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By Lizbeth Nevarez (Senior Manager, Green Hasson Janks)

It is a rare feat when two nonprofit organizations are able to come together and join resources to increase the collective impact they have in the community. It is just as rare to have enough donor contributions that allow them to do so. The amount of time, work, and of course, due diligence, that goes into making something this amazing happen is astronomical. I was able to go through this experience as the Treasurer of Bienvenidos Children’s Center (Bienvenidos).  Bienvenidos provides foster care, mental health services, and family preservation services to individuals in East Los Angeles, Pasadena, West Covina, Palmdale and other cities in Los Angeles County. Due to the hardships that were to be incurred with the recent Continuum of Care Reform Legislation, the Affordable Care Act, and the integration of Los Angeles County’s Health and behavioral health services, the CEO of Bienvenidos, Ritchie Geisel, was determined to find a strategic alliance with another nonprofit organization that would help wear the burden.

In “October of 2009, the dating game began. Ritchie and his management team started reaching out to several different nonprofit organizations that all shared a similar mission as what they at Bienvenidos aspired to be themselves.  After numerous meetings with management teams, board members and staff, they were able to find one they wanted to move forward with, the Hillsides Organization. Bienvenidos felt a strong connection with Hillsides since the respective programs were either complementary or filled gaps in their services. But after finding a great partner, we had to determine what type of alliance we wanted to form with them. Ritchie Geisel was going to retire as CEO from Bienvenidos and therefore the board felt a merger may be the best route to go. With the help of the Nonprofit Sustainability Initiative, which supports strategic restructuring for nonprofits, Bienvenidos was able to obtain a grant to explore the idea.

Bienvenidos engaged a consultant, Warren Riley, to help assist in the negotiations between both organizations. Warren helped form a Strategic Affiliation Task Force comprised of Board officers, Chairs, Treasurers and C-level officers, as well as other staff members from both entities to undertake the due diligence process. The task force consisted of several sub committees, each to cover the Finances, Business Operations, Missions and Programs and Human Resources. In turn, each committee was responsible for analyzing the impact the merger would have in each of these key areas. As a member of the finance sub-committee, our job was to review areas of advantage or disadvantage of a collaborative working relationship, identify possible solutions to areas of concern, and recommend a future working relationship.

After an arduous three month process of meetings, each tackling a different issue, each committee reported back to the full task force in regards to their findings and recommendations. The ultimate goal was to have them agree to continue with a merger after all the information was analyzed by both organizations. Luckily, all committees found positive findings that would strengthen the services and organizational structure of the organizations. The task force board members and, of course, management then recommended to their respective boards that they go through with the plan.. And, with that, both organizations signed a Memorandum of Understanding stating their intent to merge. After this was signed, the announcement to staff and the public was made. All throughout, both CEO’s from either organization remained completely transparent with staff and community members as to the mergers progress, and what it might mean for the community as a whole. In order to allay any fears, regular meetings were conducted to address any concerns individuals may have held.

The next step was to have a legal team draft an Affiliation Agreement between both organizations. The agreement had specific details regarding how the new board structure will be laid out, what type of legal relationship will both entities have, operating instructions, and so forth. We were fortunate enough to have the help of a legal firm that has ample experience with nonprofit organizations merging, so the process was likely smoother than most. In the end, while both organizations retained their individual names, they now relied on each other for the needs neither of which could supply on their own.

Now, together, the organizations will be able to serve the needs of more than 13,000 children, youth and families.

About Lizbeth Nevarez (Senior Manager, Green Hasson Janks)

Lizbeth Nevarez has over eight years of public accounting experience providing tax and consulting services to nonprofit clients. She is a frequent speaker at the Firm’s nonprofit workshops. She has completed the Riordan Leadership Institute program through the Los Angeles Junior Chamber of Commerce. The program’s mission is to develop and cultivate business professionals for lifelong service in the nonprofit community.

She currently serves as treasurer of the Board of Bienvenidos Children’s Center, a nonprofit organization dedicated to providing family services, foster care, mental health services and a variety of other family preservation programs.