Merger The story of five watershed organizations that became one

OnO SSeptembereptemberr 77,, 20102010,, the callcalll fforor ccleanlean wwa-a-a edent existed for a nonprofi t merger of this tetterr in BaltimoBaltimoreree ggrewrew louderlouder. ReRepresentativesprresenntat tives size. Experienced guidance was hard to fi nd. from fi ve nonprofi t watershed groups gath- In terms of mission, a merger made sense. ered to sign paperwork that offi cially merged The fi ve groups shared the goals and chal- their separate organizations into one—the lenges of improving beleaguered water- new organization now known as Blue Water ways in an urban setting. They emphasized Baltimore. different geographic areas, but it was easy The merger was a bold move and a complex to imagine the combined strength of their process. The participants represented fi ve programs and a larger, more unifi ed voice for organizations that evolved from grassroots advocacy. efforts to protect Baltimore’s waterways: the Still, the idea of a merger existed informally Baltimore Harbor Watershed Association, Bal- for several years without action. A merger timore Harbor WATERKEEPER, Gywnns Falls would have benefi ts, but it would also bring Association, Watershed Associa- change—and a long list of diffi cult questions. tion, and Watershed Association. Three of these groups also extended their Operationally, the fi ve groups were quite reach to the rural and suburban headwaters different. Their fi nances, staff size, organiza- of neighboring Baltimore county. Their staff tional age, board dynamics, and workplace and leadership built local identities through arrangements varied widely. They also won- years of work and enormous volunteer dered how a merger could impact their estab- contributions, yet they agreed to relinquish lished success. Would they lose members or their separate identities in hopes of making a volunteers? How would grantmakers react? greater regional impact. Where would they fi nd time to work on such questions, or money to pay for it? The merger moved them toward a future that had yet to be defi ned. The merger process In 2009, economic and partnership dynam- itself also proved to be a new and unique ics fi nally triggered action. For several years, experience. Mergers are far more common in private and government grantmakers had the business world, usually between two enti- made a concerted effort to nurture local-level ties. The Baltimore groups operated in the watershed groups in the re- mission-driven, people-centered culture of gion. When the economy hit hard times, their the nonprofi t workplace. They aimed to merge support decreased. Watershed groups faced fi ve organizations, not two. No known prec- a new and signifi cant fundraising burden. 2 Baltimore’s groups were in the uncomfort- vided by subwatersheds, there was no single able position of competing with one an- entity to speak for the city.” other for funds from a relatively small set of Now, the need and opportunity for merging grantmakers. Sustaining their programs was had aligned. “Baltimore is blessed to have a challenge; making them grow appeared an extremely collaborative group of funders, impossible. along with impassioned environmental At the same time, the drive for collaboration advocates who could benefi t from a strong on water quality issues in the Chesapeake organizational infrastructure,” Brill said. region gained strength. Watershed groups Rauch and other grantmakers supported a found more success in their advocacy efforts merger and invited a formal proposal to sup- when working together or partnered with larg- port the costs. er, established groups that increased their visibility. However, the Baltimore watershed Merging fi ve organizations takes time. In groups lacked capacity to launch or expand roughly eighteen months, the legal merger their individual advocacy programs. They also was complete. Now, work continues on the knew that one organization, speaking for many details that will fully integrate the the Baltimore region as a whole, would draw organizations and bring fi nal form to an entity greater respect during policy discussions. whose collective talent may shape a new era of environmental stewardship in Baltimore. The time was ripe for merging. The watershed groups and several grantmakers held frank Every merger, no matter the context, will have discussions about the funding horizon and a unique set of issues to address. Mergers the importance of exploring options. between nonprofi t organizations, however, will likely share some characteristics of the “Funders in the Baltimore region had been Baltimore merger. To assist nonprofi t organi- concerned for some time about the need for zations who contemplate a merger, the Bal- a strong urban environmental voice,” said timore participants—staff, board members, Cathy Brill of the Rauch Foundation. “We grantmakers, and consultants—have refl ected wanted to see Baltimore well represented on their process and provided the insights in policy discussions but, with the groups di- described here.

