Board Learning Opportunities

For-Profit Boards Versus Nonprofit Boards: Similar Challenges?

   

By: Eugene Fram  

For-Profit Boards Versux Nonprofit Boards: Similar Challenges?                               

The wise person learns from his/h own experiences. The wiser person learns from the experiences of others. Chinese Proverb

The CEO Forum published an article covering the governance views of five business board members, known for their wisdom and vision.   Following are some of topics in the article that relate to nonprofit boards. *

Good governance is dependent upon well-curated boards. This means that nonprofit boards must look beyond the functional competencies (e.g. accounting, marketing, law, etc.) for candidates. Within these groupings, they need to seek candidates who have strategic outlooks, are comfortable with critical thinking and have documented leadership skills.   This requires recruiting and vetting efforts that go well beyond the friends, neighbors and colleagues who traditionally have been the sources for board positions. Also related is the issue of board succession, since that many will leave the board after a four to six year period. The current board(s) has an obligation to make rigorous recruiting and vetting become part of the nonprofit’s culture.

Assessing long-term sustainability. In the past, nonprofits have projected longevity because there will always be a need for the services or products they provide. This is no longer an assured proposition. Nonprofit day care centers now must compete with those that are for-profit. Improvements in medication have decreased the need for individual counseling and many new technologies can quickly solve problems that are embedded in the nonprofit’s mission.

Review governance best practices carefully! Know who is suggesting them and make certain they are appropriate for a specific organization. For example, some experts suggest that executive committees should be eliminated. However an executive committee that is responsible for a slim board committee structure can be effective in driving change and promoting better communications throughout the organization. **

Changing public accounting firms. Nonprofit accounting practice suggests changing public accounting firms about every five years. However one expert suggests, “It is important to ensure that judgment areas such as nonGAAP disclosures are well-defined, supporting calculations are well-documented and that the definitions and calculations are consistent across reporting periods.” At times of accounting firm change, nonprofit board members need to be able to add these issues to their question that they pose to management.

Ethics & Compliance. Like business organizations, nonprofits are subject to significant lapses in ethics and compliance. One study of  nonprofit fraud found that it 46% involved multiple perpetrators.  ***  As shown in the recent Wells Fargo debacle, establishing the tone for rigorous applications of a standard needs to start with the board and flow through all management levels. In the current environment, audit committees have to be especially alert and take immediate actions when red flags arise in either the ethics and/or compliance areas.   In my opinion, a nonprofit audit committee that meets only once or twice a year is not doing the necessary job.

Strategy. The nonprofit board has an obligation to help management see “around the next corner.” This involves board members assessing coming trends and sparking civil and meaningful board and committee discussions.

Board member comfort zones. Like their business counterparts, few nonprofit board members are “comfortable testing how to rock the norms.” It is easier to acculturate new directors to the current norms, a process that is inward bound and self-defeating. But a start can be initiated with questions such as, “If we were to start a new nonprofit across the street, what would it look like and who of the present board and a staff members would we ask to join us?

*https://www.forbes.com/sites/robertreiss/2017/05/22/americas-five-governance-experts-share-perspective-on-boards/#2a2ee326659a   

**For documentation see: https://goo.gl/QEL8x3

***https://nonprofitquarterly.org/nonprofit-fraud-its-a-people-problem-so-combat-it-with-governance/P

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Is Your Nonprofit Forward-Focused or a Prisoner of the Past?

Is Your Nonprofit Forward-Focused or a Prisoner of the Past?

By: Eugene Fram           

Governance arguably suffers most … when boards spend too much time looking in the rear view mirror and not enough scanning the road ahead. *

It has been my experience that nonprofits rarely address the possibilities and perils of “…the road ahead.” An endless stream of current and pressing issues can cause both Board and CEO to take a myopic view of their nonprofit responsibilities — either totally ignoring strategic issues or procrastinating a discussion of the subject. The results can be damaging to the organization. Here are some “prompts” that might guide nonprofit board members and CEOs as they attempt to provide leadership in this important but neglected area:

Balanced Agendas — Include and highlight strategic issues on every board meeting agenda (not just when a committee report is presented) until they are resolved with action plans, policy development or thoroughly discussed and removed. This constant emphasis on planning can go a long way towards achieving concrete actions on topics of future concern. A discussion of immediate issues juxtaposed with ongoing strategic concerns will provide a balanced meeting format that may possibly discourage board member’s attempts to micromanage, a very common tendency in nonprofit boards!

