Alliances & Mergers: An Unlikely Journey to Scaling Mission
It was painfully hot in Phoenix, Arizona the day I locked our office doors for the last time. In the short span of 30 days I had laid off 50 staff, sold as many chairs, desktop computers, staplers (I still have one), and wound down the operation of my first real leadership job. It was a brutal ending to my role as Vice President of Client Services for a consumer credit counseling nonprofit start up. I still clearly recall one conversation with our CEO in the final days as we lamented what could have been. I openly wept in front of him as the weight of the impact on staff and our customers soaked in. We were the first 24/7 contact center enabling consumers around the United States to call any time, night or day, for advice, budgeting, and debt repayment planning. In 1999, we were among the pioneers offering online financial counseling—cutting edge at the time. Our product was great, but our timing was horrible. The economic boom of the late 90s meant few consumers were interested in financial counseling. So after two years of operations during one of the most prosperous periods in recent U.S. history, we were forced to close our doors. Bad timing can sink an otherwise good idea. But what if we had found another way to continue the mission?
In recent weeks, the world has been stunned by a global health and economic crisis. The unfolding COVID-19 pandemic threatens life and livelihoods, having put approximately 33 million U.S. citizens out of work over a seven week period and creating a 4.8% reduction in GDP for the first quarter of 2020. Over 1.6 billion children around the world are out of school. Some are predicting that this is much more than a short-term storm, but a season of change and possibly an "ice age" with permanent impacts on social norms and business practices. McKinsey & Company recommends responding across five time horizons reaching as far out as two years. One thing is certainly clear: nonprofit leaders must consider bold moves in response to these events to stay on mission.
To begin, we must consider the current state of the non-profit sector in the U.S. As of 2015, there were 1.56 million active non-profits in the U.S., having increased by 10.4% from 2005. The nonprofit sector is the third largest employer in the country with 12.3 million people employed as of 2016, just behind retail and accommodation and food industry sectors. Yet while the sector is large and influential, a significant majority of non-profits have small operating budgets. In fact, 43% operate on less than a $500,000 annual budget. Many of these nonprofits compete for the same donor dollars and foundation grants while duplicating support services like H.R., technology, and finance. Will the current nonprofit landscape be able to serve our constituents with excellence and thus fulfill our missions in the current climate? As people of faith, could we find creative ways to radically improve efficiency without sacrificing our missions - and even innovate for greater mission impact as part of God’s Kingdom?
The stapler from my first leadership role. I wish it was red.
In response to these pressing questions and our unprecedented times, Strategy for the People is launching a new approach. In collaboration with Globe Consulting and Oakley Global Consulting, we are announcing Mission-Advancing Alliances & Mergers services to help your organization assess their current situation, explore new alliances or mergers, and execute in order to build new mission opportunities. Together we can make 1 + 1 = 3. Now is the time for Christ-centered nonprofit leaders to join forces and explore bold alternatives. Don't lay off staff and start selling the staplers before you consider mission-advancing alliances and mergers. Here are a few factors to consider first:
Your organizational mission is what's most important. Finding significant new efficiencies through alliances or mergers can enable more mission. Don’t settle for less.
To find suitable partners for collaboration, consider commonalities and complementarity across mission, culture, and strategy, leading to greater outcomes.
Best practices show that an independent third party is essential for successful consolidation.
In the coming weeks, Strategy for the People will release more ideas and practices on how nonprofits can form alliances or mergers successfully. Join us on May 21 for a webinar co-hosted with the Accord Network where we will learn from executive leaders from Project Concern International regarding their recent merger with Global Communities. And if you’re curious to learn more, please use the contact button to start a conversation. I look forward to exploring what the future can look like together.