This report was funded and produced by the Rauch Foundation in response to interest from grantmakers and nonprofi t organizations around the country. It not only details this chal- lenging process, but reveals and acknowledges the hard work and intense dedication of the people who supported it.

Watershed Groups • Baltimore Harbor WATERKEEPER • Herring Run Watershed Association • Baltimore Harbor Watershed Association • Gywnns Falls Watershed Association • Jones Falls Watershed Association Grantmakers Consultants & Professional Resources • Baltimore Community Foundation • Process facilitator • Keith Campbell Foundation • Strategic analyst • Chesapeake Bay Funders Network • Transition manager • Goldseker Foundation • Legal services for due diligence • Lockhart Vaughan Foundation • Legal representation for each group • Rauch Foundation 3

Starting Points

The Baltimore watershed groups involved in this merger negotiated a host of detailed ques- tions about the mission, programs, and operations of the new organization. The process was especially complex because the dialogue involved approximately 65 people representing fi ve organizations, as compared to a more typical two-party business merger. The process was also challenging because the organizations varied in size, signature programs, and fi nancial resources. Even though their missions and programs were compatible, there were key differ- ences to address—including a vested interest in different programs and geographic areas, the role of advocacy, the use of litigation, and the handling of assets and debt.

Watersheds Represented by the Merging Organizations

Name (Year Founded) Staff Board Budget Offi ce Members Volunteers Baltimore Harbor 1 6 $96,000 leased 150 10 WATERKEEPER (2006) Baltimore Harbor 1/2 14 $62,000 donated 30 175 Watershed Association (2003) 1/2 8 $41,000 donated 91 422 Watershed Association (1997) Herring Run 4 14 $497,000 owned 307 1,951 Watershed Association (1985) Jones Falls 3-1/2 17 $284,000 leased 506 1,600 Watershed Association (2002)

*Based on most recently available data at time of the merger. 4

Merger Timeframe

2004-2008 Preparation • Talks between organizations and grantmakers increase focus on the needs of individual watershed groups and the possibility of a merger; they hire the University of Law Clinic to outline a suite of organizational options to consider. • Watershed groups work on strategic plans and partner on a stormwater project that draws public attention and built relationships between staff. 2008-2009 Due Diligence • Grantmakers encourage the groups to submit a proposal for the merger process. • Grantmakers obtain advice on mergers through the Association of Baltimore Area Grant- makers; they continue to support a merger and learn that “due diligence” is the fi rst step— a period of research to uncover any fi nancial issues or by-law restrictions that could create legal obstacles to a merger. • At the grantmakers’ request, the groups spend one month conducting fundamental por- tions of due diligence, using donated legal services. Lawyers collect and analyze gover- nance and fi nancial information for each group and share it with all participants. Aug.-Dec. Analysis & Decision Point 2009 • Grantmakers provide funds for a consultant to analyze possible organizational structures. • A steering committee forms with representation from the boards and staff of each water- shed organization. • The consultant leads a November retreat to review his fi ndings; steering committee reaches consensus to move ahead with the merger. • In December, the steering committee formally votes to pursue the merger and begin de- tailed negotiations on a merger agreement.

Jan.-Sept. Merger Negotiations 2010 • Steering committee develops a new mission statement and governance documents. • Focus shifts to resolving key program differences and fi nancial issues. A facilitated spring retreat is held to air and explore important issues. • New executive director is hired.

Legal Merger Sept. 2010 • Agreements are reached on key issues. The boards of all fi ve organizations sign a legal agreement that merges them into one.

Workplace Merger Continuing • New name and logo are developed. • Workplace changes effect programs, staff roles, offi ce location, workspace, phone and computer systems, and personnel policies. 5

Laying the Groundwork

The idea of a formal partnership fl oated between the Baltimore watershed groups for several years before they took action to explore the concept. At that point, their relationships with grantmakers and each other indicated that a merger—if they chose to pursue it—could suc- “ The reason for a ceed. Board and staff leadership have identifi ed four major factors that created a positive merger is to do context for moving ahead. everything better.”

