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Funding the Strategic Restructuring Process

Funding a Strategic Restructuring Effort

As a funder it is difficult to know how to encourage strategic restructuring as an effective organizational tool without seeming to force organizations into something they may not be ready for. A successful strategic restructuring effort can give organizations a greater ability to pursue their mission, can provide more stability - both financially and programmatically, and can reduce duplication of services in the field. For these reasons, funding strategic restructuring efforts can seem like a "no brainer." However, funders must keep in mind that there will be risks - the effort may go nowhere and nothing will happen, or it will go forward but something negative could happen, causing a public relations nightmare for everyone. And if the organizations felt pressured at all by the funder, the funder might be blamed for the outcome

The best ways for funders to be involved with strategic restructuring are to help grantees think through their needs; provide concrete help as well as be a sounding board; gauge the organization's seriousness and ability to accomplish a strategic restructuring effort; and finally, make sure that this is not just another way to get funding.

Promoting Strategic Restructuring as an option for your grantees

The most important step in a strategic restructuring effort is the first one - answering the question "is this something we truly want to consider?" It is absolutely essential that organizations take this step on their own. A strategic restructuring effort will be difficult to navigate regardless of how it came about. If it is in any way being forced, or is even perceived to be forced, by funders, chances are it will fail due to a lack of full commitment by the key players.

If, as a funder, you are committed to promoting strategic restructuring, there are several strategies that you might consider when working with organizations:

• Make available funding for extraordinary needs such as hiring expert consultants, attending relevant workshops, or covering out-of-pocket costs associated with unanticipated needs such as off-site retreats.
• Refer grantees to other organizations that have carried out a successful strategic restructuring effort, and/or develop case studies around these successful efforts.
• Acknowledge to grantees that what they are doing is difficult, and encourage them to call for help.
• Publicize the availability of technical assistance to help resolve problems. Resources along this line might include a directory of related publications, links to useful websites and referrals to consultants.
• Be willing to raise the concern that the strategic restructuring effort is in trouble, if such becomes the case. And offer possible solutions, i.e. technical assistance. Of note, a funder must be careful in how it presents the offer to help. Be sure that it is not interpreted as a condition of future assistance. To take this a step further, funders should be willing to help organizations recognize that perhaps the strategic restructuring effort is not right for their organizations.

If the organizations are serious about the strategic restructuring effort they are considering, they will begin to formalize their conversations. Executive Directors will meet and/or board members will meet. They may sign an MOU committing to working together, or their boards may sign a board resolution committing to further discussion on the topic. Some organizations may be ready to begin to formalize the strategic restructuring effort, but won't know how to proceed. In such a case, a funder can provide assistance in finding information and resources that can help the organization move forward. The key is to provide organizations with as much information as possible and to let them know that you are interested in helping them, but only inasmuch as they are ready and willing to move forward.

What to fund

Another key issue for funders to keep in mind when thinking about funding strategic restructuring efforts is what to fund. Rule number one in funding strategic restructuring efforts is "do not fund indirect costs." Indirect costs include costs such as the Executive Director's time, or rent. These are fixed costs that the organization will have regardless of whether or not it is pursuing a strategic restructuring effort. Yes, undertaking a strategic restructuring effort can take a lot of time and the Executive Director may have to refocus his/her efforts, but this should be done without supplementary funding. If an organization cannot commit enough of the Executive Director's time to the strategic restructuring effort, then chances are it won't succeed anyway.

So what should be funded? Cost directly related to the strategic restructuring effort. Examples include:

• Off-site meeting space
• Professional services (consultant(s), attorney, accountant)
• Education
• Purchase of written resources
• One-time start-up costs (i.e. moving costs, database development costs, web site development costs, severance pay)

Once the strategic restructuring effort has been finalized, the new organization may need operating funds initially to help it get off the ground. However, the organization should be able to show you a plan for how it will be self-supporting in x number of years if it receives this transitional support in the first few years.