is that destination. For example, if you are looking to pool a collective knowledge base and eliminate redundant service it may make sense to join forces. How ready is your organization to make such a move?

  • The Negotiation – The Art of Agreement

    Here lies an opportunity to take a deep dive on how the organizations might work together by aligning resources and missions. The ultimate goal is obtaining a clear understanding with parties that the merger will make sense to both organizations.

  • The Integration – Putting the Pieces Together

    At this point of the process is bringing together all the various components to launch the newly merged entity.  It is at this point that proof is in the pudding – success or failure.  It looks at how the board, operations, finances, programs, staff, and infrastructure all sync up to become a fully functional organization.

Another key activity is how to communicate changes internally as well as externally. Staff, volunteers, and program participants should not be surprised by the changes and be part of the process.  Community stakeholders and funders should also be made aware of the merger in appropriate fashion. For example, how and when you notify a foundation that has awarded your nonprofit a large amount versus notifying your donors will have a different timeline and amount of information you will disclose.

As with any great idea, there are also possible challenges and pitfalls to consider.  Some many consider a quick move without practicing due diligence and investigation in the beginning of the process. Here are some other items to consider:

  • Always include staff in the process.
  • Recognize the culture of the organization.
  • Determine the level of confidentiality.
  • Consider the impact on stakeholders.
  • Identify all the costs associated with the merger.
  • Understand the required signatures needed for the documentation.
  • Plan for new systems and integration of staff.

If your nonprofit is looking at a potential merger, consider the strategy behind the pursuit. Are you looking to grow the organization to increase revenue and/or reduce expenses? Conducting your due diligence and thorough planning can lead to a successful collaboration. Knowing all the actions required is also necessary. Knowing how the change will impact your community is equally important.

In our next blog, we will explore some examples of mergers and lessons learned in the process.


Person writing notes on paper

Creating a Fundraising Plan as easy as 1-2-3

As Amy Einstein covers on her website, the pieces of a fundraising strategy consists of several pieces and when you assemble those pieces in a thoughtful way, you will have a road map for raising money.

According to her article, there are several activities to do this:

  • Build a foundation
  • Define your goals
  • Identify your course corrections
  • Write it out and live the plan

Like building a house, you do not purchase a couch if you do not have a living room to put it in. As with a fundraising plan, you have to start with the beginning and create a solid foundation to build upon.  Evaluate what you have done in the past and keep in consideration what external events were part of those fundraising cycles. Also make a note to do an immediate evaluation of each activity so you do not have to scramble to find that information when it is time to assemble your plan.  

As you determine your overall financial goals, I encourage you to establish both actual and stretch goals.  We have just experienced an unprecedented world event with the global pandemic and although the nonprofit sector has experienced both an explosion, as well as, a loss in support, using your organization’s historical performance with other possible influences will help you craft another strong method of keeping track of your course.

Of course, not every effort is the best one and now is the opportunity to determine whether or not a ‘tried and true’ event makes sense to continue, for example. There are also ample opportunities to explore new ideas.  Perhaps your organization has yet to launch a major donor program and this year may be the year to do that. Or, perhaps your board has not been engaged in as many fundraising efforts as you had hoped.  Now may be the time to include some board training around how to use social media to build awareness about your nonprofit.

After all the evaluation, a plan that stays in your head will not do the organization any good, so write it out. Review it with key stakeholders, like your executive director, to ensure there is buy in for the goals and support for needed resources. Be sure to refer to the plan and check in on it on a regular basis.  Make adjustments as needed in the event of unexpected changes. 

Keep in mind that a majority of your donors will research your nonprofit’s online presence to get a sense of stability and community impact. Not only do you need an engaging website, you also need to be active on social media. Investing in this foundational communications infrastructure is the start of your fundraising efforts.

When crafting your digital presence, keep these things in mind:

  • Search engine optimization (SEO) is key to having donors find you on the internet.
  • 70% of people living in North America have a social media account.
  • Understanding who uses which social channel helps you focus on your own presence.
  • Email lists are a direct link to your donors and is one of the most effective ways to connect.

