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By David La Piana

Strategic Restructuring of Nonprofit Organizations

A publication ofTHE JAMES IRVINE FOUNDATIONand theNATIONAL CENTER FOR NONPROFIT BOARDS

NCNB Funder Briefing

R e v i s e d E d i t i o n

BeyondCollaborationBeyondCollaboration

The James Irvine Foundation is dedicated to enhancing the social,economic, and physical quality of life throughout California, andto enriching the State’s intellectual and cultural environment. Withinthese broad purposes, the Foundation supports programs in the arts,children, youth and families, civic culture, health, higher education,sustainable communities, and workforce development.

Additional copies of this report may be obtained by contacting theFoundation.

The James Irvine FoundationOne Market, Steuart TowerSuite 2500San Francisco, CA 94105(415) 777-2244

777 South Figueroa StreetSuite 740Los Angeles, CA 90017(213) 236-0552

© 1998 The James Irvine FoundationRevised EditionFirst Printing, November 1998

The National Center for Nonprofit Boards (NCNB) is dedicated toincreasing the effectiveness of nonprofit organizations by strengthening theirboards of directors. Through its programs and services, NCNB:

■ provides solutions and tools to improve board performance■ acts as convener and facilitator in the development of knowledge

about boards■ promotes change and innovation to strengthen governance■ serves as an advocate for the value of board service and the

importance of effective governance.

NCNB is a 501(c)(3) nonprofit organization. To learn more aboutNCNB’s publications, workshops, and consulting services, contact us at:

National Center for Nonprofit Boards(as of January 15, 1999)1828 L Street, NWWashington, DC 20036(800) 883-6262(202) 452-6262fax (202) [email protected]

The James Irvine Foundation supports programs to improve the manage-

ment, governance, and operations of nonprofit organizations. In this context,

we undertook an exploration in 1996 to determine whether we could be help-

ful in supporting or encouraging “strategic restructuring” among nonprofits

in California. As nonprofit organizations face mounting challenges and new

opportunities occasioned by federal devolution and an increased emphasis

on accountability, issues of mission, strategy, and market must be reexamined.

Such assessments have already resulted in several high-profile and many lower-

profile mergers among nonprofits in California. Given this reality, a study of

sectoral activity in this regard seemed timely.

We are pleased to share with both other funders and nonprofit leaders the re-

sults of this inquiry on strategic restructuring, conducted by David La Piana.

The study offers an analysis of restructuring efforts among nonprofits and de-

scribes several strategies that funders might develop to support further activity

in this arena. Though the report is addressed to funders, many of the findings

will be of interest also to nonprofit executives and board members. In the spirit

of sharing lessons learned, we encourage readers to request additional copies of

the report from the foundation or to pass the report along to others.

We are grateful to the many funders and nonprofit leaders in California and

beyond who contributed to our inquiry, and I especially wish to thank David

La Piana for his thoughtful analysis. I would also like to acknowledge the

National Center for Nonprofit Boards (NCNB), which not only served as pub-

lisher of the report, but also provided additional perspective and rigor in the

editorial review process. NCNB will assist in distributing the report beyond the

foundation community.

We hope this report contributes to the conversation within philanthropy and

the nonprofit sector on these issues, and we welcome your thoughts about how

the Irvine Foundation might support nonprofit organizations as they engage in

strategic restructuring activity.

Dennis A. CollinsPresident

The James Irvine Foundation

Foreword

The first edition of Beyond Collaboration appeared in April 1997. It was

mailed to a select group of funders and others around the nation. These read-

ers in turn recommended it to their colleagues and grantees. The first 5,000

copies disappeared quickly. Callers to The James Irvine Foundation, which

distributed the report, also quickly consumed a second printing of 5,000. In

mid-1997 the National Center for Nonprofit Boards added Beyond Collabo-

ration to its web site (www.ncnb.org), where thousands more have read,

downloaded and reproduced it. The report has found its way into registration

packets at numerous conference programs, onto the shelves of nonprofit and

community foundation libraries, and onto at least two university course re-

quired reading lists.

From its origins as an effort to look into the future role of mergers in the

nonprofit sector, the study that became Beyond Collaboration grew into an

investigation of the possibilities for partnering across multiple entities, using

many structures. The original publication of this report marked the beginning

of a heightened consideration of organizational structures, collaboration, and

partnering in the sector. The state of knowledge in the field has advanced con-

siderably since 1997, a fact reflected in the expanded reference section. We are

heartened that so much attention has been drawn to these critical issues, and

hope that the re-publication of Beyond Collaboration will spur further debate

and inquiry.

Preface to the Second Edition

SStrategic restructuring—includingmergers, back-office consolidations,and joint ventures—is an increas-ingly popular option for nonprofitorganizations facing stiff competi-tion, rising community needs, anddecreasing federal funds.

The James Irvine Foundation recog-nized the potential role fundersmight play as nonprofits grapplewith fundamental changes in the waythey operate. Thus, the foundationcommissioned a study to develop anapproach through which foundationsmight assist nonprofits in strategicrestructuring. This report, intendedto encourage funders to become in-volved in strategic restructuring,outlines that approach.

The study attempted to answer fivequestions:

1. How can we best define and de-scribe the options for strategicrestructuring?

2. Is the climate right for strategicrestructuring? Will successfulrestructuring improve the func-tioning of nonprofits?

3. What pressures lead nonprofitsto consider mergers, consolida-tions, and joint ventures, andwhat difficulties prevent bringingthese efforts to fruition?

4. How can funders encouragenonprofits to undertake strate-gic restructuring without beingperceived as applying pressure todo so?

5. What educational activities canfunders promote to encouragestrategic restructuring activitiessuch as mergers, consolidations,and joint ventures?

Findings in Brief■ Many nonprofits are considering

a fundamental change in organi-zational structure because ofeconomic pressures such as in-creased competition from busi-ness, government, and othernonprofits; a shrinking supplyof experienced leaders willing toremain in the sector for inad-equate wages; and increasinglyurgent and complex communityneeds.

■ Those interviewed for the studysuggest that a heightened interestin strategic restructuring isnatural as the nonprofit sectormatures, but that nonprofitleaders need assistance as theyundertake significant organiza-tional change—assistance thatfunders are well positioned toprovide.

Executive Summary

■ Nonprofit organizations at-tempting to restructurethrough mergers, back-officeconsolidations, joint ventures, orfiscal sponsorships must over-come perceived threats toautonomy and board and staffmembers’ self-interests, as well aspotential culture clashes.

■ Since the concept of strategicrestructuring is still evolving,additional research is needed toanalyze factors leading to successor failure, develop best practiceguidelines, and compile and dis-seminate information for chiefexecutives and board members.

■ By sponsoring educational activi-ties intended to raise overallawareness in the sector, funderscan introduce nonprofit organi-zations to strategic restructuringoptions, without requiring con-sideration as part of a grantagreement.

■ Funders can provide direct assis-tance to organizations involvedin strategic restructuring bysponsoring workshops, trainingconsultants, or providing directfinancial support.