Phil Lee, former 1) Sound reasons for merging. The Balti- goals, current roadblocks, and the potential president of the benefi ts of a merger. more groups’ primary goal was to combine Baltimore Harbor strengths. They believed that merging could 4) Encouragement from grantmakers. The Watershed Association lead to stronger programs, a larger platform watershed groups met with grantmakers be- for infl uencing policy, and more fi nancial ef- fore beginning any formal part of the merger fi ciency. Although a merger could potentially process. They found that the local funding bring fi nancial benefi ts, the ultimate goal was community not only supported a merger, to realize the potential power of combined but encouraged it. Grantmakers agreed that programs. Both the merging organizations indefi nitely supporting fi ve separate organi- and supporting grantmakers caution that zations would ultimately limit their ability to mergers should not be viewed as means grow. They also indicated that having one to save money. A merged organization may organization, rather than fi ve, would not spend money more effectively by consolidat- necessarily decrease the overall amount of ing costs for offi ce space, systems, and fund- environmental funding for Baltimore. raising; however, budget needs may actually increase over time.

2) Compatible organizations and inter- staff relationships. The Baltimore groups had some variations in missions and pro- grams, but they shared the same goals and challenges. In the years leading up the merger, they created the Baltimore Sewer Co- alition, partnered on restoration projects, and conducted a joint survey on public percep- tions of stormwater pollution. These projects were a positive experience that created work- ing relationships between staff members.

3) Organizational awareness of long-term needs. The leadership of each organization had been working internally on long-term planning for their separate organizations. Three participated in a three-year capac- ity building program designed specifi cally This polluted stretch of the Gwynns Falls is off-limits for watershed groups by the Chesapeake to the public. Gwynns Falls drains to the Patapsco Bay Funders Network. This work created a River from an watershed in southwest Baltimore and broader understanding of their long-term portions of Baltimore County. 6

The Role of Grantmakers

The relationship between grantmakers and watershed groups played a signifi cant role in the creation of Blue Water Baltimore. Grantmakers not only funded the majority of the merger pro- cess, but provided critical feedback and frank communication that encouraged the watershed groups to take action. “ We aren’t just looking for Baltimore grantmakers care deeply about the “The positive experience of working collective- economies, but long-term viability of the nonprofi t organiza- ly converged with the reality of the economy,” for a better, tions in their community. The philosophies said Elizabeth Periello Rice of the Baltimore more effective of the private foundations involved with this Community Foundation. “They wanted to do organization. merger supported investments in process- the merger themselves, not just because the

Pete Powell, Clayton related activities that build the overall capac- funders urged it.” ity of organizations. Capacity-building grants Baker Trust and The grantmakers who supported the merger, Lockhart Vaughan might fund strategic planning, membership however, had little direct knowledge of what Foundation drives, or offi ce systems. In this case, grant- the process would entail. With help from the makers invested in an eighteen-month pro- Association of Baltimore Area Grantmakers, cess to reinvent the watershed organizations they spoke to funders and consultants who their earlier grants had helped to create. had experience with mergers. They discov- The Goldseker Foundation, for example, is ered that one of the fi rst crucial steps is to committed to the neighborhoods served by conduct “due diligence”—a period of legal the former Herring Run Watershed Asso- research to uncover any fi nancial issues or ciation and has a long-standing interest in governance restrictions that would prevent or capacity-building. complicate a merger.