In closing, your development plan should be crafted as part of the budget development cycle of your nonprofit as your fundraising goals tie into your operational budget. It also informs your work plan for the year. By doing the evaluation and due diligence at the front end, you will have focus and strategy to reach your goals so your nonprofit can do the work it does in the community.


Beginners Guide to SEO

Beginners Guide to Successful Email Marketing

How to Create a Fundraising Plan

Are you in tip top shape for a strong year?

One of the best things you can do for your nonprofit is to assess your strong points and the missing links in your overall fundraising efforts.  That’s where the development audit comes in. It is your measurement tool to help monitor how you are doing and how you can improve. Often times, some small tweaks to your development efforts can result in a large increase in revenue.

Basically, it is taking some time to assess your program and to evaluate if you are ready to level up your fundraising efforts.  The development audit should take a 360 degree view of your organization, including board engagement, staffing, the effectiveness of your database, return on investment with your current tactics, your reputation in the community, systems, volunteer engagement, how your donors view you, and stewardships, It is a fantastic tool at the start of a strategic planning process or considering a capital campaign effort.

The Association for Fundraising Professionals partnered with the Center on Nonprofits and Philanthropy at the Urban Institute on the Fundraising Effectiveness Project and offers an assortment of resources and tools that are of great use in audits. It focuses on growth-oriented fundraising programs.

It is best completed by a consultant to offer objective feedback on findings and once it is completed, it can offer useful insights to identify your strengths and course correct on your weaknesses. It is a fantastic tool to help your organization grow and can reconnect all of your internal stakeholders with your mission and purpose. The bottom line: investing in a development audit will point you in the right direction to grow your fundraising income.

Free Download from the Association of Fundraising Professionals to help you map out your audit!


The Million Dollar Question: How do I boost year end giving?

The season of year end giving is upon us and with it, both the challenges and opportunities to engage more donors in supporting their favorite charities.

A big chunk of annual giving is in November and December with a significant portion coming in the last three days of the year.  Donors are using digital means, more and more, to make those gifts. 

According to SAGE Intaact, over half of donors use an online access point to make a donation and almost 70% want their tax letter emailed to them, not sent via snail mail.  

It is the time of smart devices with instant access to any nonprofit website – is your digital presence ready?

Most donors are doing online research before they give and websites must be mobile friendly and super easy to navigate.  Offering your powerful statement of purpose on your home page with an urgent call to action are still necessary.  Interconnecting with your various social media channels is also a must.

So how do you convey that messaging?  

Strategies vary depending on your audience. For example, Millennials prefer to watch videos while Generation X most likely wants a relationship with the nonprofit as a volunteer.  Baby Boomers typically are big fans of sustaining support while older donors still like receiving a letter in the mail.
Your best bet in serving your donors with meaningful opportunities is to communicate the urgency of why your service is needed and craft methods that will speak across the digital board to your various demographics of donors.  Transparency demonstrating how those dollars help you do good work will go a long way in establishing trust with donors, too.  

Another thing to keep in mind as your look to next year’s efforts, be sure to start building your email lists to engage with potential donors.  Be sure to personalize those communications in order to build a relationship with those donors who have opted in to support your cause.

Make your impact easy to find and clear to understand.  As donors look to open their digital checkbooks this holiday season, you want to be responsive to them.


Meeting Your Fundraising Goals Starts With The Correct Tools

Your constituent relationship management system, often referred to as your donor database, is one of your most important tools. Having a suitable database is a key investment so your organization can develop meaningful relationships with your biggest fans: your donors. One should not take lightly the decision to select the right system.

A good system will help track your conversations and help you segment your donors based on their giving history and interests. It will also manage connections to board members and other leadership staff at your agency as you develop your major gifts program.

The first step is evaluating the goals of your organization and researching what databases are available to tackle your needs. Next you need to determine what information you want to track and how to organize the data. You can make changes down the road, but setting everything up right initially will save everyone a lot of time later. One should put a great deal of thought into how to customize the structure and how to input the information.

My expertise includes conducting an assessment of your database needs and providing you with options for the best system to track your relationships with all your constituents. I can use my experience working in a variety to donor databases to help you plan how you organize and customize your database. I can also evaluate the strengths and challenges of your nonprofit’s development systems and provide solutions to identify your biggest opportunities.

If you are looking to set up a new system or clean up an existing one, please contact me for more information!

