Closing down an organization or program is not an easy decision for nonprofit leaders to make. It typically requires tough decisions about services, personnel, and — most importantly — the communities and people served. If your organization is facing such a decision, thoughtful consideration of strategic alliances and restructuring options may enable your organization’s legacy, as well as its core purpose and mission, to live on, even as you close down.
Kristina Gawrgy, Monisha Kapila, Angela Romans
“If there is a lesson from the last several years, it is that we have to look inward before we do anything else. Between the pandemic, the “Great Resignation,” political division, and heightened awareness of the ways racism and oppression has shaped everything we do in the nonprofit sector, we have been called to be more self-aware and reflective as leaders.”
In 2020, in the midst of a global pandemic, the nonprofit consulting firm AchieveMission underwent an unexpected executive director transition. Having served over 84 organizations, the board and existing leadership decided to pause and assess their options before moving forward with the traditional path of a hiring process.
The AchieveMission board and leadership made the decision to review three options: a new ED search, a merger, or dissolution of the organization. The board explored these options by focusing on three key questions:
1. How does the current context and environment impact the future of the organization?
2. How can the organization best contribute to the field?
3. What is the board capacity needed in each scenario?
Ultimately the board made the hardest decision for a nonprofit organization, to dissolve the organization and share assets with the community. AchieveMission believed their choice highlighted the importance of nonprofit leaders looking inward, challenging ways of working, and considering when an organization may no longer need to exist in order to get to the most equitable results for a community. You can read the full case study here.
Nadya K. Shmavonian, president, Public/Private Ventures
“Providing continued access to [our] resources allows the Public/Private Ventures’ legacy to endure. We are forever grateful to the Foundation Center for making this possible.”
In 2012, based primarily upon financial considerations, the board and staff leadership of Public/Private Ventures (P/PV) made the difficult decision to dissolve the organization after almost 35 years as a program, research, and evaluation intermediary working with disadvantaged youth in the United States.
P/PV’s leaders focused on finding a way for the organization’s knowledge and resources to continue to serve the community. It had hundreds of research reports, case studies, and evaluations about how best to improve programs and outcomes for children, youth, and families — and there was no reason why these resources couldn’t continue to inform the community. P/PV’s leaders just needed to find a home for the resources. After thoughtful consideration and outreach, they found that home in the Foundation Center’s IssueLab.
While it’s never an easy decision to close down a program or organization, P/PV’s leaders take pride in the fact that their organization’s work lives on through IssueLab. The research and valuable resources that they created continue to serve their purpose, and practitioners will be able to benefit from this knowledge for years to come.
Matthew Klein, board chair, Groundwork
“We are very pleased that Groundwork is now officially a part of Good Shepherd Services. Already we’ve seen that the union is allowing more comprehensive services for children and families in communities where they are most needed.”
Groundwork, which provided tutoring and academic services in Brooklyn, was struggling financially. But after 10 years of successful programming for youth and families in high-poverty areas of their community, its leaders knew that simply closing down was not the answer. After thoughtful consideration, its board decided that the best way for the organization to continue to serve the children and youth who depended on Groundwork was to pursue a merger opportunity with another youth-serving organization.
Groundwork’s leaders reached out to Good Shepherd Services, an organization focused on helping children and families in New York City succeed at school, at home, and in their communities. Good Shepherd was open to the idea of a merger, viewing it as a way to ensure ongoing service to the neighborhoods of Bedford-Stuyvesant and East New York, neither of which was currently in Good Shepherd’s geographic service area. Good Shepherd also saw the opportunity to continue — and even build on — Groundwork’s strong socio-emotional, academic, and health-related programming outcomes. The strategic partnership began with Groundwork coming under Good Shepherd’s management; a formal merger was completed 21 months later.
Even before the formal merger was completed, it was clear that the strategic partnership was a winner. Building on Groundwork’s strong reputation in Bedford-Stuyvesant and East New York, Good Shepherd was able to expand services for youth and families in those neighborhoods and secure the funding needed. While Groundwork previously served 292 students in after-school programs, Good Shepherd secured new contracts and private grants to serve more than 1,000 children — plus another 850 in summer camps — and has launched several new programs that serve court-involved young people. And, Good Shepherd is now poised to open a newly constructed, much-needed community center in East New York to provide a hub of robust activity and a safe space for young people and their families.
Groundwork’s board was not only able to avoid the discontinuation of services for children and families in Bedford-Stuyvesant and East New York, it was able to strengthen them. It’s been a huge win for the community, and a reminder that a nonprofit’s core purpose and mission are bigger and more important than its corporate structure. Groundwork’s legacy of service lives on through Good Shepherd’s good work, and it wouldn’t have been possible without the courage and commitment of its board.
The boards of both Public/Private Ventures and Groundwork faced tough decisions about their organizations’ futures. After determining that moving forward independently didn’t make sense, they were able to find powerful ways for the organizations’ legacies to live on through a strategic alliance and restructuring.
While both of these organizations faced financial realities that left few other options, the decision to thoughtfully close down a program or entire organization is not always a financial mandate, or even financially driven. Nonprofit leaders may find themselves contemplating closing the doors or eliminating programs for a variety of reasons: They may decide that the organization’s core purpose has been achieved (or is no longer relevant), they may have lost a founder or leader who was the linchpin to their programs, or they may see another organization that’s providing a similar (or maybe even stronger) community benefit.
Whatever is driving the conversation about possible closure, boards are wise to consider how a strategic alliance or restructuring can enable an organizations’ past work to provide continued benefit to the community and people they served. It’s also important to know that a decision to close down an organization is not tantamount to failure — for the organization or its leadership. Indeed, in some cases, it can be the best way for an organization’s core purpose to be served.
As your board discusses the possibility of closing down your organization or one of its programs, here are some things to keep in mind:
Start by asking yourselves some fundamental questions about your organization’s core purpose and current environment. If you’re discussing the possibility of closing down a program versus the organization, focus your discussion on the scope and role of that program within the context of your broader organizational purpose.
Your answers to these questions will likely reaffirm the importance of your work, but may also flag an opportunity or need to think differently about your future direction and core purpose. Thinking creatively about how to build on your organization’s history and progress through a strategic alliance or restructuring may provide a powerful opportunity for your organization’s purpose to live on, whether in partnership or through another organization.
For some organizations, a conversation about the possibility of closing down the organization or a specific program comes at a time when all other options have been exhausted. For others, it’s a more strategic conversation about the best way for the organization to move forward, given its larger context. Depending on which of those two realities best describes your organization, your conversation about options will vary dramatically.
|Do we have the option of continuing to exist as an organization (or program)?|
|If yes…||If no…|
As the experiences of Public/Private Ventures and Groundwork demonstrated, the end of an organization does not have to mean the end of its legacy. When organizations have significant reputational and programmatic assets, as was the case with both of these organizations, boards and leadership have a powerful opportunity to seek out potential partners for a merger or program transfer. By doing so, they are not only able to preserve the organizational legacy and assets that have been built up over time, but do so in a way that serves the community and core purpose.
If your organization is ready to think about how your legacy can continue through the work of another organization, here are some questions to consider:
Once you’ve identified the type of strategic partner you’re seeking, you’re ready to initiate a conversation. Existing relationships and trust can be enormously helpful as organizations set the stage for a first conversation about a potential strategic alliance or restructuring, so it’s wise to consider how board members can be helpful. That said, board members should avoid initiating a conversation with a potential partner without being empowered to do so by the full board (in cases of mergers or acquisitions) or by the executive (in other programmatic partnerships).