You Never Let a Serious Crisis Go to Waste – it’s an Opportunity to Do Things You Think You Could Not Do Before” –Rahm Emanuel
Over the past several months, there have been a proliferation of articles, posts and op-ed/opinion pieces focusing on the short and long range devastating effects and impact of today’s pandemic on the vitality and viability of our nonprofit institutions. Many of these media pieces with few exceptions, have focused on the negative and helplessness of the pandemic, with very little emphasis on emerging opportunities, positive responses or creative strategic solutions.
This reality is not the result of our inability to positively innovate solutions, or the lack of capacity, but rather the enormity and magnitude of the crisis which for many, have created an emotional/cognitive paralysis and roller-coaster exacerbated by an existential threat resulting from the current global health crisis. To be sure, with growing job losses, lay-offs, budgetary deficits and flat fundraising campaigns, our Jewish Day Schools and nonprofit Jewish communal institutions which have flourished over the past decade, are now facing daunting challenges of epic proportion.
As we begin to think about the future viability of our nonprofit institutions – whether they be Jewish day schools, central agencies, synagogues, community centers or human/social service agencies – it is essential that we not only “think outside the box” (an over-used buzz phrase) for solutions, but that we begin to think boldly and creatively about short and long range strategic options and approaches for their future.
During the financial crisis of 2006-2008, I recall vividly how many of our Jewish nonprofits needed to reinvent, restructure and reimagine themselves against a backdrop of financial insecurity and uncertainty. They needed to “right-size” staff, structure and operations. For many, it resulted in a very difficult and painful process which did not prove always prove successful; for others, it resulted in new meaningful partnerships, collaboration, joint planning and transformative service delivery.
For those nonprofits that engaged successfully in this process – including complete or partial restructuring, consolidations and mergers, it necessitated a very painful process which impacted organizational culture and behavior, institutional ego, and governance. It also resulted in a most difficult albeit successful transformation process which continues to bear fruit over a decade later. These models brought to bare a true willingness and readiness to explore these options versus those institutions which were resistant and therefore in many cases were forced by their funders and/or constituents to restructure, reinvent, reduce, redeploy and amalgamate human and financial resources.
Today’s Pandemic and its profound impact on our institutions is once again, a clarion call for nonprofit institutional innovation and transformation. It may now be time to revisit the advantages and efficacy of nonprofit mergers and consolidations in a manner that will hopefully result in positive outcomes for our communities.
Yes, there are those who will say that if you merge two failing institutions into one entity, you will only create one big failing institution. That is 100% correct. But, that may only be the case if its not done planfully, systematically and methodically. In addition, we have learned a tremendous amount about those factors which result in effective and sustainable mergers and consolidations. We have learned invaluable lessons about “downsizing” from the invaluable survival experience of 2006-08. It was almost as if it was a “dry-run” for today’s institutional conundrum.
As we know, schools and other nonprofits can only “downsize” to a point until they end up with what I call “corporate anorexia” – the inability for an institution to move forward effectively due to a lack of human capital and financial resources. The challenge therefore is to identify those services which can be consolidated as a precursor to potential mergers without paralyzing the institution. It is also important to note that each institution requires a critical mass of resources in order to function let alone flourish. This includes realistic overhead costs in addition to “economies of scale”.
In light of this reality – including the paucity of personnel, increased budgetary deficits due to unanticipated expenditures and duplication of services, flat fundraising – now may be the time to take another hard look at merging and consolidating resources for a more streamlined system of service delivery…..be it in education, social service or human resource delivery. .
Building a Case for Jewish Day School Mergers and Consolidations
The following are a series of challenges and opportunities which can motivate and inspire leadership to renew their thinking regarding the possibilities for school mergers and consolidation of services. It is not intended to address the “how” to merge or consolidate programs, services or institutions (which will be described in Part II of this BLOG,) but rather the possibilities of “what” services and programs can be consolidated, amalgamated, jointly administered or merged.
- If two or more schools of similar ideology and hashkafa (religious philosophy) are in close geographic proximity to one another, what would it mean for the leadership of these schools to think creatively and boldly about the consolidation and amalgamation of school resources?
- What would a joint Governance Structure look like?
- Can joint fundraising and marketing be more effective or increase institutional capacity?
- Would joint back-office fiscal management, bookkeeping , purchasing and plant maintenance be more effective and efficient?
- Would the joint recruitment, placement and training of faculty be more advantageous to the merge entity?
- Can joint educational programming allow for deeper and richer student engagement over an extended period of time?
- Would administrators and faculty benefit more fully from joint planning and problem solving?
- Would the fiscal viability of the school be enhance and improved if it had a consolidated fiscal management structure?
- Would the use of communal resources be more readily available to the school if the school represented more than a single entity?
- Would a coordinated joint approach to student recruitment, enrollment and placement result in greater success ?
As we know, It is obvious that in order these opportunities to be realized, we will need to address a variety of very complex political, organization, communal and psychological barriers and obstacles. It will require flexible and nimble leadership, visionary thinking and above all, the ability to park territorial and provincial thinking at the door.