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Working Better Together

CAPLAW’s Guide to Mergers and Shared Services

Resources

CAPLAW Shared Services and Merger Case Studies

Shared Services Case Study
This case study is based on CAPLAW’s interviews with Paul Carlson and Harlan Tardy, the current and former Executive Directors, respectively, of Arrowhead Economic Opportunity Agency, Inc. and Kootasca Community Action, Inc., and a review of the Executive Director Services Agreement between the two organizations. This case study presents an example of a collaboration between two nonprofit Community Action Agencies to share administrative services, which has since grown to include shared program staff. Read more.

Merger between Mesa Community Action Network (MesaCAN) and A New Leaf, Inc.
This case study is based on CAPLAW’s interview with Kathy Di Nolfi, Executive Director of MesaCAN, and Michael Hughes, CEO of A New Leaf. This case study presents an example of a parent-subsidiary merger between a small, non-profit CAA facing significant financial challenges and a larger, more financially robust non-profit organization providing overlapping social services in the same service area. Read more.

Merger of a Maine CAA and a non-CAA
This case study is based on CAPLAW’s interview with Mike Tarpinian, Chief Executive Officer of the Opportunity Alliance in Portland, Maine, about the merger of a Community Action Agency, Peoples’ Regional Opportunity Program, Inc., with Youth Alternatives Ingraham to form the Opportunity Alliance. Read more.

Management Agreement between Georgia CAAs
This case study is based on CAPLAW’s interview with Nancy Smith, Executive Director of Middle Georgia Community Action Agency, Inc. and Heart of Georgia Community Action Council, Inc., and a review of the management agreement between the two organizations and their annual reports. Read more.

Merger of CAA and non-CAA in Suffolk County, NY
This case study is based on CAPLAW’s interview with Adrian Fassett, President/Chief Executive Officer of Economic Opportunity Council of Suffolk, Inc. (EOC) in Patchogue, New York, as well as a review of EOC’s website and its IRS Form 990. Read more.

State Association Involvement
This case study is based on CAPLAW’s interview with Elaine West, who at the time was the executive director of the Missouri Association for Community Action (MACA). (Ms. West, the long-serving executive director of MACA, has since retired.) This case study examines how one state association was able to facilitate an exploration of sharing services among several Community Action Agencies in its state. Read more.

Merger of Two Minnesota CAAs
This case study is based on CAPLAW’s interview with Dr. Leah Pigatti, executive director of Mahube-Otwa Community Action Partnership (Muhabe-Otwa) in Minnesota, as well as a review of Mahube-Otwa’s website. This case study presents an example of the combination of a CAA experiencing financial difficulties with a larger and healthier CAA. Read more.

Merger Between a Nonprofit and a Public CAA
This case study is based on CAPLAW’s interview with Michael Thorsteinson, executive director of Three Rivers Community Action in Minnesota, as well as a review of Three Rivers Community Action’s website and IRS Form 990 for the 2011 tax year. This case study presents an example of a merger between a nonprofit CAA and a public CAA. Read more.

Minnesota Office of Economic Opportunity Encourages Mergers
This case study is based on CAPLAW’s interview with several staff members at the Minnesota Office of Economic
Opportunity. This case study explores what state CSBG offices can do to facilitate merger explorations among Community
Action Agencies in their respective states. Read more.

Minnesota CSBG Statue and Regulations on CAA Mergers

Minnesota’s Community Action statute contains a section enacted in 2014 addressing the problem of two CAAs merging and the resulting merged CAA receiving a lower amount of CSBG funding than the combined amount of CSBG funds that each of the merging CAAs had received prior to the merger. The statute specifies that, generally, when two Community Action Agencies (CAAs) merge, the merged entity will receive a base funding amount equal to the sum of the base funding amounts each of the merging CAAs had received before the merger. Read more.

Books About Shared Services and Mergers

Nonprofit Mergers and Alliances
2nd ed., Thomas A. McLaughlin, available for purchase. Using real-world examples, case studies, and enduring frameworks, this book offers clear, practical, step-by-step guidance for designing and implementing effective collaborations of all kinds.

Books About Mergers Only

The Nonprofit Mergers Workbook, Part I: The Leader’s Guide to Considering, Negotiating, and Executing a Merger
By David LaPiana, available for purchase. Includes merger case studies, decision trees, twenty-two worksheets, checklists, tips, milestones, an extensive resource section and many samples — including the minutes of a completed merger
negotiation.

The Nonprofit Mergers Workbook Part II: Unifying the Organization after a Merger
By David LaPiana, available for purchase. Included with the book is a free CD-ROM which provides a detailed template for an integration plan, as well as sample integration plans, worksheets, checklists, tips and quotes from leaders of merged organizations, all of which will help organizations in implementing their own merger integration process.

Online Resources About Shared Services and Mergers

New Models to Achieve Your Mission: Strategic Restructuring for Your CAA
This toolkit has been developed by the Community Action Partnership to provide CAAs with baseline information on strategic restructuring, resources necessary to being the discussion of possibilities, and key board and staff questions that need to be considered before starting the strategic restructuring process. Strategic restructuring comprises a range of collaborative strategies that Community Action Agencies (CAAs) might use to pursue new opportunities, build capacity, increase client impact, increase access to funding, increase efficiency, and reduce costs. Read more.