“Baltimore’s nonprofi t sector has grown and They used this knowledge for grantmaking. professionalized, but it has also exploded in The fi rst proposal from the watershed groups number,” said program offi cer Laurie Latuda. requested $100,000 for a one-year period “That leaves a large number of undercapi- to analyze a potential merger. Grantmakers talized organizations competing for scarce requested a revised proposal with a shorter resources. It’s almost impossible for the timeframe, a defi ned outcome, lower costs, smaller ones to compete with each other for and emphasis on due diligence. They ap- funding and still thoroughly meet their mis- proved the revised proposal for $30,000 over sion in the way they would like to.” a period of six months. “The process takes a long time and it prob- When the nation’s economy took a downturn, ably needs to, but you can impose some time Baltimore grantmakers talked frankly with limits on pieces of the process,” said Cathy watershed groups about the funding horizon. Brill of the Rauch Foundation. Available funding was insuffi cient to help fi ve different organizations reach their potential. Watershed organizations sought assurance Grantmakers believed a merger made sense. that program funding wouldn’t be reduced Until this point, the watershed groups had during the merger process. They also wor- only discussed the idea informally. But grant- ried that funders would make smaller overall maker encouragement, along with their own grants in the future because of the percep- planning and partnership work, led to action. tion that one organization would need less 7 money than fi ve. Watershed groups dis- building is a critical activity that should occur cussed these concerns with grantmakers. early and aggressively; however, the process takes time and will vary in each setting. “They were concerned that some funders The Baltimore groups felt they could have might see the merger as a way to reduce shortened the overall timeframe by investing overhead and thereby warrant a reduction more early effort on building trust and open in funding,” said Pete Powell of the Clayton dialogue. On the other hand, organizations Baker Trust and Lockhart Vaughan Founda- “ Set parameters sometimes need an external push to avoid tion. “I recommended that our boards not do and be up front over-extending the process. that. We aren’t just looking for economies, about the outcome but for a better, more effective organization.” 3) Consider the true cost. Recognize that you need. But organizations must pay for merger activities In summary, grantmakers and watershed leave decision- (including staff time, board meetings, legal groups identifi ed four aspects of a funding making to the services, and consultants) with unrestricted environment that help a merger succeed. funds, which are always hard to obtain. They groups.” 1) The grantmaking community agrees cannot afford to conduct a merger without Cathy Brill, that impact, not fi nances, should drive the additional unrestricted gifts to support it. Rauch Foundation merger and recognizes the need to fund Drawing on their existing pool of unrestricted merger-related activities. These activities funds harms ongoing functions of the organi- focus on process, rather than program deliv- zation while the merger is underway. erables. Funding is needed for consultants 4) Positive feedback from funders mat- and legal services, but also to support the ters, quelling insecurities that could threat- signifi cant amount of staff time needed to en the merger. There can be great anxiety develop a new organizational structure. Staff about losing funding during the merger, while leaders estimate that at least half of their their identity is in limbo, and after the merger working hours were devoted to the merger, is complete. Grantmakers should talk openly and some had no staff to whom they could with organizations about the impact of the delegate tasks. merger. Even with reassurance, some staff 2) Grantmakers and grantees should ne- and/or board members may remain skepti- gotiate on the timeframe, especially when cal. Regular repeated communication helps part of a funding agreement. Relationship- reinforce the message.

Herring Run travels the northeast corner of Baltimore and surrounding portions of Baltimore County. The stream is fed by a 44 square-mile watershed that includes more than 41 miles of streams and more than 50 neighborhoods, some of which have the lowest amounts of tree coverage in the city. 8