“I am so grateful for James and his extensive experience in fundraising and management of donor records. Our organization had limped along for years with an archaic gift tracking system. As a result, it was a challenge to develop meaningful relationships with our donors. James cleaned up our information and now we know who they are in order to cultivate lasting relationships!”

Kate Van Ummersen – Executive Director 
Salem Public Library Foundation 

Let the Numbers Be Your Guide

The Giving USA Foundation just released their report about charitable giving in the United States for 2018. The Annual Report on Philanthropy contains research from over a million nonprofit organizations and several thousand religious institutions. According to the report, charitable giving in the United States hit over $427 billion last year. Although this was a slight increase from 2017, when accounting for inflation, it was actually a decline – the first since 2013.

The Report shows that in 2018, 68% of charitable contributions came from individuals. Those who have not paid attention to past reports are often surprised to find out that individuals are the biggest source of support for charitable organizations. Those not involved in the charitable sector often assume that business support and grants from foundations provide a majority of an organizations income, but as you can see, donations from corporations only accounted for 5% of charitable support and foundations provided 18% of charitable support. Another 9% comes from bequests.

The report speculates that between a strong economy, a year-end stock market drop, and new tax law created a complex giving environment. Individual giving dropped dramatically from previous years. Speculation is that the change in tax law created a rise in foundation giving grew as more individuals turned giving through donor advised funds and family foundations.

So what might these numbers mean to you and your organization? When analyzing the development function of an organization, I like to compare the mix of charitable support for each organization with the statistics from the Annual Report on Philanthropy.  Every nonprofit is a little different but these figures can provide a benchmark for the level of support that your organization might receive from each source. For those organizations that do not have a well-established history of charitable support, the percentage from each source can be a guide for the allocation of resources. For example, an organization that is just beginning to raise funds might want to spend 68% of their time and resources soliciting individuals since 68% of funding comes from individuals. Since 18% comes from Foundations, organizations can spend 18% of their time writing grants. Following this logic, organizations could spend 5% of their resources seeking sponsorships and 9% of resources on planned giving. Fundraising can be an art, but it is also a science. Information like that from the Annual Report on Philanthropy should be a guide in how you execute your development function.

Tips & Tricks for Making Your Small Shop Bigger

As you are managing your donor relationships and direct appeals, and all of the other important work in maintaining a successful pace in your fundraising efforts,  identifying key strategies to grow your fund development department is critical.  Here are some “Tips and Tricks” that can help you increase your capacity and raise more money for your non-profit! Thanks to B. Michael McFarland and Jim McBride who helped in the creation of these tips.

  1. Plan your work and work your plan – ​Take the time to create a development plan: create the first draft; share with staff for input; have your development committee review; and forward to Board for approval.
  2. Clearly communicate to Board members what the non-profit is expecting of them (“what we’re counting on you for”), such as annual Board member pledge, major donor prospect names/gifts, sponsorships, sell/buy event tickets, volunteer at events, etc.
  3. Conduct a Donor Retention Analysis year-over-year; create a campaign to win back lapsed donors; can be as simple as who didn’t donate last year who donated the year before at $XX+ level, then make them your top prospects.
  4. Segment donors to create custom/tailored appeals: Top 20 or 50 donors – include number of years donating, original donation date, last gift amount, etc. Segment others by program area of interest, or geography, or lapsed donors, or professional sector, etc.
  5. Do ONE event annually and do it well.
  6. Volunteer on a grant-making committee; you will be better at writing grants once you participate in the review of grants.
  7. Create a Planned Giving Prospects List: if you have a database that allows you to pull a report on lifetime number of gifts, use that report and sort from most to least number of gifts (that’s your prospect list for soliciting planned gifts; the number of gifts an individual has made to your organization is a good indicator of their likelihood of making a planned gift).
  8. The IRS requires you send a ‘thank you’ for any gift over $250 – send one for EVERY single gift you receive, regardless of amount.
  9. TechSoup provides discounted software and hardware for qualified non-profits. A fantastic resource!
  10. Read “​Fundraising for Social Change​” by Kim Klein. 

Download the full article here!

If you are interested in taking a deeper look at your fundraising capacity, please contact me about my planning services.