National Center for Nonprofit Boards PAGE 1

F

Introduction

Foundations are faced with an over-whelming task. Their finite resourcescannot meet the unlimited needsgrant seekers present, and they makeup only a small fraction of the totalsupport Americans provide to thenonprofit sector each year. Nonethe-less, these funders play a critical rolein developing new ideas, addressingemergent needs, initiating partner-ships, and focusing the public’s at-tention on important issues.

Economic and political pressures,competition, taxpayer revolts, and afew high-visibility scandals have allhurt the nonprofit sector. As a result,nonprofits face critical decisionsabout their future—and perhapstheir very survival.

Funders recognize that new ideas willflow and that promising partnershipswill grow only as long as the non-profit sector is strong and vibrant.Thus, they have a vested interest inthe health of the sector.

This report, based on a study com-missioned by The James IrvineFoundation, reviews the challengesfacing nonprofit boards and chiefexecutives. It also examines the moti-vations and inhibitions that encour-age or discourage these leaders inconsidering nontraditional alterna-tives such as mergers, consolidations,and joint ventures.

These undertakings are not easilyachieved. They require nonprofitleaders to yield some of their au-tonomy, to make themselves vulner-able, and to open their organizationalcultures to outside influences. In re-turn, these efforts have saved essen-tial nonprofit services (if not theorganizations that originally deliveredthem) from extinction, resulted inan improved market position, andopened the door to new opportunities.

This report may inspire funders toask some difficult questions of theirgrantees. Ultimately, however, it isintended to help funders betterunderstand the nature of strategicrestructuring and the ways in whichthey can help their grantees developmeaningful partnerships with othernonprofits. These decisions—amongthe most significant nonprofit leadersface—have impacts that extend be-yond the organizations involved tocommunities that rely on the non-profit sector for a host of programsand services.

Frustrated by overlapping pro-grams, service gaps, turf battles,and a lack of coordination, fundershave begun to encourage, and insome cases to demand, closer col-laboration between nonprofitorganizations in return for new orcontinued funding. Unfortunately,despite some notable exceptions, thispush for collaboration has led pri-marily to joint grant writing ratherthan collaborative action and sus-tainable partnerships: nonprofitleaders work together on the pro-posal, but continue to workseparately after the grant is made.

Yet the need for closer coordinationremains, as does a need for creative,strategic solutions in response to anaccelerating economic squeeze.

The challenge confronting nonprofitsis to look beyond collaboration—tobuild sustainable, long-term relation-ships that fundamentally change theway they function as organizations.Anecdotal evidence indicates thatnonprofits are exploring mergers,consolidations, and joint ventureswith increasing frequency. Each ofthese options goes beyond the cur-rent definition of collaboration.Where collaboration implies coordi-nation of service, strategic restructur-ing requires changes to the corporatestructure and, frequently, a change inthe organization’s locus of control.


E

Background&Assumptions

“A nonprofit merger or consolida-

tion will only be successful in the

long run if the leaders involved can

place achieving improved commu-

nity outcomes ahead of both

advancing their organizational mis-

sion and maintaining

organizational

structures.”

—Michael HoweExecutive Director

East Bay Community Foundation

PAGE 4 National Center for Nonprofit Boards

Early in 1996, The James IrvineFoundation identified a need to en-courage increased integration ofnonprofit organizations, therebyleading to greater efficiency and anincreased chance of survival.

The Foundation commissioned thisstudy to develop organizing prin-ciples for this effort; to investigatethe attitudes of nonprofit leaderstoward mergers, consolidations, andjoint ventures, among other options;to develop and test ideas for pro-moting these arrangements; and,ultimately, to propose an approachthrough which the Foundation mightassist nonprofits as they strategicallyrestructure their organizations forincreased effectiveness.

This report attempts to develop afuller understanding of the rangeof strategic restructuring optionsavailable and the motivations, in-hibitions, and environmental factorsaffecting nonprofit leaders’ attitudestoward change. Mergers, consoli-dations, and joint ventures canhelp nonprofit organizations ad-dress structural weaknesses. Thisreport addresses both specific strate-gic restructuring options and thebroader ends toward which they areemployed.

Ultimately, strategic restructuringshould better position nonprofits toadvance their missions. The quest fororganizational survival in a hostile

environment should be secondary tothe goal of advancing a useful socialmission.

The nonprofit sector needs a keenmarket focus and an ethic of responsi-bility to mission over empire-buildingor organizational self-preservation.By integrating nonprofit organizationsinto fewer, stronger, more flexible andeffective structures, resources andfocus can be redirected to strength-ening and advancing missions that,as Michael Howe states, result in“improved community outcomes.”

All studies, and ensuing reports, aremolded by a set of assumptions. Thiswork assumes that:

■ Improved quality of service,enhanced market position ormarket share, political advantage,and similar strategic benefits arethe most significant outcomes ofsuccessful restructuring efforts.Although a major motivator,cost reduction is seldom a short-term outcome of mergers andconsolidations.

■ Traditional philanthropy (thegiving of grants) has a limitedability to help nonprofitsthrough structural difficulties.Funders are called to take a moreactive role in guiding nonprofitsas nonprofit organizational struc-tures evolve and change.

The questions articulated at the study’s outset andaddressed in this report are:

1. How can we best define and describe the optionsfor nonprofit strategic restructuring?

2. Is the climate right for strategic restructuring?Will successful restructuring improve the func-tioning of nonprofits?

3. What pressures lead nonprofits to consider merg-ers, consolidations, and joint ventures, and whatdifficulties prevent them from bringing theseefforts to fruition?

4. How can funders encourage nonprofits to under-take strategic restructuring without beingperceived as applying pressure to do so?

5. What educational activities can funders promoteto encourage strategic restructuring activitiessuch as mergers, consolidations, and jointventures?

Study Questions


■ Problems facing nonprofit orga-nizations are—at their core—the same across all subsectors:motivating and leading boardmembers, staff, and volunteers;earning and raising sufficientfunds; managing the organiza-tion; developing and articulatinga vision for the future; and con-tinuously analyzing and actingupon environmental pressures.

■ Board and staff leaders likely tobenefit from strategic restructur-ing already possess, at a mini-mum, a basic level of strategicsophistication that they bring totheir thinking about the organi-zation’s future. If they lack thisperspective, and cannot gain itquickly, the strategic restructur-ing effort is doomed to failure.

■ Likely nonprofit candidates forstrategic restructuring are analo-gous to businesses with under-valued stock: the necessaryelements for success are present,but the organization needs out-side help to move it forward.When a business’s restructuringis successful, its stock value risesdramatically. When a nonprofit’srestructuring is successful, itsability to fulfill its social missionrises dramatically.

Findings

Findings

Q U E S T I O N 1

Q

T

How can we best define and describethe options for nonprofit strategicrestructuring?


The nonprofit sector is highly inter-dependent. Nonprofit organizationsjoin trade associations and coalitions.They form shared purchasing clubsand insurance cooperatives. Profes-sional staff members belong toguilds and advocacy organizations.This associative process builds in-definitely, creating a web of inter-relationships throughout the sector.Virtually all of the organizationswith which nonprofits affiliate arethemselves nonprofits.

