Tuesday, November 15, 2011

Challenges In A Merger

For all the benefits of a potential nonprofit merger, it brings along as many risks and challenges.  How will existing departments function under the new management?  What will be the fate of current employees?  How will the merger be announced to the public?  These are all questions that can cause lots of headaches for nonprofit managements.  It's enough to make you reconsider going through with the merger.  Luckily, there's help on the horizon.

During the 2011 Risk Management and Finance Summit for Nonprofits, Eileen Morgan Johnson of Whiteford, Taylor & Preston LLP discussed the risks of nonprofit mergers and separations.  The NonProfit Times was in attendance for their tips, which included the following:
  • Periodically review governing documents.
  • If a potential conflict can't be avoided, make sure it is disclosed.
  • Don't be afraid to request a legal opinion when the issue warrants it.
  • Seek the advice of independent experts.
  • Insist on thorough documentation. This includes board minutes showing discussion and reports, memoranda and other documents considered in decision making.
  • Keep your employees informed of all new merger developments and provide ample opportunity for their feedback.  Nobody likes being kept in the dark.
  • Make sure that your fellow directors get copies of all proposed agreements or summaries.
  • Demand that board minutes accurately reflect votes.
Want to read the rest of the tips?  Read the full article over at The NonProfit Times.

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