Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Friday, July 23, 2010

Now Tweeting ...

First, a quick reminder that there's still a few days left to enter the 2010 Getting Attention Nonprofit Tagline Awards. Each year I'm pleased to help promote this fun approach to encourage and recognize great marketing by our nonprofit community. This year - for the first time - organizations can enter a tagline for their program (product or service), fundraising campaign and/or special event, in addition to their organizational tagline. But hurry, the entry deadline is July 28 - See to enter now.

Since my posting here a couple of weeks ago, taking a nonprofit to task for "over-tweeting," it has come to my attention that I am not "practicing what I preach" or modeling proper twitter behavior or, frankly, even tweeting at all from an account associated with my consulting practice. I've been on Twitter for a few years with a personal account, but I've kept that separate from my professional life.

Well, that is being corrected. I have opened a second twitter account - #NonprofitKenG - for professional purposes. I will be tweeting about nonprofit issues, news, and ideas, as well as linking back to this blog when new posts are added.

To see if I follow through on my own tweeting advice, simply go to and click on the "Follow" button.

Thursday, July 22, 2010

Nonprofit Mergers & Alliances: An interview with Thomas A. McLaughlin (part two)

Thomas McLaughlin is Vice President for Consulting Services for the Nonprofit Finance Fund, a nationally recognized expert on nonprofit mergers and alliances, having consulting in over 200 such collaborations, and the author of the excellent and indispensable volume Nonprofit Mergers & Alliances, now in its second edition.

I recently had the opportunity to speak with Mr. McLaughlin about his book and his experiences with nonprofit mergers and alliances. What follows is part two of our discussion:

Ken Goldstein: I've heard that, on average, only 1/3 of organizations that enter merger negotiations actually wind up merged. In my own experience, I've been successful in 2 out of 3 rounds of merger negotiations. What do you find are the most important factors in beating the odds and having a successful set of merger talks?

Tom McLaughlin: I don't know whether it's 1/3, 2/3, or 1/2... because we don't have standardized reporting, or any reporting at all, whereas with the FTC for-profit companies have all sorts of reporting to do. How do you define success? If you're talking about the very beginning, and just talking and exploring, that might be 1/3 successful, if people are sincere in the discussion, but there are many things that can intervene... if you start the clock ticking when organizations "get serious" and start to plan something, enter the implementation planning stage, I think the percentage goes up to 75%. Until that point it's just discussion, once you commit, things start to fall into place and you start making decisions that have lasting effects and consequences. In the future this activity will be frequent enough that organizations will say "we're always talking" but that doesn't mean we're always "getting serious." I would say that once you get over that first hurdle of the feasibility stage, your chances are quite high. Because there's something in it for both organizations. These are voluntary organizations; organizations in this sector cannot and should not be forced to merge. This should be a voluntary process from the ground up and should not be somebody else's grand plan. I think it's stronger when two organizations choose to put their groups together and follow through.

Given what you've just said about mergers needing to be voluntary, is it right for United Ways or Community Foundations or other funders to be cheerleaders for the trend, and to be encouraging mergers?

I think funders should be advocating collaboration, but not forcing any particular merger. They're independent voluntary organizations. Outside matchmakers don't have the inside knowledge and could push for a potentially bad result for all the right reasons. Funders can create an atmosphere that encourages talking, fund it... one of the best things they can do is provide Critical Juncture Financing; external financing provided to defray the cost of collaboration between two or more organizations. Those two parts are essential: collaborating organizations - to facilitate the process, not to ordain it. In Boston they call it a catalyst fund, these are efforts on the part of forward thinking foundations to provide what otherwise might be a pretty heavy lift for organizations to come up with on their own. One thing worth noting here, this is asking foundations and funders to do two things they're not used to doing: one is to pay for collaborative activities, not a strategic plan for one organization... the second is that this is not funding for programs, it's funding for management and infrastructure, and that's okay, it's the only way to get some of these going.