Short Term Focus — In a BoardSource report,  “…only 33 percent of nonprofits report that their board members are actively involved in advocating for their missions, and many organizations aren’t advocating at all.”** To inspire and challenge board leaders to actively serve as ambassadors.  The explanation for weak performance in this area is often attributed to the fact that the directors’ terms of service on the board are usually three to six years during which time people’s interest in the long-term future of the organization may be compromised. Some boards may be disproportionately represented by “millennials” whose participation comes with heavy time constraints. Problems of this type can be mitigated by seeking board members who are partially or fully retired. They are likely to be better equipped to focus on the important governance functions and the fundamentals in which the nonprofit operates. Boards need to look to look further out than anyone else in the organization… There are times when CEOs (those operationally concerned with strategy) are the last ones to see (environmental) changes coming.

Board Recruiting — Nonprofit recruiting can be a hit-or-miss process, often producing candidates who are readily available and familiar to the current board. Rarely will the committee seek out people who have strong track records as strategists and/or competent visionaries. This is a real challenge, but a forward focused board should make every effort to identify potential directors who have these types of experience and skills. The topic of recruitment is a challenging one and the process should have continual annual evaluation.

Can Nonprofit Boards Work Smarter Not Harder?
As noted earlier, nonprofit board people are often limited in the amount of time they can devote to board participation. Given these constraints, the board chair and CEO can choose from a range of options that will help orient directors to better understand the external landscape in which the organization operates. These initiatives can include visits to comparable facilities, opportunities to attend field related conferences or inviting experts in the same or similar organizations to interact with board members. The purpose is to infuse each member of the board with an informed view of the organization’s long-term future and prepare them to take the appropriate action. The CEO and board chair must address this question with a viable plan: What actually helps… (to develop) a board environment that encourages participation and allows board members to derive meaning, inspiration and satisfaction from their (board) work?

Talent: The Key to Nonprofit Success — A nonprofit board has one hiring decision to make: the engagement of the CEO. But it also has a significant responsibility to overview long-term talent development in the staff and management. The board of a family service agency needs to assure that its counselors are up to date on current modalities of counseling. A recreational organization must be operating in the context of accepted fitness practices. Annual talent reviews need to be scheduled with CEOs and the appropriate staff. In addition, individual board members, with the concurrence of the CEO, may want to have occasional professional contact with key people below the senior management.

Make strategy part of the board’s DNA — (Many nonprofit) … CEOs present their strategic vision once a year, the directors discuss and tweak it at a single board meeting (or a short retreat), and the plan is then adopted. The board’s input is minimal and there’s not enough in-depth information to underpin proper consideration of the alternatives.

An educated nonprofit board will have the depth of understanding to be alert to the future needs and problems of its organization. Typically there is usually an unanticipated “fork” in the road ahead. Status quo, “minding the store,” participation by rote are all too easy mindsets that will only hobble the progress of an organization. Board chairs and CEOs are key actors in turning an existing board environment into one that is focused on moving forward.

*Christian Casa and Christian Caspar (2014) “Building a forward-looking board,” McKinsey Quarterly, February. Note: Quotations from this article are presented in italics.

**https://boardsource.org/research-critical-issues/

 

How Seriously Does Your Nonprofit Board Take the Matter of Ethics?

How Seriously Does Your Nonprofit Board Take the Matter of Ethics?

By Eugene Fram                          

Most board members are aware of their obligation to ensure their nonprofit’s compliance with certain standard regulations e.g. making tax payments, submitting IRS Form 990s and/or avoiding potential fraud. But what I have found missing in the nonprofit environment is a sense of board member responsibility to provide for and sustain a viable ethics program.

Board members, as representatives of a community, profession or industry, have a significant responsibility to mitigate risks for their supporting constituencies. To ensure their integrity and prevent tainting the organization’s reputation, an internal ethical culture must prevail. An emphasis on ethical conduct should cover everyone from board members to the lowest ranking employee, and address issues that range from personal use of facilities to various types of harassment.

Following are some thoughts on putting ethics in their rightful place:

• The Audit Committee in responsible-business organizations often have a full-time corporate counsel or compliance officer who are charged with seeking evidence of unethical behavior. On the other hand, nonprofits must vest significant ethics responsibilities in the audit committee. As a base approach, the audit committee should have the CEO investigate installing a hotline system that can surface questionable behaviors and issues. 