The Merger Process

The process that created Blue Water Baltimore took eighteen months to complete, including nine months of exploratory work before the fi ve organizations voted to create a formal merger agreement. Approximately sixty-fi ve staff and board members participated, supported by the paid and donated services of three consultants and a team of lawyers. “ Make an early honest assessment The Workfl ow Phase three was workplace integration. The of where the unity that existed on paper had yet to take The merger process for Baltimore’s water- shape. Because negotiations had focused on problems will be. shed groups fell into three phases. some diffi cult and time-consuming issues, Daylight issues decisions about programs and administra- sooner and it will The fi rst was an exploratory phase, which allowed the groups to become more informed tion were put on hold. The new organization take less time about each other and the impact of a pos- even had a temporary name until two months overall.” sible merger. They conducted preliminary after the merger. Solutions for staff roles, Halle Van der Gaag, research called “due diligence”—lawyers programs, workspace, computers, personnel former director of the collected, analyzed, and shared fi nancial and policies, and other details continue to evolve. Jones Falls Watershed governance information for each organization Association to uncover any legal obstacles could block or Governance complicate the merger. Each organization selected three to four As due diligence was underway, a consultant board members to serve on the seventeen- evaluated a variety of organizational struc- member steering committee. The commit- tures, ranging from no change at all to a tee members worked through many specifi c formal alliance or a full legal merger. merger issues, reporting back to their indi- vidual boards to seek feedback and request The exploratory phase took nine months, formal votes as needed. culminating with a retreat. There, the consul- tant led a review of his fi ndings and recom- Executive directors carried much of the mended a full merger. The steering commit- staff responsibility for meetings, planning, tee took a straw vote, which also supported a and paperwork, but all levels of staff were merger. Their formal vote to proceed occurred involved with the process. The larger organi- a month later, in December 2009. zations were asked to play more active roles in administrative tasks. The second phase of the process entailed detailed negotiations on a formal merger The process was also nurtured by a consul- agreement. This also took nine months—lon- tant who worked largely on donated time. ger than expected—because several issues She knew each of the organizations through became more intense than anticipated. The previous work on water quality issues in the steering committee worked through ques- Baltimore region. She took on a role as a tions of debt, mission, board structure, and process facilitator who helped the groups local identity. Ultimately, another consultant arrange meetings, share information, raise led a spring retreat focused on open and questions, and communicate with grantmak- constructive dialogue. This moved discus- ers. After the November retreat, the steering sions forward. The fi nal merger agreement committee asked her to serve as the offi cial was signed on September 7, 2010. transition manager. 9 The steering committee hired an executive wouldn’t let us comply with our own stan- director while the merger negotiations were dards? We would lose our license, our boat, underway. In another setting, this could and our cash to the new organization,” said raise competition among staff. In this case, Baltimore WATERKEEPER Eliza Steinmeier. however, existing staff members were not The steering committee also grappled with interested in the position and the director of the potential loss of local appeal. Each group Herring Run resigned. The new director was had spent an enormous amount of time and an outside hire, chosen for expertise in non- energy recruiting members and developing profi t management rather than environmen- programs through very localized neighbor- tal programs. He served as director of Herring hood appeals. They now weighed the extent Run until the merger was complete. to which they could formally commit to the same geographic focus of the original fi ve. Challenging Issues “One of the biggest issues for everybody was During the negotiation phase, questions the loss of identity,” said Marcus Griswold, a arose about debt, programs, and identity. steering committee member from the Gywnns The Herring Run Watershed Association Falls Watershed Association. “We were all carried a level of debt that caused concern. localized groups. How Most was related to a mortgage on the Her- can you engage those ring Run Watershed Center. The debt was communities when you growing, however, as Herring Run grappled have a larger base? A with the unfunded costs of merger-related lot of the board mem- staff time and restraint on fundraising efforts bers were worried.” that would have competed with their joint Ultimately, the commit- interests. As a result, some committee mem- tee realized that setting bers questioned whether or not they should long-term conditions retain the Herring Run Watershed Center, would impede suc- which the group had recently debuted as its cess. Each organization headquarters, a showcase of green technol- needed to relinquish ogy, and a community meeting space. Herring strict attachments to Run sought a commitment that the building the places and pro- would remain with the new organization, but grams that defi ned others weren’t comfortable with this pledge. them. They agreed Program issues came into play with the Bal- to the waterkeeper timore Harbor WATERKEEPER. Waterkeepers standards, including may operate independently or nested within the use of litigation, a watershed group, but each are part of the but made no special ar- international Waterkeeper Alliance with a rangements regarding The Jones Falls drains commitment to thirteen quality standards. ownership of the boat. from a 40-square- mile watershed that The issue affecting the merger was the role “Everyone is throwing something into the that waterkeepers play in enforcement and covers parts of central pot,” said Jack Machen, who served on the Baltimore and a more litigation. Waterkeepers are more confronta- board of the Baltimore Harbor WATERKEEP- suburban area to the tional than most watershed groups and the ER. “If any organization holds back what it north in Baltimore steering committee wasn’t sure if this would considers precious, the success of the entire County. Much of the align with their new identity. The Baltimore undertaking is at risk.” river within the city WATERKEEPER was concerned about retain- has been diverted ing ownership of their boat and other assets, The committee set parameters that would underground or in case mission confl icts led to a “divorce.” defi ne them for one-year only. They agreed obscured by the Jones “What if, down the road, the new organization to hold the Herring Run Watershed Center Falls Expressway, 10 for one year, then re-evaluate. No staff would sooner this happens, the more open and pro- lose their jobs during that period, the board ductive the dialogue will be throughout the structure would be temporary, and board merger process. This helps to avoid surprises members need only commit to a one-year when the process is further along. term. They avoided long-term defi nitions of programs altogether. 4) Create a written work plan for the steering committee. The work plan should outline goals and tasks, and assign responsi- “ Establish a Lessons Learned bilities. This will clarify the roles of staff and commonality committee members and help track progress 1) Hold early discussions about the work- of mission and against the projected timeframe. load that a merger entails. The process will use it as the require a signifi cant time commitment from 5) Third-party facilitators help the process touchstone.” board and staff. The administrative challeng- run more smoothly and raise confi dence Bobby Johnson, former es are great. At times, the workload may not that each group is heard from equally and president of the Jones be distributed evenly between the merging openly. This is true for sharing fi nancial infor- Falls Watershed organizations and the process may be emo- mation, as well as mission and programs. Association tionally intense. 6) Budget adequately. Without a new 2) Prepare to create a new organization, source of adequate unrestricted funds, not tweak an existing one. Legally, one groups will suffer fi nancial stress to pay for organization will “absorb” the others but, in staff time during merger planning and transi- terms of programs and operations, it’s best tion tasks. Consultants and lawyers also cost to view the result as a new or re-invented money. If donated services are not available, organization. Everything from the name, mis- budget accordingly. sion, staff, board structure, workplace, and programs will be on the table for discussion. 7) Build fl exibility into the written agree- ment for the fi rst year as a new organiza- 3) Relationship-building for board and tion. For example, the board structure and staff is critical. Invest in early, active relation- fi rst board terms might last only one year, ship-building, led by a skilled facilitator. The when they can be redefi ned as needed.