No nonprofit organization can longsurvive and succeed in advancing itsmission while living independent ofother nonprofits. Nonprofits gaininformation, political power, andpersonal and professional supportfrom and in concert with othernonprofits. Thus, close working rela-tionships, partnerships, and evenjoint ventures between nonprofitorganizations are a fairly naturaloccurrence.

Definitions and Legal FormsSome confusion exists when distin-guishing strategic restructuring fromstrategic planning and reengineering.Strategic planning is an effort to de-fine an organization’s purpose and

scout a path for the years ahead;strategic restructuring is a set ofoptions helpful in implementingthe plan. “Reengineering” refers tolarge-scale productivity-enhancingprocess change, whereas “strategicrestructuring” describes an evolvingform of structural change.

Legally, only a merger effects changein a nonprofit’s corporate status,producing a higher level of integra-tion than any other transaction. Nomatter how it is implemented, amerger means a change of control,involving a great deal of risk andemotion. A variety of legal inventionscan be employed in executing amerger or other affiliation. The mostcommon options are described below;variations are constantly being in-vented and tested in the field.

Merger is the generic term for a fulland final coming together of twopreviously separate corporations.Legally, mergers often entail onenonprofit closing (the dissolving cor-poration) and leaving its assets andliabilities to another nonprofit (thesurviving corporation). This tactic isoften employed for technical reasons.For example, if ABC and XYZ wishto merge but ABC is in debt, it maybe best for XYZ to dissolve. To dootherwise could trigger a call forrepayment of the debt prior todissolution.

Although the merger may be a join-ing of equals, the legal partnershipwill preserve only one corporation.Roughly eight out of ten “mergers”are executed as dissolutions, forreasons similar to the example aboveand because it is simpler and lessexpensive. A true merger in the legalsense occurs when both nonprofits


dissolve and fold their assets andliabilities into a newly created thirdentity. Since this entails the creationof a new corporation and applicationfor a new IRS tax exemption, it isusually not the method of choice.

Acquisition is the same, legally, asmerger. Since nonprofits have noidentifiable owners, nonprofit corpo-rations cannot be bought or acquired.Certainly no legal maneuver amongnonprofits corresponds to the acqui-sition of a publicly traded corpora-tion. Nonetheless, many mergers,perhaps the majority, feel to partici-pants very much like acquisitions.Use of the term is widespread, usuallyin reference to a merger in whichone party is considerably larger orstronger than the other.

Back-Office Consolidation is an in-creasingly common arrangement forsharing core administrative functionsamong nonprofits involved in similarwork. A consortium of community-based primary health care clinicsprovides an excellent example. Asmanaged care is implemented andeconomic pressures mount, the clinicsmust lower costs and work togethermore closely. Yet each clinic serves adistinct geographic and ethnic con-stituency, making a merger politicallyinexpedient.

In this example, the clinic consolida-tions are far-reaching. Nonetheless,when completed, the affiliations willbe “invisible” to the public and, mostsignificantly, to the clinics’ patients.Separate corporations with separatechief executives and boards of direc-tors will continue to exist. Behind thescenes, however, virtually every as-pect of the clinics’ operations will beconsolidated. Management informa-tion systems, billing, fiscal manage-ment, human resources, medicaldirection, capital acquisitions, andcontracting will all be jointly man-aged. This model is one of a develop-

ing range of creative options shortof merger.

Joint Venture applies to a widerange of situations. Some aspectsof the above example could be de-scribed as a joint venture. So toocould a programmatic collaborationbetween two or more nonprofits thatinvolves no consolidation. Within thescope of this discussion, only jointventures that materially change thecharacter or locus of control of thenonprofit corporation are of interest.

For example, currently threenonprofits in one metropolitan areaare entering the emerging field oftherapeutic foster care for troubledchildren, an undertaking requiringcapital investment and the assump-tion of some risk. Rather thancompete for clients, foster parents,and dollars, the three nonprofits areforming a new subsidiary nonprofitmembership corporation, limited tothree corporate members: each of thethree partner corporations. This newsubsidiary will provide a vehicle formarketing, delivery, and billing ofservices, maximizing use of the threepartners’ resources and minimizingthe risk assumed by any one organi-zation. The opportunity for sharedrisk and reduced competition in anew undertaking is one of the majormotivators of joint venture agree-ments between nonprofits, as wellas between nonprofit and businessentities.

Fiscal Sponsorship traditionally re-fers to an established nonprofitserving as “middleman” for chari-table funds received by a new projectlacking 501(c)(3) tax status. Usually,the sponsor performs little oversightof the project, a situation that hasresulted in more than a few prob-lems. Recently, fiscal sponsorship hasemerged as a more formal and inten-tional means to help formativenonprofit activities receive charitable

dollars, develop an organizationalstructure and board, manage finan-cial and human resources, and evensecure shared office space.

The Tides Center in San Francisco,Community Partners in Los Angeles,and The Fund for the City of NewYork are examples of organizationsmaking fiscal sponsorship a corebusiness, rather than simply anincome-producing sideline. Thesecenters offer an impressive array ofservices. They also perform an im-portant educational function thatmay forestall the formation of somenew separate nonprofit corporations:as their projects outgrow the sponsor-ship arrangement, the sponsor volun-tarily assumes responsibility to informthe projects of various options forjoining established nonprofit organi-zations as an alternative to spinningoff as a new 501(c)(3).

K

QQ U E S T I O N 2

Is the climate right for strategic restructuring?Will successful restructuring improve thefunctioning of nonprofits?


Key informants agreed that the spec-ter of increased mergers and consoli-dations is an unavoidable if oftenfrightening reality. The next 10 yearswill produce increased interest instrategic restructuring and a con-comitant increase in activity. Whilekey informants varied in their enthu-siasm, they were united in their beliefthat “the writing is on the wall.”

This trend is not unique to the non-profit sector—both the private andpublic sectors have been restructuringand consolidating for nearly a decade.Nonprofit attorney Tom Silk, a vet-eran of hundreds of mergers andconsolidations, sees the current in-creased interest in merger activity asa direct result of the maturation ofthe sector, which grew dramaticallyin the 1960s and 1970s. He believesthat a number of “thirty-something”nonprofits have reached a point intheir life cycle where their best workis behind them, while others haveachieved a level of organizationalsophistication that allows consider-ation of complex issues such as athose raised by a strategic restructur-ing effort.

Is it worth the effort? This study un-covered widespread anxiety and fearamong nonprofit leaders. Economicsare forcing a growing number of or-ganizations to the brink of financialdisaster. Yet these nonprofit leadersare not without hope. On the con-trary, they hunger for solutions.

Keith Merron, in the best-sellerRiding the Wave, argues that ac-knowledging that the organizationfaces a crisis is a necessary antecedentto committing to a major change ef-fort. This acknowledgment seems, atlast, to be emerging across the sector.

Funders can help by portraying stra-tegic restructuring as a vehicle fororganizational change; they can serveas resources—developing and dis-seminating information about stra-tegic restructuring, and helpingnonprofits as they implement re-structuring efforts. The nonprofitsector is struggling to understandand to find a way out of its currentpredicament, and funders can con-tribute to the solution by dedicatingresources and expertise.