• Ethical Behaviors Start with the Board – A review of existing ethical standards should be included in the orientation process of every new board member or employee– and reinforced briefly each year. Potential conflict of interest in board members can skew decision-making and jeopardize outcomes. Engaging in “sleight of hand” decisions can reverberate throughout the organization. For example: it is not unusual for nonprofit boards to seek grant dollars that support programs that are not directly related to the organization’s mission. Similar relaxation of standards can propel an organization down the slippery slopes of ethical boundaries. This also applies to senior managers whose behavior or actions are perceived to be inappropriate.

• Seeking Information – Although the Sarbanes-Oxley act suggests that board directors are obliged to seek information from persons below top management, this can sometimes become controversial in the nonprofit environment.

The bottom line is that (ethics) compliance must be pervasive, ongoing and actively tested, experts say, in order to maintain a healthy culture throughout the organization. By rewarding ethical behavior and mitigating risk, nonprofit board members will be doing all they can to protect themselves and preserve values for shareholders (and help to assure ethical actions in a mission-centrist nonprofit.)*

* Boardmember.com (2014), “Compliance Oversights Starts and Ends with the Board,” May 14th.

How Can A Chief Operating Officer (COO) Advance Your Nonprofit Organization?

By: Eugene Fram               

In my decades of involvement with nonprofit boards, I have encountered several instances in which the CEO has failed to engage the services of a COO–when this addition to the staff was clearly needed. In each case and for whatever reasons, this reluctance to act left the nonprofit organizationally starved.

This means that the CEO continues to handle responsibilities that should have been delegated, some of which a predecessor may had assumed during the start-up stage. I once observed a nonprofit CEO with an annual $30 million budget personally organize and implement the annual board retreat, including physically rearranging tables/materials and cleaning the room after the retreat! When top leadership is deflected in situations at this level, client services and the general health of the organization is likely being negatively impacted.

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Are Your Board and Staff Ready For Change?

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Free Digital Image

Are Your Board and Staff Ready For Change?

By: Eugene Fram               

Ideally, change takes place only when is a critical mass of board and staff want it. A significant portion of leadership must realize that the status quo won’t do. Based on my experiences, this ideal is rarely achieved because:

  • The CEO needs to support the changes being suggested and/or mandated by a majority of the board.   But, if not fully invested in the change, the CEO can accede to board wishes for action but move slowly in their implementations. The usual excuse for slow movement is budget constraint.

Complicating the situation is the fact that most nonprofit boards are hesitant to remove a CEO who has a nice personality but lacks vision, makes modest revisions each year and keeps budgets
in  balance. As volunteers, board members know that removing a “status quo” CEO can cause board and staff conflict. These events require more meeting times and can cause board members
to turn against one another. Volunteers accept board positions to promote positive outcomes, not to become involved with the stresses that accompany conflict.

  • Changing a CEO, board members or the governance model, etc., can easily send negative signals to the staff because they may view it as leading to disruption in their jobs and working environments. Most nonprofit staffs are only one or two organizational levels away from the board and may become concerned that new influential board members can have significant impact.

For example, two professors persuaded their board colleagues that the agency needed a “management by objectives program.”  The staff became so involved in establishing and measuring
objectives that they neglected client services .

Critical actions that boards can take to overcome these barriers.

  • Agreement about what “change” means. Perhaps it is increasing clients served and/or simultaneously having to increase donations to maximize the mission’s service? These changes can be readily measured. However, nonprofits often have revisions that can only be measured approximately in the short-term because of the significant costs involved. These include such items as improving public awareness or community influence. They require use of more qualitative measures over time to assess trends and improve the measures. *

Those responsible for change need to be reminded that words have meaning, and the words used to describe revisions can create negative attitudes from board members and staff. Those with
negative connotations include “profit, efficiency and restructuring.” Positive words include “mission, serving and compassion.”

  • Radical honesty about the hurdles standing in you way. It’s important to be upfront about the “bandwidth” in staff and board resources needed to implement any major modifications. This involves having three or four board members who are experienced with implementing change, willing to assume leadership of the process and have the interpersonal skills necessary to “sell” other board members on the benefits of the new plan. In one situation, where a governance model was changed and the ED’s title revised to President/CEO, a traditional board member was dissatisfied.  He complained about the new title “What do we call the ED now, Presco?”   The implication was that the new title was satisfactory for the head of a business organization but too sophisticated for the operating head of a nonprofit organization.
  • Commitment to do whatever it takes. Driving changed from a nonprofit board position isn’t for the person or team that gives up easily. A realistic plan is to anticipate the bumps in the road along the way. For example, if some board members agreed to a revision with limitations, it’s the responsibility of the CEO and board members to make certain they are consulted as the change progresses, helping them, if they can, to be more comfortable with it. If the change has substantial impact on the staff, the CEO and board members need to be certain that false rumors are handled appropriately when they appear. This also applies to rumors circulating in the community or in an industry, if the nonprofit is an association.