I really appreciated that in your book, you're clear about the differences between nonprofit and for-profit mergers, including issues of ownership, motivation, and the lessoned need for absolute secrecy around the talks. Do you find that a lot of board members, whose main lives are in the corporate world, are surprised or uncomfortable at these differences?

Yes, absolutely. For-profit board members who are bankers tend look at the nonprofit sector and see a lot of little banks. For-profit board members who are manufacturers see a lot of little factories. That is a problem because the incentives, the processes, the reasons for doing things, are very different in the for-profit and nonprofit sectors. The vast majority of public organizations tend to focus more on doing back-room collaborations for savings, but we already keep our overhead as low as possible for a lot of reasons. Say you have overhead costs of 8%, which is very low. If you can save 10% of 8% you're a genius. If you go into a nonprofit merger to save money, you will be disappointed. At some point you'll say, "We're doing all this to save $25,000? And we might not even come up with that kind of savings?" A sliver of a sliver is not a major savings.

You also do a bit of "myth busting" in the book - particularly around unrealistic expectations of immediate administrative saving, as you've just said, and that "only failing organizations merge" - How do you convince strong organizations that mergers or alliances are to their advantage with lowered expectations of quick payoffs?

It ultimately has to be strategic in nature. Everybody talks about strategic alliance. Strategic is a popular label to apply to things, but it really does need to be strategic. You may or may not regard 2% savings to be a lot of money. But if two dance troupes get together and they talk strategically about the ability for having bigger shows, to attract more media, to produce original shows... I can't put a value on that, if its' worth 2% or 5% or 10%. But if you can put a strategic vision like that on it, it's hard to say, "Eh, not worth it."

Wednesday, July 21, 2010

Nonprofit Mergers & Alliances: An interview with Thomas A. McLaughlin (part one)

Regular readers of this blog know that I've been involved in two successful nonprofit mergers, as well as a third attempt that was never consummated, and I've written several blog posts on my feelings about nonprofit mergers. So, when I received a message asking if I was interested in speaking with Tom McLaughlin, author of Nonprofit Mergers & Alliances, I jumped at the chance.

McLaughlin's book is a must read for anybody interested in the topic, or any nonprofit leaders (board or staff) who are considering any sort of merger or alliance. I found myself nodding my head and saying, "Yes, yes," throughout reading the book, and wish I'd had it during my three sets of merger negotiations. The following is part one of our talk:

Ken Goldstein: You certainly make a strong case for mergers and alliances as a strategy for growth, cost containment, reaching a sustainable size, and simply surviving in these times. Are there any times when you advise against a merger or alliance?

Tom McLaughlin: Oh, sure, absolutely. Here's the starting point... the two reasons that are most cited as reasons why organizations don't get together or it falls apart and doesn't work are, ironically, the same in both the nonprofit and for-profit sectors, and that is, that they can't decide who the CEO is going to be and culture clash. I'll give you an example of what I mean by culture clash, it's rooted in what the organization does and how it does it. Years ago I was working on a merger between a VNA (Visiting Nurses Association) and a hospice. I was working with the VNA, and they had had a number of conversations with the hospice down the street, part of the community, and it never worked. Never any animosity, it just didn't happen for different reasons, and the primary one was that they were just different cultures, two very different models for how they do their missions. With a VNA, it's a health care model; death is failure. With Hospice, it's a social care model; death is part of life. I believe that was at the heart of why they couldn't get together.

That was a specific example of why a particular merger didn't work, but is there a time in the life cycle of a nonprofit when a merger not advisable?

Yes, probably a small handful of those situations. The one that's most common is when one, or both, of the organizations is so financially stressed, that they are only paying attention to getting cash in the door and not brining in enough of it. The value of their programming is likely to be similarly stressed and declining. At some point an organization in a downward spiral like that, the programs become too much of a risk, just too neglected to be salvaged by another organization. An example of decision delayed tragically. In those cases, it would have been preferable to think about this a lot earlier.

