Strategic Restructuring:
Partnership Options for Nonprofits

What is Strategic Restructuring?
Structuring of Relationships among Affiliates of National Nonprofits

Strategic restructuring is not just for individual nonprofits - we have worked with many national organizations that have assisted their local and/or regional affiliates with various forms of restructuring, including mergers and administrative consolidations. These SR efforts can occur among affiliates, or between affiliates and other nonprofit organizations in the affiliates' geographic area. While the process involved is very similar to that utilized by non-affiliated organizations, there is a broader set of questions that often arise about how national organizations typically structure their relationships with their affiliates, and how that might impact strategic restructuring efforts at both the national and local levels.

Given the high level of interest in these issues, we have done an extensive literature review on the topic, and have spoken to representatives of many national nonprofit organizations about their structures. The range of options is large.

• National/affiliate relationships can involve almost total local autonomy, or almost total centralized control.
• There are many ways for national organizations to structure their relationships with local/state/regional organizations that pursue the same (or nearly the same) mission.
• There are also many terms used to describe such local/state/regional organizations: chapters, branch offices, affiliates, sites, franchisees, associate organizations, members, etc.

Several nonprofit researchers and authors have used the term "trade association structure" to refer to relationships characterized by significant autonomy and a looser affiliation among members. The term "corporate structure" often refers to organizations with more centralized national control, with local groups known as "chapters," "branch offices," "divisions," etc. National/affiliate relationships with characteristics falling somewhere between these two extremes are sometimes known as having "federated structures," although there are no clear dividing lines between such categories.

The following diagram illustrates this perspective. Note that federated systems strike a balance between local autonomy and centralized control, though there is great variation even within that category.

Trade associations, federations, and corporate structures differ not only with regard to the degree of local autonomy enjoyed by the affiliates, but also with regard to the types of services provided by the national organization to its affiliates. In addition, there are differences both between and within categories with regard to governance structures; the degree to which national organizations set standards for and regulate their affiliates; how funds, fees and financial accountability are distributed between the entities; and what happens when affiliates cease to be affiliates.

We have found the articles listed below to be particularly helpful in describing the characteristics of these types of national/affiliate relationships:

• Oster, Sharon M. "Nonprofit organizations and their local affiliates: A study in organizational forms." J. Economic Behavior And Organization, 30(1) (1996) 83-95.
• Oster, Sharon M. (1992) "Nonprofit Organizations as Franchise Operations." Nonprofit Management and Leadership, 2(3): 223-238.
• Widmer, Candace and Susan Houchin. Governance of National Federated Organizations. National Center for Nonprofit Boards, 1999.
• Young, Dennis (1989) "Local Autonomy in a Franchise Age: Structural Change in National Voluntary Associations." Nonprofit and Voluntary Sector Quarterly, 18(2): 101-117.
• Young, Dennis, Neil Bania, and Darlyne Bailey (1996) "Structure and Accountability: A Study of National Nonprofit Associations." Nonprofit Management and Leadership, 6 (4): 347-365