When boards fail to take the types of actions cited above, the impact can affect the nonprofit’s culture for decades. For example, a nonprofit engaged a new executive director with an authoritarian leadership style.  His long-term predecessor developed a relaxed culture, often casually taking staff meeting time to read poetry. The Board concluded major changes were necessary.

As a first step to solve the problem, the board made a mistake by demanding the new ED modifies his authoritative management style. But concurrently, a union organizer heard about the dissatisfaction and persuaded the social workers on the staff to form a union. Results: the problematic ED was finally terminated, and an experienced ED, who had worked previously at the agency, was engaged. But the social work staff is still unionized. Trust between management and the professional staff was never restored.

* https://nonprofitquarterly.org/2012/07/24/using-imperfect-metrics-well-tracking-progress-and-driving-change/

Once Again: How to Keep a Nonprofit Board Informed.

Informed.

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Once Again: How to Keep a Nonprofit Board Informed.

By: Eugene Fram   

With high performing nonprofit boards, its members will rarely be invited by the CEO to participate in operational decisions. As a result, management will always have more information than the board. Yet the board still needs to know what is happening in operations to be able to overview them.
The name of the game is for the CEO to communicate the important information and to keep directors informed of significant developments. Still, there’s no need to clutter regular board meetings by reporting endless details about operations.

Following are some practical suggestions:
• An executive director, in response to a blog post I presented, provided a most creative approach. He and the board chair have a weekly conference call, usually on Thursday. Other board members are invited to join the call if they have time. A few days later, the ED sends a brief e-mail to all board members highlighting the important events that took place during the week. (He joked that his high school English teacher would never approve of its format, but the board is always full informed.)

• Probably the more traditional way of keeping board members aware of what is happening within the organization is to have staff frequently make short presentations. I have seen this approach used in dozens or nonprofit board meetings without success. Two problems frequently occur. First the staff person is so enthusiastic about an opportunity board that the presentation continues well beyond the allotted time, and, second, board members raise “micromanagement” level questions, that further extend the presentation session. To solve these problems, the board chair needs to suggest to those seeking more than appropriate detail that the questions can be answered “offline.” In addition, the chief executive should meet with the staff person well ahead of the meeting to make sure that the material to be presented is succinct, and the staff person is well aware of the time constraint. A “dress rehearsal” might even be appropriate for some staff personnel

• Another technique is to use a consent agenda. With a consent agenda, routine and previously agreed upon items are organized together in the pre-meeting agenda and then, hopefully, approved as a group. If one or more board members question an item in the group, it is placed on the agenda for the next board meeting. This process eliminates the time consuming effort of having a separate discussion for each item.

• A third controversial way is for the chief executive to meet with board members informally about every quarter. (It is controversial because many nonprofit CEOs feel this is too time consuming.) Occasionally, these meetings are with two directors at one time. At the sessions, the chief executive can discuss the more “entrepreneurial or wild ideas” that might need testing and update board members on operational decisions in greater detail. Some of the meetings can happen quite informally, before or after a committee meeting or after a monthly board meeting. Others can occur at appropriate social events. This is a controversial suggestion, as some CEO’s report they don’t have sufficient time for such a rigorous meeting schedule.  My observations of dozens of CEOs indicates that the very best manage to develop the schedule.
It is important to have the executive’s assistant keep track of the meetings and then to have authority to make new appointments to meet the quarterly schedule. Obviously, the CEO would need to meet with the board chair more often. If the board is a national one, meeting less frequently or a scheduled phone call are appropriate. One veteran CEO I know meets frequently with two board members. One is a long serving member, and the other is a newly appointed board member.

Keeping important information flowing to the board is critical to having a high performing nonprofit. It is a significant CEO responsibility

Board Members Need to Review Unwritten Protocols to Boost Nonprofits’ Effectiveness

Board Members Need to Review Unwritten Protocols to Boost Nonprofits’ Effectiveness

By:  Eugene Fram                                       

Nonprofit boards are governed by a series of obligations —some are clearly defined as legal responsibilities such as financial actions. Others, however, are less clearly defined and relate to people who are, in some way, associated with the organization. Guidelines to these diverse interactions are not typically archived in policies but are important to the overall professionalism of the board. They include consideration of its: board structure, internal operations, recruitment methods and leadership style.

