As the financial crisis hits yet the number of non-profit organizations continues to increase in many countries, questions of whether and how certain organizations should continue to exist have become front and center. When is a merger the most effective and/or ethical solution? When should an organization shut its doors? When is a third contractual option such as alliances or partnerships (as opposed to institutional restructuring) most effective? As discussed below, these questions are relevant to all organizations as a matter of on-going oversight, even the most successful.
The details of these options are too extensive and organization-specific for a blog. However, one key message applies: this analysis is as much a question of ethics and accountability as of strategic, operational, and even human and emotional considerations. The organization’s underlying ethical concern and starting point should be the most effective, efficient, accountable, and ethical delivery on mission to the beneficiaries and use of donor funds – not the existence of your organization or its programs in any particular configuration. The questions below help focus the overriding ethical concern.
Have you clearly positioned your organization amidst competition and opportunities? The answers to the underlying organizational survival questions depend on on-going awareness of competition and opportunities in your sector and region. Does your work duplicate the work of another organization? If so, compare the type and quality of services, efficiency, feedback from beneficiaries, other evaluation indicators, and financial resources. Would there be economies of scale or other opportunities to improve performance on mission through merging? Increased financial resources? What from your organization would be missed if you shut down and let the other carry on, perhaps transferring some of your resources? Addressing competition, as well as identifying ideas to seize gaps or opportunities, should be part of normal on-going strategic planning operations decision-making. (Obviously the quality and efficacy of your work, as well as the related financial and human considerations, is evaluated regularly on its own irrespective of competition and opportunities.)
What are potential complementarities with the work of other organizations? Does your work complement the work of another organization such that there could be enhanced efficacy and/or efficiency in terms of delivery on mission by joining together through a merger? If there are good reasons for the organizations to remain independent, would a partnership or alliance allow you to remain independent but with greater strength to execute on the mission and potentially to fend off other less effective competition and merger threats?
Has your organization’s work lost its relevance? This can be a good thing. Many organizations have the laudable ambition of putting themselves out of business (e.g. the Institute of Cancer Research based in London), in which case the need or mission would have been solved. However, irrelevance or diminishing relevance can also be the result of struggle, for example: competition, diminishing resources, changing priorities, inability to meet beneficiaries’ needs or unfixable complaints from beneficiaries, or a change in regulation. Can the organization address these issues? Or does the organization have an ethical obligation to consider shutting its doors before burning through financial resources and creating personal and professional disruption for employees and beneficiaries?
Does a crisis signal the end…or the beginning? A crisis period – in management, in strategic reorientation, in income, even in service delivery – is not necessarily a signal to merge or shut down. Analyse carefully. Crises can be opportunities to shift strategy, downsize, or otherwise make necessary adjustments toward a stronger future. They can, however, also be signals to stop.
Remember the human side. Any major organizational change must be handled with great individual and collective sensitivity and with an eye to minimizing the personal and professional impact. This might mean assisting employees in finding other employment or providing other forms of support. It is not, however, humane for anyone (employees, volunteers, beneficiaries, the public, or trustees) to prop up an organization’s existence or particular structural configuration beyond the effective, ethical timeframe.
20/20 Foresight. As always in this blog, the key underlying issue is 20/20 foresight. Ask yourself what you want to be able to say you did, said, and decided today looking back from the perspective of six months, a year, three-to five years, and even ten years out. How can you prevent the “what were they thinking?” reaction? Once again, always consider the ethical, legal, human, and mission implications of the process in addition to the organizational, operational, and financial aspects.
Trustees and management. In many circumstances, a merger or closure does not reflect failure of the trustees and/or management team. In any circumstance, it is an opportunity to correct and move forward. Trustees with an eye on their oversight responsibilities, best serving the beneficiaries of an organization in accordance with the mission, and stewarding donor funds properly must make tough decisions and demonstrate vision and highly ethical accountable behaviour. Sometimes closing an organization is a sign of great success, even if initially the result of problems. Sometimes a merger is the way to growth, irrespective of the surviving entity. Any situation can be an opportunity for trustees to model ethical, accountable, first in class behaviour. The point is always to move forward positively not look backward with blame.
Communication. Communication will be key, internally and externally, in relation to any organizational change. That will be the subject of a separate blog.
The ethics of ending or enduring is, once again, an on-going question for all organizations, not only those on the brink of crisis.
As always, comments, questions, and client applications are welcome.
Copyright 2011 Susan Liautaud. All rights reserved