The information contained herein does not constitute legal advice.
The recent surge of nonprofit organizations, coupled with the current economic situation, influences many charitable organizations, leading the abolition of important programs and the closure of business. Specifically, according to the Urban Institute and the United States Charity Statistics Bureau, as more than 2.3 million US nonprofit organizations have been on the rise for decades as of 2006, (3) the non-US For-profit organizations (this figure is over 36% of the data available in 1996)
However, as with profit organizations and individuals, non-profit organizations need to adapt their functions and thought processes in order to survive in these difficult economic times. In a December 2009 article, Philosophy of Chronicle of Philanthropy (quoted a survey of about 100 nonprofit organizations in a recent Bridgespan Group report) states that "54% of respondents are using resources of other programs In order to release ... [and that] [n] Two-thirds (63%) of respondents said that they transferred staff to support core programs. "(Ben Gose, the pain of the economy continues, more charity groups abolish the program, the philanthropic chronicle, December 10, 2009)
Many organizations have decided to reduce programming, but there is another option that charity organizations can continue to provide services to their members while achieving the final stages of mergers and integration. Mergers and acquisitions of non-profit organizations, which are considered to be traded mainly for commercial communities, are possible as well as being an important element of survival. In fact, another recent research report contracted by The Bridgespan Group supports not only as a means of survival in a tough economic environment, but also the possibility of the integration of non-profit organizations as a strategic tool for success doing. In that report, The Bridgespan Group quoted a recent questionnaire from non-profit leaders and proactively reviewed M & A as a means for promoting non-profit organization leaders to raise funds, To tackle [but that the time] As a way for healthy leaders to strengthen their effectiveness, broaden best practices, expand reach, maximize the use of scarce resources and carry out all cost-effective ways, actively It is also ripe to consider M & A. "(Alexander Cortex, William Foster, Katie Smith Milway," Non-profit M & A: Beyond Harsher Era Tools "Bridgespan Group, February 2009) Thus, in this article we are discussing the merits of the merger The organization Always consolidation can be regarded as a valuable tool for success.
One of the first important pioneers to consider mergers is to understand and appreciate that no one is an island. And in order to make the continent better, we need to build a bridge. This may be obvious. However, many small non-profit organizations are actually limited by their central cause and leaders' enthusiasm for the cause and constitution. This enthusiasm and diligence may become a real asset of charitable organizations, but it is potentially obstacle, as it potentially could limit the viewpoint of organization leadership. This phenomenon is sometimes called Wikipedia (Wikipedia) "Founder's syndrome". "Wikipedia is a label commonly used to refer to the behavior pattern of an organization's founder. Correspondingly, forensic hurdles for small organizations interested in consolidation are leadership in tunnel vision The achievement of this is suitable for approaching the potential relationship with the open mind.
Another important consideration for mergers of nonprofit organizations is the culture and environment within each organization, and the governance structure associated with it. The two organizations fulfill almost the same purpose, but they may differ from many governance issues, such as the number of seats in the board of directors, the process of appointing the board of directors, the performance evaluation of the board, and the relationship with the staff. For example, an organization with sub-board participation and low attendance is highly likely to have a significantly different management style than an organization with 50 active and involved executives. In addition to affecting the proportional organization's corporate governance, this variable also affects the ability to emphasize staff and programs. Similarly, when deciphering the feasibility of integrating the cultures of two organizations, organizations need to evaluate and consider their corporate image, core value, work environment, and leadership style.
Apart from the above internal factors, program services, facilities and facilities are also indispensable for proper evaluation of the merger. Examples of these variables include the number of individuals provided by the program, geographical coverage and "client" demographics, utilization of technology, "competitors" in the marketplace, location of services, real estate arrangements, major equipment inventory, Maintenance contract and technical system. Furthermore, one of the remaining key factors that an organization should consider in light of potential mergers is human resources, including paid staff and volunteers. The subpart of this component includes the structure, training / orientation, recruitment and evaluation / approval of salary, benefits, expenses redemption, vocational training, liability insurance, performance evaluation, volunteer program.