While the main thing people are interested in, and the book focuses on, are mergers, you make the case for alliances at several levels below the full merger, with your CORE (Corporate, Operations, Responsibility, Economic) model. Does lower level collaboration always have to lead to full merger, or can it be an end in itself?

It certainly can be an end in itself, and that is what I try to communicate with the CORE model. You don't enter an alliance and then ask why. You have the question and build the alliance around that. It its whether it's a question of how to strengthen services or how to save money (etc.) that leads to the appropriate level of alliance or merger. It's entirely possible that organizations would create some kind of alliance first and move on to a merger; it's a nice progression if it does happen that way, but it doesn't have to.

Related to organizations entering mergers and alliances, there are organizations that come into being as pseudo-independent nonprofits, but they're under the fiscal sponsorship of another group and enjoy many of the benefits of an alliance. In the past, this was seen more as a "nonprofit incubator" approach, and the organizations were expected to eventually blossom and go out on their own, but I see that more and more, they'll embrace fiscal sponsorship and alliance as a permanent ideal for single-program nonprofits. Do you have any comments on this?

That's a relatively rare phenomenon, but it does happen. It takes a long time to incubate an organization, in any case, the fiscal sponsorship model has some characteristics similar to a management company or management services organization (which I have written about), where there is 501(c)3 that provide management services to others that are, effectively, subsidiaries. The most effective way is to lock the boards together, and it's kind of a merger under a different name. And I think that is one of the least understood models in the nonprofit sector. Why I say that, one of the attractive features of that generic kind of model is that both entities retain their brands and the connection occurs mostly in the backroom area, if that's the case, and there's not a board interlock, then you've got two separate entities with separate brands. You can have the same situation in the management company model, where if you have three subsidiaries you can three different brands, plus the brand of the parent corporation. I think we need to get out of the one corporation, one program, one site model. I think there are shades of gray here that quickly become black and white when we talk about changing corporate structures.

Thursday, July 08, 2010

"I had to unfollow because..."

From time to time I've used this space to encourage nonprofit organizations to use social media to help get their message out, connect with supporters and community, and engage in conversation. A good social media strategy can include all or any of blogging, Facebook, YouTube, Twitter, or any number of other platforms.

Last year, to the question of "Should Your Nonprofit be on Twitter?" I answered an enthusiastic, "Yes!" But in that posting, I emphasized that "Twitter requires listening, as well as frequent posting," and that ignoring that warning could cause your social media strategy to backfire. Yesterday, it did backfire for an organization I was following.

This organization had always had a habit of tweeting in spurts, posting five to ten links or comments at a time, then nothing for 24 hours. I understood this, as the person doing the tweeting has many other duties as well, and she did a good job of listening and responding to others.

But what happened yesterday was a spurt of several hundred tweets within a three hour period before I had to click "Unfollow."

Regardless of how useful and valuable the information in a tweet might be, and regardless of what other benefits such a promotion might bring, she forgot to consider the effect it would have on those who are already their supporters and followers.

For me, it rendered Twitter useless for those several hours before I pulled the plug. Within the hundreds of messages from that organization, I lost messages from other groups and individuals, and there was no possible way to read all the tweets this one group was sending - nor could they have been paying any attention to replies during this period.

Overwhelming is not informing, and drowning out is not communication. Even well-intentioned tweets or emails can become spam when the tools are abused.

This morning, they have posted an apology and explanation, promised a return to "normal tweeting," and I have re-followed. But if my loyalty to this person and this organization had not been so strong, I would have un-followed quicker, and not come back.

So, how often should you tweet? As far as spurts, I'd say that if you need to tweet more than five times in a 30 minute period, or more than twenty tweets per day (not counting replies), you should have written a blog post instead.

A handful of useful tweets each day, plus responding to supporters tweets, keeps you part of the conversation and relevant, and - most important here - not annoying.