Trash is a major problem in Baltimore waterways. This trash net on Harris Creek captures an average of 3.5 tons of debris each month. Issues of environmental justice are critical in many neighborhoods, where accumulated refuse degrades both quality of life and local waters. 11

Communications & Relationships

Transparency and openness are the keys to success on many levels. They not only lead to a positive experience for staff and board but enable the merger to be completed in a reason- able time frame, with good morale and a strong position for future success.

The Nonprofi t Culture than the beginning, cost them time, money, “ A merger should not and morale. “A lot of things could have hap- be rushed before The importance of relationships during a pened a year earlier, if we had recognized people get to know merger process is heightened by the unique the need for common vision,” said Ray Heil, each other. We culture of the small nonprofi t workplace. former president of the Herring Run Water- shed Association. could crank out and The nonprofi t workplace differs from the fi le the paperwork business sector, which relies more heavily Another reality of the small nonprofi t work- relatively quickly, on top-down management and task-oriented place is the limit of inhouse fi nancial exper- but that’s a employees. In contrast, the success of a tise. Despite conducting due diligence with small nonprofi t organization depends on a legal assistance, fi nancial surprises arose mistake.” continual exchange of ideas and feedback late in the merger process. Some of the Jack Machen, former between board and staff members at all smaller organizations, with fewer assets, had board offi cer of the levels. The staff often has intense emotional balanced books while the largest organiza- Baltimore Harbor investments in their workplace. Their efforts, tion had a growing amount of debt. WATERKEEPER in many cases, have created or transformed the organization. They are not driven by a The size and resources of nonprofi t organiza- paycheck, but by passion for the mission. tions also vary widely. This may introduce un- Board members have similar ties to the spoken worries, as some groups bring more organization, contributing time, talent, and board members, staff, and fi nances to the fi nances on a purely volunteer basis. They are table. These are valuable resources, but they committed to mission and community, and may also trigger concerns about maintaining provide big-picture guidance that shapes an an equal voice for all participants. Variations organization’s success. in size may also lead to uneven administra- tive burdens during the merger process. The Baltimore merger convened approximate- ly 65 board and staff members for a project The Role of Outside Help that held risks and stirred emotion. Even though good working relationships existed The Baltimore watershed groups could not among them, they did know each other well have accomplished the merger without help enough to voice serious questions at the out- from consultants. Three consultants fed the set. The business-style tasks that marked the process. The fi rst was a process facilitator, fi rst phase of the process failed to recognize who both managed and supported commu- this unmet need for dialogue and engage- nication and administrative tasks, eventually ment. Deeper concerns were not aired or serving as the offi cial transition manager. The explored until the process was underway for second was the analytical consultant who more than nine months. conducted the strategic analysis. The third was a communications facilitator who led a Participants strongly believe that raising hard retreat to resolve tough issues. issues toward the end of the process, rather 12 The Patapsco is a minor river for most of its length, but the last ten miles form a large tidal inlet of the Chesapeake Bay. Its inner basin is the Baltimore Harbor—the heart of tourism and industry, but plagued by poor water quality.