Now, when endemic problems arerising to the surface and creative so-lutions are actively sought, develop-ing new options, disseminatingpractical information, and offeringdirect assistance to the nonprofitsector are essential. The strategicrestructuring effort is already underway in a halting, uncoordinated,grassroots way. Funders may wish toposition themselves to shine a lightinto the darkness, helping the sectorto find its way, and to do so througha coordinated effort that is certainlynot “philanthropic business as usual.”

W“Why would we want to merge? We

would lose our independence. We

have our own way of doing things.

We don’t want to be taken over by

some other group with different

priorities. We would lose our iden-

tity. This will never happen while I

am president.”

—Spoken by the board chair of a nonprofitthat dissolved six months later

“Mergers will become an increas-

ingly prevalent means of

organizational survival during the

next several decades, and increased

competition for declining funding

and community support is the

primary reason for this trend.”

—Naomi VineDirector

Laguna Art Museum

QQ U E S T I O N 3

What pressures lead nonprofits to considermergers, consolidations, and joint ventures,and what difficulties prevent them frombringing these efforts to fruition?


While factors specific to each or-ganization and situation lead in-dividual nonprofits to considerstrategic restructuring, economicconsiderations offer a backdrop tothe sector’s problems as a whole.Mounting economic pressures havetaken their toll on both nonprofitexecutives and their organizations.

Federal devolution of responsibilityto state and local government (oftenaccompanied by a decrease in allottedresources); increased competitionfrom business, government, andother nonprofits; and two decadesof taxpayer revolts have broughtmany nonprofits to a crisis point.

Beyond the general financial problemsof the nonprofit sector, some sub-sectors face woes uniquely their own.For example, the advent of managedcare is wreaking havoc with the tra-ditional market strategies, paymentstructures, and contracting relation-ships of nonprofit health care pro-viders, while at the same time raisingcompetition to a fever pitch. Similarly,the end of the “Ford Era,” as describedby John Kreidler in his essay LeverageLost: The Nonprofit Arts in the Post-Ford Era, has brought the arts sub-sector a new economic calculus aftermore than 30 years of reliance on largefoundation funders and their leverageeffect within local communities.

Compounding other economic pres-sures is the continued phenomenal

growth rate of the nation’s nonprofitsector: as many as 30,000 new tax-exempt organizations are created eachyear in the United States. Many ofthese new organizations are providingvaluable services, mobilizing commu-nity resources, and developing inno-vative approaches to problems. At thesame time, duplication of effort, wastedresources, unnecessary competition forlimited funds, and an increasing levelof organizational failure are becomingendemic to the sector. Continuallyforming new nonprofits rather thanreevaluating existing structures is con-tributing to and accelerating thesetroubling trends.

Another factor haunting the sector isthe aging population of experiencednonprofit managers and staff. As babyboomers age, one seemingly inevitableconsequence is a loss of what Kreidleraptly calls “discounted labor.” Theboomers, as they assume family respon-sibilities, are less able to continue toaccept discounted wages. Exacerbatingthis problem, younger generations withreal concerns for their economic well-being and future security are less will-ing to accept substandard wages thanwere the baby boomers before them.The economic stress exerted by thisupward pressure in compensation,particularly among experienced staff,further erodes the sector’s ability tosustain an ever-growing number ofseparate organizations.

Despite a challenging economic environment, many non-profits continue to grow and thrive, providing necessaryservices, creating innovative solutions to social problems,excelling in their fields. Meanwhile, other nonprofitsstumble and fall. The sheer tenacity of the sector shieldsthe world from the full effects of nonprofit failures.Traditionally, nonprofits defy the “natural laws ofbankruptcy.” Economic circumstances that would causea sane businessperson to seek court protection or simplyclose up shop are often accepted as the normal course ofevents among nonprofits. For many nonprofits, delayedpayroll, reduced wages, and mounting back rent are aregular part of doing business. Failure to pay requiredpayroll taxes to the Internal Revenue Service is the mostfrequent cause for legal action against individual non-profit board members nationally and, ultimately, fordissolution of nonprofit corporations.

While both thriving and troubled nonprofits can benefitfrom a well-conceived strategic restructuring effort,

understanding the characteristics that contribute tononprofit organizational success is important. Thesecharacteristics help nonprofits succeed in novel, high-stakes undertakings such as strategic restructuring. Four“success factors” correlate with the ability to succeedwithin the current high-risk environment.

Mission. The first and most important factor in nonprofitsuccess is a clearly defined mission that is embraced byorganizational leaders, both volunteer and professional.A strong commitment to a clearly articulated missionrequires much more than a written mission statement. Itmeans that the organization’s focus on changing societyas its mission mandates is a genuine, clear, daily presenceand the most important element in decision-making, par-ticularly in the consideration of major undertakings.

Flexibility. The second factor in success is flexibility.Many nonprofit organizations strive to maintain the sta-tus quo, while the world is changing with unprecedented

“Oversupply is not a new problem

in the nonprofit sector; it is the

accelerating financial squeeze that

brings new urgency to the over-

supply problem.”

—Rick SmithNational Executive DirectorSupport Centers of America

Factors Contributing


Roadblocks toStrategic RestructuringAs a result of increasing economicpressures, nonprofits of all sizes arein trouble. Merger or consolidationis seldom the first thought of leadersof a troubled organization; instead,they deplete reserves, even restrictedendowments; live in expectation ofthe next grant; defer facilities upkeep,and reduce services and salaries; inshort, they hang on and hope fora miracle.

When such weakened groups do con-ceive of a merger or consolidation, itis seldom wholeheartedly, and usuallyfrom the perspective of extreme finan-cial desperation.

Strategic restructuring negotiationsraise many critical issues, any one ofwhich can threaten the outcome: theproposed name of the merged orga-

nization, chief executive self-interest,and fear of change, to name a few.Whatever the outward manifestations,resistance to strategic restructuringefforts usually stems from one of thefollowing three themes.

Autonomy. Mergers, consolidations,and other forms of strategic restruc-turing can be perceived as threats toorganizational and individual autono-my. In a sector where compensationis not a primary motivator, inde-pendence and autonomy are muchcherished rewards. Nonprofits areoften founded by, and continueto operate on, the commitment,energy, and drive of a small groupof devoted leaders. Most impassesencountered in the course of strategicrestructuring efforts can be traced toinadequate attention having beenaccorded to this emotional, andpotentially explosive, issue.

rapidity. Nonprofits attempting to preserve “the way wehave always done things” are struggling to hold backtime—a battle that cannot be won.

Ironically, the missions of many nonprofit organizationscall for social change, yet the organizations themselves areaverse to change. Successful nonprofits not only embracechange, but they also anticipate or even create it. In pur-suit of their missions, successful nonprofits have becomemore technologically sophisticated, customer-focused, andattuned to the external environment. They have learnedthat continuous rapid change, “learning faster than thecompetition,” according to Peter Senge in The FifthDiscipline, constitutes the ultimate competitive advantage.