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People Problems Can Put Nonprofits at Risk

People Problems Can Put Nonprofits at Risk

By: Eugene Fram   

Like the Streisand song lyric, nonprofit people who need people must first have the know-how to choose and cultivate those people! If not, the risks to a board can range from modest to substantial. It all begins with making the right choices and vetting board and CEO candidates.  Most nonprofit board members know that they are only required to make one hiring decision—the engagement of the CEO. This is a process that always involves some risk factors. Take the case of the university that has expended substantial amounts to engage a CEO. After a brief “honeymoon period” it was determined that the candidate lacked the requisite background to move the organization forward. His resignation was forthcoming, and with it, a disruption that was costly not only in dollars but in board/faculty morale and public confidence.

A nonprofit board is usually confronted with several people risks. Following are some that should be noted by board members.

Colleagues on the Board- Modest Risk: Except when a crisis occurs necessitating additional time and effort to address the problem, there is often little opportunity for collegiality among nonprofit board members. In recent times, with many board members living time-compressed lifestyles, colleagues not only don’t know each other but may pass each other on the street without recognition! This lack of personal interaction makes it difficult for directors to understand and share perspectives regarding the organization. It is clearly the board and CEO’s responsibility to provide these opportunities by organizing social events and/or small gatherings for board people to interact– perhaps over breakfast, lunch or wine. Another option is to extend an invitation to attend local or regional professional events. Or to invite board members to join a conference call during the weekly call between the board chair and the CEO. People contact within the board cements relationships and becomes an asset to working together as a group.

Financial Personnel-Might Be Substantial Risk?: Financial people, as a group or individually, can constitute a potential risk group. At the very least, each board member should be thoroughly acquainted with the CFO, his/h senior reports and the professional qualifications of each, especially in relation to their abilities to stay current with financial requirements. The board needs to provide sufficient signals to all staff personal that it is alert to unethical behavior, especially fraud.  Similarly, the board and/or its committees need to make certain that there is substantial compliance with all regulations imposed by governmental or professional organizations. Example: One CFO delayed the delivery of an accounts receivable report for an extended time period. Neither the board nor management demanded it. When the report finally arrived, the board found that the CFO had been carrying a substantial number of bad debts as assets.   To rectify the situation, the nonprofit had to engage costly forensic accountants. Although the board was also substantially at fault in its due care, both the CFO and CEO were fired.

The CEO-Can Be A Substantial Risk: Like a marriage, there needs to be substantial trust between the board members and CEO. However the CEO should to be comfortable with a policy of “trust but verify.”   This requires that the board members and/or its audit committee ask questions or make inquiries that sometimes might appear be insulting. Some examples:

The Staff- Can Be Moderate Risk: Board members need to be have enough contact with management and staff in order to be able to help identify those who with talent may be eligible for promotion, understanding that traditionally the CEO has is responsible for internal promotions.   Unfortunately this is a nonprofit board responsibility that is often neglected. But it needs to be reviewed annually at the time that CEO succession is reviewed by the board.  

A nonprofit is only as good as its team of people. With many of the board members rotating off after their terms have expired, it becomes an ongoing challenge to keep them apprised of potential risks and challenges. The board must develop its own way to a nonprofit’s success.   In addition, it must overview management and staff to build background knowledge on those with potential to become future leaders. 

Stay on That Nonprofit Board!

By: Eugene Fram

Gene Takagi, noted San Francisco attorney, who specializes in nonprofit organizations published an article listing 12 reasons for resigning from a nonprofit board. It is worth reading.*

BUT

Nonprofit board members often become impatient with the slow pace of progress toward positive change. Here are some actions that may change the situation, improve service to clients and prepare the organization for any long-term mission disruptions.

• Talk With The CEO: He/s may feel the same frustrations and be delighted to find a board member who shares his goals. In fact, she/h may be thinking of leaving or be wedded to the current area only because of a family situation. As a result, your conversation may give a chief executive new hope and energy. On the other hand, if the CEO is too aligned with the past, it will be unlikely that the board will terminate the current CEO, unless there are some performance malfeasances involved. Then, estimate the CEO’s remaining tenure and use remaining time to find opportunities to make modest increments in change.