These third-party participants were invalu- strongly about this misstep that they would able to the merger. They provided profes- consider completely replacing the analysis sional skills and acted a neutral base for function with relationship-building. information and process management. They Participants also recommend professional also supplemented staff time. For example, fi nancial analyses. Ideally, each organization the process facilitator/transition manager could prepare for the merger with its own donated an enormous number of work hours professional fi nancial advisor. As the merger that the staff could not have absorbed by proceeds, participants say that a third-party “ A fi nancial themselves. In retrospect, however, partici- fi nancial consultant would be invaluable. consultant would pants in the Baltimore merger believe that This function was not part of the Baltimore consultants could be used more strategically have been great. merger. Paid and donated legal services to strengthen group interactions and mini- I might have felt a supported the due diligence process, but the mize unexpected issues. little intimidated, assembling and interpretation of fi nancial but it would have Overall, participants strongly recommend information was conducted in-house. A third- been a good building relationships before doing business. party fi nancial consultant could have provid- ed objectivity, clarifi ed confusing issues, and business move.” The early exploratory phase of the Baltimore merger focused a business-style analysis minimized last minute concerns. Eliza Steinmeier, that unintentionally pushed relationships Baltimore Harbor and dialogue to the background. The analyti- Lessons Learned WATERKEEPER cal consultant was swift and thorough, but 1) Respect the culture of the nonprofi t he was hired to analyze and report rather workplace. Staff has a history and expecta- than encourage group discussions. Staff and tion of being involved in decisions. They are board members generally agreed with his emotionally invested in the process. They fi ndings, but didn’t engage in much dialogue aren’t just employed by the organization: they about benefi ts or drawbacks. It wasn’t until have grown it themselves. the negotiations phase that they began to ex- press deep concerns about identity, mission, 2) At the very beginning of the merger and programs. Some participants feel so process, hire a consultant experienced in 13 building relationships and open dialogue, fi ll it. For the Baltimore merger, the process especially in a nonprofi t environment. Even facilitator arranged and led meetings be- with compatible organizations and person- tween staff and boards, gathered information nel, third-party assistance is crucial for airing for due diligence, smoothed out minor issues, concerns and navigating diffi cult conversa- and helped communicate with grantmakers. “ We thought we tions. Use facilitator expertise immediately The more organizations involved with the had made a lot of and actively as a fi rst step for both the staff merger, the more time-consuming this func- progress, but we were and boards. tion will be. Having third-party assistance to broker meetings and communications was really deferring a lot 3) Adjust your timeframe if necessary. very helpful. However, the role of process of signifi cant issues “You have to establish a timeframe at the facilitator could potentially be fi lled in-house; that weren’t being beginning of the process but, as things bear in mind that this would seriously com- resolved.” evolve, you need to be fl exible,” said Mary promise the time that person would other- Ray Heil, former president Sloan Roby, former director of the Herring wise spend on program functions. Run Watershed Association. “Pay attention to of the Herring Run Watershed Association how people are feeling. If there is a lingering 7) Evaluate the need for and timing of a atmosphere in the room that things aren’t’ strategic analysis consultant. If you decide quite right, accept that it might take longer the analysis function is important, the select- than you thought.” ed consultant may or may not be the same person who helps with relationship-building. 4) Make every effort to daylight diffi cult In the Baltimore merger, many participants issues early in the process, even if solu- would have preferred a consultant who elic- tions aren’t immediately apparent. Diffi cult ited solutions as a group activity rather than conversations are inevitable, and people presenting the group with a fully produced tend to avoid them. Inequalities in the size report. and resources of each organization, along with variations in programs, are sensitive. 8) An organizational merger is a creative Respectful listening is critical. Even people and exciting opportunity. Any steps that who know each other and work well together make the merger process a positive and en- may be challenged by such issues and stay ergizing experience help the new organization silent until later in the merger process. Post- become a dynamic community presence in a poning diffi cult issues delays the operational shorter amount of time. Kayaking on the and marketing decisions that help the new Jones Falls. organization become a dynamic and effi cient presence.