Leadership. The third success factor is leadership. Thereis no substitute for it. The quality of both board andprofessional leadership varies widely among nonprofitorganizations. Successful nonprofits have enterprisingexecutives who work in harmony with supportive,


One way to defuse this potent issueis to ask the proponents of autonomyto detail their concerns and fears.Without interruption, argument, orrebuttal—indeed, with great andsympathetic care—they should beencouraged to articulate their worstfears for their organization, for theirconstituency, and for themselves. Afull listing of such concerns usuallyreveals issues ranging from the realis-tic to the fantastic, from the easilysolvable to the intractable. Subsequentthorough discussions of each concerncan lead to compromises, cleared-up misunderstandings, and well-informed agreements to disagree.Equally important, these discussionswill reveal the motivations of theparties to the negotiations and there-by begin to build mutual trust, anessential foundation for a successfuloutcome in any strategic restructur-ing process.

Self-Interest. Whether it is a boardmember fearing loss of attachment toa beloved organization or cause, orstaff fearing loss of status or evenemployment, self-interest is neitherinappropriate nor unethical in a non-profit context; it is a legitimate andmajor issue in strategic restructuringnegotiations and leads to many break-downs. Each staff person brings tothe workplace psychological needsfor affiliation, security, and self-esteem, as well as the practical needfor continued gainful employment.Similarly, volunteer board membersdevote a significant amount of timebecause they feel a strong attachmentto the organization, its cause, orboth. The challenge is to identify andaddress participants’ legitimate self-interest concerns so that they do notmove underground to reemerge assabotage.

to Nonprofit Successdedicated, involved boards. These executives keep theirboards well informed, give both the good news and thebad, and involve their boards in the nonprofit’sstruggle, viewing board members as actors rather thanaudience in the drama of the organization’s life. Overtime, a successful chief executive gains the board’s trust.Thus, high-risk, potentially high-reward undertakingsthat the chief executive supports are more likely to passboard scrutiny. “Succeed, and the board will let youtake bigger risks next time,” is advice given to many newexecutives.

Growth. Successful nonprofits also share a desire togrow in order to deliver more and better services andincrease financial stability. Strong nonprofit organiza-tions sometimes grow by “acquiring” smaller, weakernonprofits they believe can be revitalized by an infusionof good management. In most acquisition-type mergersthe dominant party is just such a successful growth-ori-ented organization.

National Center for Nonprofit Boards

“While I agree that organizational

leadership is important [to a

merger’s success], my experience

suggests that financial imperatives

often are a stronger success factor.”

—Rick SmithNational Executive DirectorSupport Centers of America

Self-interest, like autonomy, is bestaddressed by open discussion. How-ever, often the self-interest of one orboth chief executives poses a majorstumbling block to merger or consoli-dation. One way to address the chiefexecutives’ concerns is to establish atthe outset that each chief executivewill have continued employment atthe same salary level, or receive a sub-stantial severance package.

Culture Clash. Organizational cultureis a pervasive influence that is revealedby, among other things: where staffsit at the conference table for meet-ings, whether they wear businesssuits or jeans to work, the ethnicmakeup of the board, the staff’sshared political beliefs, and the staff’sand the board’s respective views ofone another’s roles and competency.Most nonprofit organizations havea strong organizational culture.Surviving financial insecurity andhard work, absent financial incen-tives, fairly requires a strong set ofshared beliefs and practices.

One result of a strong organizationalculture is a slightly different subjec-tive reality from that perceived bymembers of the next organization.In the normal course of business thisis usually not an issue, since visitorsto an organization know they arevisitors. However, during strategicrestructuring, and specifically duringmerger negotiations, participantstend to forget this fact, to bring theirown organizational culture to thenegotiating table, and to expect othersto share their point of view. Thissubtle shift in expectations occursprecisely when each organization’smost basic arrangements are beingscrutinized, and its very culture isbeing implicitly called into question.

An understanding of these three criti-cal issues, their interplay, and thevaried ways in which they manifestthemselves in the strategic restructur-ing process will explain most negotia-tion stumblings. Early identificationand ongoing attention to these po-tential deal-breakers is essential to asuccessful outcome.

K

QQ U E S T I O N 4

“I think one of the things we really

need is a broader list of options for

organizations to consider, besides

just mergers and consolidations . . . if

you could develop more models, this

would be the most significant con-

tribution to moving organizations

forward.”

— Ralph SilberExecutive Director

Alameda Health Consortium

How can funders encourage nonprofits toundertake strategic restructuring withoutbeing perceived as applying pressure todo so?


Key informants agreed that fundersmust act with care to avoid the ap-pearance of having an undue influenceon nonprofits, given the reliance ofnonprofits on funders for financialsupport. Michael O’Neill, directorof the Institute for NonprofitOrganization Management at theUniversity of San Francisco, quotesAlexis de Toqueville: “When thegovernment speaks it is difficult toascertain the difference between asuggestion and a command,” reflect-ing the power that funders can wield,even inadvertently, when they “showan interest” in an area.

The consensus among key informantswas that funders should promotemergers, consolidations, and jointventures as the powerful organiza-tional options they are, but shouldbroaden the framework to encom-pass the concepts of reengineering,reinventing, and market positioning,as adapted to the nonprofit sector.From these discussions the conceptof strategic restructuring emerged,broadening the focus from the pro-motion of specific options. Strategicrestructuring addresses the need tobring change to a nonprofit in anenvironment that is itself rapidlychanging.

Key informants reasoned that non-profits must be encouraged to think

deeply, strategically, and realisticallyabout their present situation andfuture prospects. The process shouldaim to assess, as objectively as pos-sible, the organization’s situation inlight of its mission and its externalenvironment. No organizationalstructure should be taken for granted.As corporate reengineering hasshown, the redesign of business pro-cesses for greater productivity (andprofitability) often requires abandon-ment of cherished but outmodedstructures.

Strategic restructuring considerationsare so fundamental—and their effectsso far-reaching—that the organiza-tions involved must begin with acomplete reevaluation of their currentstrategic position. This approach alsomakes political sense. Most nonprofitleaders will balk at a third party’ssuggestion of a merger; it is an ideathat must “dawn from within.”

Thus, funders may wish to sponsorbroad educational and awareness-raising activities for the sector, andthen be ready to assist those organi-zations that realize that a merger,consolidation, or joint venture mightbe an appropriate alternative forthem to consider.

K

QQ U E S T I O N 5

A funder’s objective should not

necessarily be to promote more

frequent use of a particular option,

such as merger, but rather to in-

crease the number of options

available to nonprofit leaders.

What educational activities can funderspromote to encourage strategic restructur-ing activities such as mergers,consolidations, and joint ventures?


Key informants contributed a widearray of ideas concerning educationalactivities that funders can promoteto encourage strategic restructuring.The suggestions were easily dividedinto three categories: research anddevelopment; documentation anddissemination; and direct assistance.