Advice to Strengthen Strategic Mergers and Collaborations: A Catalyst Fund Report
The Catalyst Fund, a five-year project managed by the Nonprofit Finance Fund, fostered explorations of partnership among 80+ Boston-area nonprofits and led to 13 mergers. Partners included The Boston Foundation, The Hyams Foundation, The Kresge Foundation, LISC Boston, and United Way of Massachusetts Bay and Merrimack Valley. This final report addresses lessons learned, advice for nonprofits, funder reflections, and case studies. Read more.

Online Resources About Mergers Only

Combining Forces: A Merger Manual for Community Action Agencies
Now more than ever, CAAs are exploring mergers as a strategy to improve their sustainability and enhance their efficiency and effectiveness. Whether or not your agency is currently contemplating a merger, this tool will help you understand what may be gained by and what should be considered in the pursuit of a strategic merger transaction.

View the Tool
View the Appendices

Success Factors in Nonprofit Mergers
This is a study of 41 direct service organization mergers in Minnesota, is now available from MAP for Nonprofits and Wilder Research. Read more.

MergeMinnesota: Nonprofit Merger as an Opportunity for Survival and Growth
This guide, by Project ReDesign, a project MAP for Nonprofits, includes a 10-step merger decision making process, a merger tool kit, merger implementation guidance, interviews with merger experts, a literature review and full bibliography. Read more.

The M Word: A Board Member’s Guide to Mergers
Published by CompassPoint,. this study provides a road map to a merger’s expectations, processes, and obstacles. Special sections depict seven organizations’ actual merger experiences, feature sample resolutions and worksheets, and highlight the key roles executive directors play in a merger. Also offers advice on how to close down an organization. Read more.

Mergers that Made a Difference
A series of cases and blogs from the Bridgespan Group, The Catalyst Fund for Nonprofits, LaPiana Consulting, and the Lodestar Foundation, exploring effective nonprofit mergers, looking at their rationales, catalysts, and results, plus the challenges of due diligence and integration. Read more.

Merging Wisely
By David LaPiana of LaPiana Consulting, articles published in the Stanford Social Innovation Review, Spring 2010. Read more (about mid-way down the page).

Legal and Tax Aspects of Nonprofit Mergers
W. Marshall Sanders, Esq. of Alston & Bird. Article published in Taxation of Exempts Sept./Oct. 2010. Read more.

All About Mergers of Nonprofit Organizations
Jerold A. Jacobs, Esq. of PillsburyWinthrop Shaw Pittman, LLP. Article published in Association Law & Policy, a publication of the Legal Section of ASAE & the Center for Association Leadership July 2008. Read more.

Why Nonprofit Mergers Continue to Lag
By Katie Smith Milway, Maria Orozco, & Cristina Botero. This article identifies and describes major obstacles to mergers and how to overcome them. Read more.

Creating Successful Nonprofit Mergers
By editors of Standford Social Innovation Review. This resource is a supplement to Why Nonprofit Mergers Continue to Lag and contains an interview with the CEO of Crittenton Women’s Union who successfully merged two large nonprofits. The interview is split into two videos, the first of which describes how to merge board of directors, and the second describes how to blend senior staff. Read more.

Online Resources About Shared Services Only

Why Nonprofits Should Explore Shared Administrative Services
By Vance Yoshida of LaPiana Consulting. Read more.

Shared Services: A Guide to Creating Collaborative Solutions for Nonprofits
Published by The Nonprofit Centers Network, available for purchase. An 84-page guide helps nonprofits build a successful shared services program and achieve greater financial stability. Includes step-by-step guidelines, 10 case studies of organizations that are successfully sharing services, planning tools, and sample documents. Available for purchase.

Nonprofit Collaboration Database
This database provides models and best practices of exceptional nonprofit collaboration efforts from projects presented for consideration for the 2011 and 2009 Collaboration Prizes, created and funded by the Lodestar Foundation. Read more.

Sample Documents

Organizations should review these sample documents thoughtfully and modify them as necessary to meet their individual needs and to comply with applicable laws and regulations. CAPLAW strongly recommends that when working with these sample documents, an organization consult with an attorney in its state who is well-versed in state contract laws and the laws affecting Community Action Agencies (CAAs). Please note that documents developed by CAPLAW are marked as such and those developed by others are provided for reference purposes only. Names and other identifying information have been redacted to preserve agency confidentiality. Please contact CAPLAW if you have any questions about the sample documents.

Sample Shared Services Agreement (Developed by CAPLAW)
Sample Due Diligence Checklist for Mergers and Shared Services (Developed by CAPLAW)
Sample Confidentiality Agreement for Nonprofit Mergers and Other Collaborations (Developed by CAPLAW)
Sample Shared Services Agreement 1
Sample Shared Services Agreement 2

This resource is part of the National T/TA Strategy for Promoting Exemplary Practices and Risk Mitigation for the Community Services Block Grant (CSBG) program and is presented free of charge to CSBG grantees. It was created by Community Action Program Legal Services, Inc. (CAPLAW) in the performance of the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Community Services Cooperative Agreement – Grant Award Number 90ET0433. Any opinion, findings, and conclusions, or recommendations expressed In this material are those of the author(s) and do not necessarily reflect the views of the U.S. Department of Health and Human Services, Administration for Children and Families.