5) Hire a fi nancial consultant/auditor to conduct a thorough, objective look at each group’s fi nancial picture. Each organization needs to provide and receive full transparen- cy, and a professional third-party consultant will raise confi dence in the fi nancial analysis. Halle Van der Gaag, former director of the Jones Falls Watershed Association, suggests discussing fi nances in the middle of the pro- cess, rather than the beginning or end. “Talk- ing about money is hard and emotional,” Van der Gaag said. “Build trust fi rst.”

6) Evaluate the role of the process facili- tator/transition director and how best to 14

Looking Ahead

Signatures on paper marked the formal birth of Blue Water Baltimore, but the evolution of a fully integrated organization and dynamic regional voice is still underway.

Blue Water Baltimore has entered its fi rst Its board members are deeply involved and full year of existence. In many ways, it is a knowledgeable about the group’s needs and typical nonprofi t organization: the board and potential. staff are setting goals, recruiting volunteers, Board president T.J. Mullen is pleased by strengthening programs. They are pursuing their unifi ed mission. “We are now a more grants and raising unrestricted dollars to comprehensive organization that truly covers cover administrative expenses. the watersheds of Baltimore,” Mullen said. At the same time, Blue Water Baltimore “We have the opportunity to make an impact occupies a unique transitional status. It is a on the water quality of Baltimore, period. Not new organization, resolving myriad practical a piece here, a piece there. All of these dif- details—from web sites and time sheets to ferent watersheds are being cared for under personnel policies, accounting, and comput- one roof, without duplicating efforts.” er systems. These tasks are extra challeng- Cathy Brill of the Rauch Foundation is en- ing because this “new” organization arrived couraging funders to sustain their support with nine experienced staff members and for Blue Water Baltimore and consider the immediate commitments to existing grants addition of signifi cant program grants. Brill and programs inherited from its founding also hopes to introduce Blue Water Baltimore watershed groups. to non-environmental grantmakers who may Blue Water Baltimore also benefi ts from their be intrigued by the group’s impact on com- valuable legacies. It has mature programs, munity development. and the opportunity to re-energize and ex- “The funders’ role doesn’t end here,” Brill pand its work with experienced and talented said. “It goes beyond providing grants to help- staff. It enjoys an existing relationship with ing nurture this new organization.” grantmakers and a range of volunteers spread throughout the Baltimore region. A publication of the

February 2011

229 Seventh Street, Suite 306, Garden City, New-York, 11530-5766 Tel: 516.873.9808 E-mail: [email protected] http://rauchfoundation.org

35354545 BelairB l i Road, R d Baltimore, B lti MD 2121213213 Tel: 410-254-1577 www.bluewaterbaltimore.org

Acknowledgements

Special thanks to the former staff and board of the Baltimore Harbor WATERKEEPER, Baltimore Harbor Watershed Association, Gwynns Falls Watershed Association, Herring Run Watershed Association, and Jones Falls Watershed Association; Elizabeth Periello Rice, Baltimore Community Foundation; Pete Powell, Clayton Baker Trust & Lockhart Vaughan Foundation; Laurie Latuda, Goldseker Foundation; and Frances Flanigan, Flanigan Consulting. Written by Lara Lutz.

Photo Credits

Baltimore Harbor WATERKEEPER (pp. 8, 12); Baltimore Harbor Watershed Association (pp. 5, 10); David Davies (cover); Marcus Griswold (p. 5); Herring Run Watershed Association (pp.7, 14); Jones Falls Watershed Association (pp. 9, 11, 13); Lara Lutz (p. 6).