Tips and Answers to Your Questions
Financial Issues

Will restructuring save us money?

Strategic restructuring efforts, while potentially very beneficial to the overall health of many organizations, do not typically save money in the short-term for the nonprofits involved. While it is true that restructuring may save some staffing costs, or may result in achieving greater economies of scale in administration, the restructuring effort itself entails a variety of front-end costs. Most of these are non-recurring and can be anticipated. They include professional fees (for consultants, lawyers, accountants, etc), severance costs, design/printing/signage costs, moving costs, and systems integration costs. The actual costs will vary according to the type of partnership involved, the level of change foreseen, and the availability of in-kind or reduced cost alternatives for different services. Lack of funding will cause some organizations to avoid some optional costs altogether.

The real benefits of strategic restructuring are not short-term and tactical, but medium- to long-term and strategic: better market positioning; a larger market share; a higher public profile; greater political influence; better back-office services; a larger staff, allowing specialization of functions; the creation of a continuum of services under unified control; a potentially wider range of funding options. These are the likely, and substantial, benefits of strategic restructuring, but they take time and planning to realize.