Research and DevelopmentKey informants expressed a need formore creative thinking in this area,viewing strategic restructuring as“uncharted waters.” Now that eco-nomic necessity is forcing nonprofitsto look at strategic restructuringmore closely, isolated advances inpractice are far ahead of the develop-ment of a body of practical scholar-ship on the subject.

Society is at risk of losing essentialnonprofit services because of thepoor financial performance andimminent economic collapse of somany of the organizations withinwhich these activities occur. Thesector needs an incubator functiondevoted to developing new organi-zational arrangements under thebanner of strategic restructuring.Specifically, a successful strategy willencourage the development and dis-semination of information on op-tions for organizational change thatenhance the missions of the non-profit sector, without necessarily per-petuating its current organizationalstructures.

Today’s nonprofit leaders glean manyessential skills from practitioner-led,action-oriented research and writing(e.g., John Bryson’s work on strategicplanning and Hank Rosso’s AchievingExcellence in Fund Raising). The skillstaught, and more generally the broadconceptual approach to each prob-lem conveyed in these works, spreadquickly throughout the sector. Forexample, even among those whohave not read Bryson, strategic plan-ning is better understood because ofhis book Strategic Planning for Publicand Nonprofit Organizations.

Most nonprofit management learningspreads through word-of-mouth,facilitated by the ubiquitous networksnonprofit managers maintain. Thisseminal activity is sorely needed inthe emergent area of strategic re-structuring. As happened with strate-gic planning, the resultant learningfrom a research and developmenteffort in strategic restructuring wouldquickly spread from written formthrough word-of-mouth to benefitthe wider sector. Some of the issuesto be addressed by an R&D effortinclude:

■ How to make information aboutmergers, consolidations, andjoint ventures directly availableto board members.

■ How to educate chief executiveson the need for a well-informed,involved board capable of mak-ing strategic restructuring andother critical decisions.

■ The development of best-practiceguidelines for handling each as-pect of a merger (e.g., humanresources and layoffs, finances,due diligence and other legalconcerns, board integration, andthe resolution of deal-breakers).

■ Analysis of the factors leading tothe success or failure of strategic


restructuring efforts and of thelong-term benefits obtained fromcompleted projects.

■ A retrospective analysis of theeffects of mergers on ethnic andother minority communities,social and artistic diversity, andcommunity access to services.

■ Examinations of new and emerg-ing strategic restructuring optionssuch as back-office consolidations,fiscal sponsorship arrangements,and joint ventures.

■ Development of new conceptsfor effective, lean organizationalstructures that maximize re-sources available to pursue themission, such as the “virtualcorporation.”

■ Exploration of the possible rolesof business and governmententities in nonprofit strategicrestructuring efforts.

Rather than promoting one particu-lar option, such as merger, a funder’sobjective should be to increase thenumber, frequency of use, and devel-opment of more options.

A concentrated R&D effort representsan opportunity to field-test new ideasamong entrepreneurial nonprofitsand publicize the results. R&D doesnot require independent research oran experimental design. Many inno-vations are emerging from the field.The focus would be on findingpromising models, studying them asthey unfold, documenting the proc-ess, synthesizing the lessons learned,and then turning the results into rep-licable programs or policy recom-mendations to be considered bynonprofits and their funders.

Documentation andDisseminationKey informants were unanimous intheir belief that this area represents a

major gap in the nonprofit manage-ment literature. In order to raise thesector’s consciousness and compe-tence in these issues, a larger body ofliterature is needed. Much of thiseffort could emerge from the R&Dwork described above, in partnershipwith practitioners and researchers.Communications aimed at scholars,board members, chief executives,constituent groups, and public andprivate funders are needed.

The development of this work will takemany years, but it must begin now.Nonprofit managers are looking forrealistic suggestions and fresh insightsinto new and old problems. They arerelatively uninterested in theory forits own sake, but keen on practicaladvice and workable solutions.

The senior manager’s time is every or-ganization’s most precious resource.Even the most thoughtful executives are“grazers” who skim widely, rather thanreading in depth. Projects envisionedby key informants to expand thebreadth of literature available include:

■ Case studies by actual mergerand consolidation participants;

■ Critical reviews of successful re-structuring innovations ready forreplication;

■ General articles in widely readperiodicals;

■ Scholarly articles in sectoral andsubsectoral journals;

■ Full-length practical yet scholarlybooks, such as those from Jossey-Bass; and

■ A workbook format describingdifferent restructuring options,designed around a decision treeuseful for choosing the most ap-propriate organizational designfor a given situation. (Also, thisworkbook could be made avail-able online to reach a broaderaudience.)

“Considering the complexity of man-

aging a successful merger . . . Direct

consultation is clearly needed if a

merger is to be successful. The con-

sultants need to be well trained in

nonprofit management, have knowl-

edge of issues related to mergers,

and possess mediation skills.”

—Dale NeedlesVice President

National Hispanic Scholarship Fund


These publications could be fosteredthrough direct approaches to pub-lishers, academic institutions, andpractitioners. Small grants could sup-port the writing and dissemination ofcase studies by practitioners.

Direct AssistancePractical, immediately useful strate-gies are needed to encourage non-profit leaders to consider mergers,consolidations, joint ventures, andother strategic restructuring effortsand to successfully initiate and com-plete the delicate, sometimes ego-bruising negotiations required tobring them to fruition. In additionto the strategies described above,which are educational in nature andmedium- to long-term, an effort isneeded to encourage, support, andfacilitate actual changes involvingspecific nonprofit organizations inthe field now.

This component of the proposedstrategy includes the identificationof a network of “local partners”—convener organizations with accessto nonprofits in their community.Community foundations and man-agement support organizations arelikely candidates for this role. Toparaphrase the old Tip O’Neillmaxim: “All nonprofit politics arelocal.” Without geographically di-verse, home-grown partners, it willbe difficult to access nonprofits frommany locales. Local partners wouldreceive assistance in promoting theefforts of local nonprofits to examinetheir futures from a strategic restruc-turing perspective.

Workshops. Local partners couldrecruit participants and sponsorworkshops to instruct nonprofitleaders about the strategic restructur-ing process. Workshops would covervarious aspects of strategic restruc-turing, such as the importance ofnegotiation, the financial commitmentinvolved, and the relationship be-

tween strategic restructuring andpursuit of mission. From these pre-sentations candidates for directassistance would emerge.

Consultation. Key informants reportgreat variability in consultants’ skills.An unsuitable consultant can doserious damage in these sensitivenegotiations. Training for consultantsand a clearinghouse of experiencedconsultants would be useful. Localpartners would identify strategic re-structuring candidates for possibledirect consulting assistance.

Direct Financial Support. Candidatesfor grants to pay for one-time ex-penses related to a restructuringeffort, such as legal fees, could beidentified by local partners. Funderscan also create other financial in-centives related to the new organiza-tional structure.

Funders’ Challenge

T


This report outlines pressures facingnonprofit organizations as resourcesshift and societal need intensifies. Itdescribes the dynamics that motivatenonprofit leaders to pursue or avoidstrategic arrangements with otherorganizations. Finally, the reporthighlights several ways nonprofitorganizations can be encouraged toadvance into the foreign territory ofstrategic restructuring. Some of theseinterventions advertise the benefits ofthe journey and its potential outcome.Others are designed to provide thetools—the organizational map andcompass—needed by a traveler toparts unknown. Ultimately, this re-port is intended to stimulate fundersto consider encouraging and sup-porting strategic restructuring bynonprofits facing turbulent times.