As the organization determines these core issues, the remaining legal considerations concerning mergers or consolidations are regulated by the applicable state and federal laws. Depending on the structure of the transaction, ie the true merger vs. the management reconfiguration of the Board or the outsourcing of asset transfer, the organization needs to obtain specific government approval before completing the transaction. Furthermore, in a true merger, it is desirable to engage in due diligence that is sufficiently deep enough to fully satisfy the organization's knowledge of the other status (in the case of a surviving company, completely through the charger Know the assets and liabilities being undertaken).
Specifically, in California state, in order to be involved in a statutory merger, the attorney general must be aware, and the specific filings to be filed are paragraph 6010, seq. Abbreviation for California Corporations Code. Under these sections, the legislative body establishes various logistical requirements that an organization must fulfill in order to engage in such transactions. Specifically, a public interest corporation (how organizations of non-religious organizations 501 (c) (3) in California are organized) without obtaining written consent from the California State Attorney General, It is a profitable or religious corporation and has gained a special dedication of asset language in the charter. CAL. Corporate § 6010 (a). In addition, a copy of the proposed merger agreement must be submitted to the Attorney General, which includes the general provision, in certain cases including certain amendments, in the articles of incorporation and the articles of incorporation Detailed explanation of how to transfer the membership from the surviving corporation, the annihilation corporation to the living enterprises. CAL. Corporate code ž 6010 (b); CAL. Corporate § 6011. There are also many other provisions that should be clearly and accurately stated in the merger agreement between the two organizations. This is not limited to the treatment of the employees of the annihilation corporation (living corporations, if so, benefits relating to the accuracy and completeness of documents provided by each affiliated organization during the due diligence process, vacation etc. (For obvious reasons, this guarantee depends on documents provided by other documents such as financial statements and annual reports), what happens to the incurred benefits, warranties and representations of the merger transaction " Termination. "The merger agreement must be approved by the board of directors of each organization (and, if applicable, the members), and the living company must sign the certificate of the officer and the contract You need to submit a copy of the document.
As mentioned above, in a merger transaction, the surviving company not only acquires assets of other organizations, but also assumes liabilities, so the amount of due diligence that we recommend to carry out increases. It is well established "[w] The merger of nonprofit utility companies will be effective and the disappearing part will not exist separately in the merger and for the survivors after the merger, the mortgaged party will be subject to their respective liabilities and liabilities ... "Catholic · Healthcare · West versus California Insurance Guarantee 178 Cal.App 4th 15, 28 (CAL.CORP.CODE Documents and information to be reviewed and analyzed in merger transactions include organization documents Finance documents (eg: forms 990 and 199, registration and renewal of the Attorney General, IRS Form 1023 copy and opy of the IRS decision letter), Finance Documents (eg: list of current Board members and conditions) , Donor and grant information (eg, a list of restricted promises and subsidies, a list of pending subsidy applications, copies of donation qualifications and professional donor activists), employee issues (eg, all employees List of, (Example Copies of all important contracts such as lease, joint venture, purchase contract, equipment and product measures), insurance (eg insurance policy list risk, coverage limit and premium and director and official liability for damages Copies of insurance policies), litigation (such as potentially pending litigation and contractual disputes and lawyers' memorandum on pending or intimidated litigation) or to all actual or possible liabilities of the entity to dissolve Relevant details. (Please be aware that this is an example of the document the organization must review and is by no means exhaustive)
In other types of consolidated transactions such as asset transfer, companies can select and select assets they acquire, but limit their exposure by not choosing to take on debt. However, even with such transactions, the relocating organization must write to the attorney general at least 20 days before "to sell, lease, transport, exchange, exchange, or otherwise dispose of all or substantially all The assets that do not do that transaction are in the course of normal activities or do not give the company a written disclaimer in this section on transactions filed by the law firm Corporate Code ง 5913.
In such transactions, there is a reliable knowledgeable tax and legal counsel in each organization to answer questions to each organization, provide advice on transaction structure, due diligence strategy and guidance, and counsel attorney It is necessary to pay attention so as to correlate the preparation of necessary documents and submission documents to the institution of the relevant country.
As you can see, there are clearly many variables in successful mergers and consolidations, but the potential benefits are very valuable to nonprofit organizations. In addition to achieving economies of scale while expanding the donor base and geographic reach as well as entities, more importantly, it is more important to improve the quality and efficiency of programming while touching the pool's skills and talents of potential officers You can do that.
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