• Talk With Other Directors: Between board meetings, have informal coffee sessions with other directors to determine their views on the areas in which you feel change is necessary. Three or four board opinion leaders can garner positive movement, assuming there are no strong objections from the CEO.

• Outside Validation. If sufficient budget is available, ask the board to engage a consultant to examine the potentials for change. The rationale for the request might be: “We are doing well, let’s determine how we can better serve our clients.” If budget isn’t available or the CEO is against the expenditure, try to have the board arrange, for an outside speaker or two who might validate the need for change. This might be a person from the field or a local professor who has some insights aligned with change-focused board members .

• Seek Outside Financing: Personally seek sources for capacity grants that, if awarded, might be developed to further help clients. Ask the board to take leadership in applying for several of these grants. A single successful grant might be the linchpin to promote the type of change desired by the group having similar views.

• Chair The Nominations Committee: As chair, the director can be in a position to search for candidates who are forward looking. In addition, the committee, under the urging of the chair, can seek candidates who have served on other nonprofit boards and who have proven their meddle to bring about change.

Summary
For any single board member of a status quo nonprofit to lead a change on organizational culture will require tenacity, time and patience. The person will need to be extremely dedicated to the organization’s mission and want to improve the services to its clients. Very few board members have the grit to lead such a change. However, a small-motivated group can be an advanced guard to initiate some actions in the right direction. But the group will have to keep Peter Drucker’s insight in mind when the going gets tough, “Culture eats strategy change for breakfast.”

An unusual case of an ED accused of serious malfeasance, but the board refused to fire him. http://bit.ly/1om6XUw

*https://nonprofitquarterly.org/12-reasons-resign-nonprofit-board/

Two Nonprofits Merge: Synergy or Collision Course?

 

Two Nonprofits Merge: Synergy of Collision Course?

By Eugene Fram              Free Digital Image

Having led a merger committee that resulted in a successful merger with another nonprofit, I thought my field observations might be of interest to others contemplating a merger. These comments center on a merger of two equal partners, which plan to form a new organization, not the acquisition of one nonprofit by another.

Assuming both organizations have merger committees that meet frequently, over an extended time period, the following initial issues need to be reviewed:

• Are the mission, vision and values of both organizations the same or sufficiently similar?

• Are there any financial issues that might cloud the negotiations?

• Do the two merger committees work well together and view each other positively as potential colleagues?

• Are both groups willing to invest the board time and financial resources to bring about a melding of the two groups?

• Are there any factions in either of the two organizations that might be emotionally opposed to the merger?

• What, at this early stage, might be some barriers (“deal breakers”) to the merger?

• What needs to be done to move the merger process forward and to develop an implementation plan, if both boards agree to the merger?

• How will the impact of the merger be determined and at what intervals will it be measured?

• In the event that either or both organizations are dissatisfied with the merger, what specific detail need to be specified in a “prenuptial” breakup agreement?

• How will the CEO of the merged organization be determined? This will have to be decided amicably

• How can morale of both organizations be maintained during merger discussions? What incentives need to be developed to maintain those who will certainly need a new job, e.g. CFO?

The Devil Is In The Details – Are These “Deal Breakers?”

• Consider various stakeholders who might be impacted by the merger. (These can include: community leaders, managers, staff, funders, vendors, media, etc.) How can consensus be achieved?

• Where will the new nonprofit be physically located? What are the real estates implications?

• The combination will probably require layoffs and new reporting arrangements. How will these be decided?

• How will the new board be constituted? Will a larger new board be necessary? If not, what is the plan for paring down the size of the new board.

• What legal counsel will be needed and at what costs? Will foundation support be needed to establish the merger?

• What systems or interpersonal relationships are necessary to avoid “surprises” before or after the merger?

Never Underestimate the Importance of Culture

The failure of the AOL-Time Warner merger has become an all time classic example of the failure of the two cultures to blend into a new culture. I have observed that blending two nonprofit organizations will certainly encounter cultural “bumps in the road,” starting about six months after the merger and can continue for several years. Although the mission, vision and values of both groups may be identical, culturally inspired blips can arise from differences in which previous boards operated, from expectations of the CEO, from staff differences, etc. However, they do take time, persistence and board leadership to resolve.

Any merger will have its own specific imprint. However, I hope that the guidelines cited above will be helpful in navigating the rough shoals that frequently appear after the honeymoon period.