Funders interested in encouragingstrategic restructuring may choose tobuild on the three types of interven-tions described in this report (R&D;documentation and dissemination;and direct assistance). However, thisis, at best, a starting point; muchmore work is needed. Some ques-tions that remain include:

■ What other forms of strategicrestructuring might be developedin the next few years?

■ How might programmatic col-laboration be enhanced bystrategic restructuring?

■ Is it appropriate to promotemergers and consolidationsamong ethnic and other minoritycommunities that have long

struggled to build their own or-ganizations? Will diversity beenhanced or reduced?

■ What impact may an interest instrategic restructuring have ona funder’s overall grantmakingprograms?

■ Through strategic restructuring,should nonprofits form partner-ships with private businesses?with public agencies?

■ What are the outcomes, bothfinancial and programmatic, fiveto ten years after a strategic re-structuring effort?

In conclusion, a few general recom-mendations are offered for fundersto consider in developing an ap-proach to strategic restructuring.

Take a Broad View of the Question.Should funders focus on promotingmergers or should they view mergersas a single option in a larger effortto renew organizational vitality inpursuit of mission? Key informantsbelieve in a broad approach to non-profit organizational challenges, withmerger viewed as one weapon in awell-stocked arsenal. Funders shouldconsider taking a broad view of non-profits’ problems as they relate tochanges in organizational structuresand the development of new partner-ships. The touchstone should be thepromotion of organizational changethat enhances the mission: strategicrestructuring.

Undertake an Integrated Effort.An integrated, comprehensive effort

to promote strategic restructuring—incorporating R&D, documentationand dissemination, and direct assis-tance—will maximize the funders’ability to help nonprofits as theycope with organizational change.

Establish Focus across Subsectors.All subsectors of nonprofit activityface issues and challenges similar tothose raised in this report. They ap-ply equally to health care, the arts,human services, the environment,and other fields.

Consider the Limitations of Tradi-tional Grantmaking. Consider anactive grantmaking approach. Manyfunders have discovered that organi-zational capacity-building grants tononprofits facing structural weak-nesses or threats are often insufficientto effect real organizational change.There are many ways to account forthese failures: the nonprofit may lackclarity of purpose at the outset of theproject, or it may lack the manage-ment know-how to carry it out; theorganization may rely on consultantswho are not adequately skilled; theremay be a pattern of poor organiza-tional follow-through; or organiza-tional leaders may become distractedby immediate funding crises. Boardmembers’ and managers’ attitudes,strong organizational cultures, andingrained habits are difficult hurdles,but for strategic restructuring to besuccessful they must be overcome.Given the frequent combination ofinadequate skills, external distrac-tions, and high emotions, fundersmust work in new, more direct waysto promote strategic restructuring.

SAppendix A

Since the initial publication of thisreport in April 1997 it has been re-viewed by a growing number offunders, some of whom perceivedpotential value in pursuing its ideasfurther. In July 1997, The JamesIrvine Foundation was joined by TheDavid and Lucile Packard Founda-tion in a unique collaboration tosponsor a year of further investiga-tion. Complementary planning grantswere made in order to implement anumber of the recommendationscontained in the report and, in gen-eral, to further the cause of strategicrestructuring among nonprofit orga-nizations.

At the conclusion of the planningperiod, in July 1998, the Irvine andPackard foundations were joined byThe William and Flora HewlettFoundation in making three-yearcommitments to Strategic Solutions:a concerted, time-limited effort atdeveloping a knowledge and practicebase in strategic restructuring fornonprofits.

The Strategic Solutions project isorganized to develop the three corecomponents described in this report:research and development, docu-mentation and dissemination, anddirect assistance. It also containstraining and education componentsfor funders and nonprofit manage-ment consultants. It is committed toworking with a range of nonprofitorganizations from differentsubsectors around the country andbeyond.

In Strategic Solutions’ three-year lifeit will identify, study and documentinnovative restructuring projects;work with local partners on educa-tional efforts; produce books, casestudies, articles, and other means ofcommunicating what is learned; par-ticipate in university-based researchprojects; train a cadre of manage-ment consultants; conductworkshops and training for nonprofitleaders and funders; and initiate asmall number of high-profile innova-tive strategic restructuring projects.Strategic Solutions has alreadylaunched, and is constantly improv-ing, its website, which can be foundat www.lapiana.org.

Strategic Solutions represents an op-portunity to enhance the nonprofitsector’s ability to pursue its missionsthrough new organizational struc-tures, some of which it mightdiscover or invent through its re-search and development efforts.Strategic Solutions will not only en-courage nonprofits to restructure tobecome stronger and better able topursue their missions, but it will doso within a new kind of organiza-tional partnership: active, closelyinvolved funders working with a pri-vate consulting firm. StrategicSolutions is a project of La PianaAssociates, not a new nonprofit orga-nization. This partnership is designedfor focus, flexibility and responsive-ness. Thus, Strategic Solutionsmodels the kind of strategic thinkingit seeks to promote within the sector.

The following attributes, inspired bybusiness re-engineering literature, aredynamics of successful enterprises inthe current turbulent nonprofit envi-ronment. These are not abstractions:Strategic Solutions is designed to em-body these characteristics:

■ Flexible—a project rather thana program focus (nothing ispermanent), extensive use ofoutsourced contractors andpartnering with foundations,management support organiza-tions, private consultants, etc.;

■ Small—structured as a virtualcorporation with no “offices,”minimal overhead, andoutsourcing of nearly everything;

■ Market-Oriented—a high-pro-file presence, aided by theretention of a publicist, and avery un-nonprofit-like emphasison marketing, capitalizing onnonprofit leaders’ increased in-terest in strategic restructuring,leading to earned income;

■ Entrepreneurial—an emphasison new project development andfee generation and a goal of be-coming self-supporting throughfees and project-specific grants;and

■ State-of-the-art—no excusesfor outdated technology, facili-ties, programs, or ideas.

Implementation: Strategic Solutions


Appendix B

Key InformantsKathy AndersonDirectorNonprofit Grants & Resource CenterRedding, Calif.

Nancy AxelrodFormer PresidentNational Center for Nonprofit BoardsWashington, D.C.

Rachel BellowExecutive DirectorProject 180New York City

Lew ButlerChairCalifornia TomorrowSan Francisco

Pat ChristenExecutive DirectorSan Francisco AIDS FoundationSan Francisco

Winnie ChuAssociate DirectorSanta Clara Community FoundationSanta Clara, Calif.

Robert CranePresidentJoyce Mertz-Gilmore FoundationNew York City

Michael EttnerTrusteeZacchiasWashington, D.C.

