1. Kenneth Grounds McCormick Group October 17, 2012 Non-Profit Merger: A Key to Building Capacity and Survivability Finance and Administration Roundtable

2. What Is The McCormick Group And What Are They Doing Here? Formed in 1982 by Dan McCormick Three primary competencies: 1.Create/establish new NPOs 2.Assist organizations with structural change/collaboration & merger 3.Guide NPOs through best practices screening and Modeling Clients include: American Cancer Society; Girl Scouts of the USA; The Arthritis Foundation; National Hemophilia Foundation; John Denver’s Windstar Foundation; United Way Worldwide and hundreds of others.

3. Paraskevidekatriaphobia: Fear of Friday the 13 th

4. Paraskevidekatriaphobia: Big Word No one knows why. As many as 21 Million people in the USA have some fear of Friday the 13 th.

5. Paraskevidekatriaphobia: Connotes a fear that cannot usually be substantiated. Fear comes largely from anecdotal information: stories we have heard. “Not sure what the issue with Friday the 13 th is all about but it pays to be careful.”

6. Non-profit organizations have their own Friday the 13th Word …

7. Perceptions: What Do We Hear? “I’m not sure what is going to happen” “There seem to be many unanswered questions.” “I’m worried something bad will happen.” “I’m feeling a sense of potential loss.”

8. Perceptions: Other Drivers Family and friends whose company merged Stories about what a mess mergers can be Fears that longtime staff will be fired Concern that ‘bigger is not always better’

9. Facts Can Be Negotiated, Perceptions Cannot

10. Perceptions: NPO Merger Many NPO merger fears and misconceptions arise from an assumption that non-profit merger is the same as for- profit merger.

11. For-Profit Not-For-Profit MoneyMission Perceptions: Understanding NPO Merger For-Profit merger is about money: The value proposition can be determined clearly on the front end. NPO Merger is about mission: It is not about trying to live up to an artificial financial pro-forma.

12. For-Profit Not-For-Profit Perceptions: Understanding NPO Merger  Positioning for the future  Increasing Capacity/scale  Acquisition/hostile takeover  Money/shareholder equity  Downsizing staff  Economies/cost cutting  Management Control  Positioning for the future  Increasing Capacity/scale  Never, all must agree  Mission impact  Not usually  Yes, but not a primary driver  Sharing governance

13. Collaborations  Lots of options  Some involve trading/sharing excess capacities  Program/marketing/expertise/backroom  Some involve gaining economies of scale  Combined purchasing  Some involve helping donors  Combined campaigns/recognition

14. Collaborations  Some involve helping other agencies  Shared mission priorities  All should lead to greater impact for our causes  All collaborative forms are on a continuum

15. THE COLLABORATIVE CONTINUUM COMPLEXITY POTENTIAL BENEFITS INITIATIVES INSTRUMENTS Communication Shared Services Joint Ventures Shared Governance Merger MOU/LOA*Contract Legal Filing *Memo of Understanding / Letter of Agreement

16. In Other Words…

17. Courting Your Partner Flirting o Identifying a Partner o Exploring Synergies o Establishing Trust Dating o Exploring “What could it look like” o Learning about Warts o Building Trust

18. Meet the Parents o Volunteer Involvement o Community Discovery o Building Trust Moving in Together (optional) o Shared Services o Collaborative Ventures o Discovering Warts Courting Your Partner

19. Engagement o LOI (“Letter of Intent”) o Due Diligence (wart hunt) o Corrective Action (if needed) Dowry o Promise -- Vision Courting Your Partner

20. Marriage o Merger Agreement o Board Votes Announcement o Launch Strategy Filing the License o Closing o Fulfilling Conditions o Regulatory Filings Courting Your Partner

21. Making it Work (integration) o Culture o Development & Marketing o Mission Impact o Systems o Finance Courting Your Partner

22. All collaborations are on a continuum The exploration/discovery process is nearly the same for all forms of collaboration NPO mergers are not the same as for-profit mergers (mission vs. bottom line) While efficiencies will be gained, mission impact is the key driver It all starts with a “conversation” Key Takeaways…

23. Thank You