Crystal HaylingProgram OfficerEvelyn and Walter Haas Jr. FundSan Francisco

Etha HenryProgram ExecutiveUnited Way of New YorkNew York City

Norah HolmgrenSenior Associate DirectorPlanned ParenthoodSan Francisco

Mike HoweExecutive DirectorEast Bay Community FoundationOakland, Calif.

Barbara KibbeProgram OfficerDavid and Lucile Packard FoundationLos Altos, Calif.

Heidi KolbeIndependent ConsultantSacramento, Calif.

John KreidlerProgram ExecutiveSan Francisco FoundationSan Francisco

Dan LiebsohnPresidentLow Income Housing FundSan Francisco

Larry MandellExecutive Vice PresidentUnited Way of New YorkNew York City

Jan McElweePrincipalThe McElwee GroupBurbank, Calif.

Frank McNamaraFormer Chief Executive OfficerUnited Way of Los AngelesLos Angeles

Dale NeedlesVice PresidentNational Hispanic Scholarship FundSan Francisco

Michael O’NeillDirectorUSF Institute for Nonprofit ManagementSan Francisco

Alan PardiniIndependent ConsultantSan Francisco

Drummond PikePresidentTides FoundationSan Francisco

Skip RhodesCorporate Contributions ManagerChevron CorporationSan Francisco

Patricia SchaeferVice PresidentMorgan StanleyNew York City

Michael SeltzerProgram OfficerFord FoundationNew York City

Benjamin ShuteSecretary and TreasurerRockefeller Brothers FundNew York City

Bruce SieversPresidentWalter and Elise Haas FundSan Francisco

Ralph SilberExecutive DirectorAlameda Health ConsortiumOakland, Calif.

Tom SilkAttorneySilk, Adler and ColvinSan Francisco

Nora SilverDirectorThe Volunteerism ProjectSan Francisco

Rick SmithNational Executive DirectorSupport Centers of AmericaSan Francisco

Jan StohrDirectorNonprofit Resource CenterSacramento, Calif.

Paul VandeventerPresidentCommunity PartnersLos Angeles

Naomi VineDirectorLaguna Art MuseumLaguna Beach, Calif.

Rob WeinerDirectorCalifornia Coalition for Rural HousingSacramento, Calif.


(Affiliations as of June 1996.)

Appendix C

References and Resources


Amherst Wilder Foundation. NonprofitDecline and Dissolution Project Report.Minneapolis: Amherst Wilder Foun-dation, 1989.

Arsenault, Jane. Forging Nonprofit Alli-ances. The National Alliance ofNonprofit Managers and Jossey-BassPublishers, 1998, 198 pages.

Bryson, John, M. Strategic Planning forPublic and Nonprofit Organizations.San Francisco: Jossey-Bass, 1995.

Bryson, John, M., and Barbara C.Crosby. Leadership for the CommonGood: Tackling Public Problems in aShared-Power World. San Francisco:Jossey-Bass, 1992.

Ernst, David. “Coffee and One Way toBoston,” The McKinsey Quarterly,1996, No. 1, 165-175.

Greater New York Fund/United Way.Merger: Another Path Ahead. NewYork: Greater New York Fund, 1981.

Heimovics, R.D., and R.D. Herman.Executive Leadership in NonprofitOrganizations. San Francisco: Jossey-Bass, 1991.

Hodgkin, Christopher. “What YouShould Know About NonprofitMergers,” Nonprofit World, 1992,May-June, 14-18.

Kohm, Amelia. “Cooperating to Surviveand Thrive: Innovative Enterprisesamong Nonprofit Organizations,”Nonprofit World, May/June 1998, 36-44.

Kreidler, John. “Leverage Lost: TheNonprofit Arts in the Post-Ford Era.”Circulated in manuscript, versiondated March 16, 1996.

La Piana, David. Nonprofit Mergers: TheBoard’s Responsibility to Consider theUnthinkable. Washington, D.C.:National Center for NonprofitBoards, 1994.

La Piana, David. “Successful Trusteeship:An Executive Director’s Viewpoint,”New Directions for PhilanthropicFundraising, Summer 1994, No. 4,49-62.

McLaughlin, Thomas A. Nonprofit Merg-ers and Alliances : A Strategic PlanningGuide. John Wiley & Sons, 1998, 256pages.

McLaughlin, Thomas A. Seven Steps to aSuccessful Nonprofit Merger. Washing-ton, D.C.: National Center forNonprofit Boards, 1996, 28 pages.

McMurtry, Steven L., F. Ellen Netting,and Peter M. Kettner. “How Non-profits Adapt to a StringentEnvironment,” Nonprofit Manage-ment and Leadership, 1991, Vol. 1,No. 3, 235-252.

Merron, Keith. Riding the Wave: Design-ing Your Organization’s Architecturefor Enduring Success. New York: VanNostrand Reinhold, 1995.

Remley, Dirk. “Pool Resources for Suc-cess,” Nonprofit World, September/October 1998, 42-45.

Rocco, James E. “Keys to a SuccessfulNonprofit Merger,” Nonprofit World,March-April 1992, 14-19.

Rosso, Henry A. Achieving Excellence inFund Raising. San Francisco: Jossey-Bass, 1991.

Salipante, Paul F., and Karen Golden-Biddle. “Managing Traditionalityand Strategic Change in NonprofitOrganizations.” Nonprofit Manage-ment and Leadership, 1995, Vol. 6,No. 1, 3-20.

Senge, Peter. The Fifth Discipline: TheArt and Practice of the LearningOrganization. New York: Doubleday,1994.

Singer, Mark I., and John A. Yankey. “Or-ganizational Metamorphosis: A Studyof Eighteen Nonprofit Mergers, Acqui-sitions and Consolidations.”Nonprofit Management and Leader-ship, 1995, Vol. 1, No. 4, 357-369.

Unterman, Israel, and Richard H. Davis.Strategic Management of Not-for-Profit Organizations: From Survival toSuccess. New York: Praeger, 1984.

Wernet, Stephen P., and Sandra A. Jones.“Merger and Acquisition ActivityBetween Nonprofit Social ServiceOrganizations: A Case Study.” Non-profit and Voluntary Sector Quarterly,Winter 1992, Vol. 21, No. 4, 367-380.

David La Piana, M.P.A., is a nonprofit management consultant specializing instrategic restructuring and the author of Nonprofit Mergers, published by theNational Center for Nonprofit Boards (NCNB). David is a veteran of 20 yearsin the nonprofit sector. In recent years he has facilitated nearly 50 nonprofitpartnerships. In 1997 he formed La Piana Associates, a management consultingand training firm based in Northern California. He is currently leading theStrategic Solutions project and is at work on a new book: The Nonprofit Merg-ers Handbook, which should be available mid-1999. David is also an adjunctfaculty member at the Institute for Nonprofit Organization Management at theUniversity of San Francisco, and lectures at the Haas Business School at theUniversity of California, Berkeley.

David can be reached at 510-655-3455 or by e-mail at [email protected] Strategic Solutions website is www.lapiana.org.

Appendix C

About the Author


National Center for Nonprofit Boards

1828 L Street, NW, Washington, DC 20036, 800-883-6262, fax 202-452-6299, www.ncnb.org

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