All information contained herein is not intended to determine legal advice.
In recent years, the proliferation of non-profit organizations, coupled with the current economic environment, has affected many charities and directed the elimination of important programs or closures. Specifically, the current difficult economic period is after the number of non-profit organizations in the United States has continued to grow for many years – according to data from the Urban Research Institute and the National Center for Charity Statistics, as of 2006, there were more than 2.3 million 501[c]  US non- For-profit organizations [this figure exceeds 36% of the data available in 1996].
However, like profit organizations and individuals, non-profit organizations must also adjust their operations and thinking processes in order to survive the difficult economic times. In an article in December 2009, the “Charity Chronicle” [citing a recent report from the Bridgespan Group survey of about 100 non-profit leaders] stated that “54% of respondents are reducing or canceling certain programs so that Providing resources for other programs free of charge is slightly more than a year… [and that] [n] Two-thirds of the respondents [63%] said they are mobilizing employees to support core projects. "[Ben Gose, as the economic pain continues, more charities cancel programs, charity, December 10, 2009]
While many organizations have decided to cut back on plans, charities have another viable option to continue to serve their constituents while meeting the bottom line – consolidation or consolidation. Mergers and acquisitions in the non-profit sector are not only possible but can be an important factor in survival once they are primarily considered to be transactions reserved for profit communities. In fact, another recent study by the Bridgespan Group stated that the potential of the non-profit portfolio can not only serve as a means of survival in a tough economic environment, but also as a strategic tool for success. In its report, The Bridgespan Group cited a recent poll of executive directors of non-profit organizations that found that non-profit leaders believe that “mergers and acquisitions [M&A] are a kind of reverse takeover, a kind of financial support. Ways to make their organization more attractive to funders or funders to solve the vacuum of success [but time] should also actively consider mergers and acquisitions for health organization leaders – as a way to enhance efficiency, disseminate best practices, and expand The way of influence – yes – all of this requires more cost – to effectively use scarce resources." [Alexander Cortex, William Foster and Katie Smith Milway, "Non-profit organization mergers and acquisitions: not just tools for difficult times," Bridgespan Group, February 2009]. So while this article discusses the benefits of consolidation based on this difficult economy, organizations can always see integration as a valuable tool for success.
One of the first important prerequisites for considering mergers is that the organization understands and recognizes that no one is an island, and in order to better build the continent, you must build bridges. This sounds obvious; however, many small non-profit organizations are actually limited by a core group of leaders who are passionate about their careers and the organizations they serve. While this enthusiasm and hard work can be a real asset to philanthropy, it can also be an obstacle because it may limit the perspective of organizational leadership. This phenomenon is sometimes referred to as the “founder syndrome”, which Wikipedia defines as “a label that is often used to refer to the behavioral patterns of the founders of an organization. Over time, it becomes unsuitable to successfully complete an organizational mission. "Correspondingly, forensic obstacles to small organizations interested in integration are overcoming the voice of tunnel vision leaders. Once completed, the organization is better suited to handle potential relationships with an open mind.
Another important consideration for the merger of non-profit organizations is the culture and environment within each organization and the governance structures associated with it. While the two organizations may serve almost the same purpose, they may differ on many governance issues, such as board seats, board selection processes, board performance evaluation, and relationships with employees. For example, an organization with low board engagement and low attendance may have a very different management style from an organization with 50 active and board members. This variable will not only affect the corporate governance of the proportional organization, but also the impact of staff and program operations. Similarly, organizations must evaluate and consider their corporate image, core values, work environment and leadership style, and decipher the feasibility of integrating two organizational cultures.
In addition to the above internal factors, planning services, facilities and equipment are also an important part of the correct assessment of the merger. Examples of these variables include the number of individuals served by the program, geographic coverage and “customer” demographics, technology utilization, “competitors” in the market, service locations, real estate arrangements, major equipment inventory, maintenance contracts and technical systems. In addition, one of the remaining major factors that organizations should consider based on potential mergers is human resources, including paid staff and volunteers. Subsections of this section include salary, benefits, expense reimbursement, professional development, liability insurance, performance evaluation, volunteer program structure and training/guidance, recruitment and evaluation/recognition.
Once the organization identifies these core issues, the remaining legal considerations associated with the merger or integration will be governed by applicable state and federal laws. Depending on the transaction structure, ie the actual merger and management restructuring of the board of directors or the outsourcing of asset transfers, the organization may need to obtain certain government approvals before completing the transaction. In addition, in a true merger, it is recommended that the organization conduct in-depth due diligence to fully satisfy themselves and make them aware of the identity of others [for surviving companies, it is fully integrated. Know what it is through the charger] Assets and liabilities assumed].
Especially in California, in order to carry out a statutory merger, the Attorney General must be informed and certain applications must be completed with the Secretary of State, see Section 6010, etc. Start. California company code. In these sections, the legislature has established various logistical requirements that must be met in order to organize participation in such transactions. Specifically, public interest companies [usually the organization of most non-religious 501[c] organizations in California] are only allowed to merge with other publics without the written consent of the California Attorney General. Interest or religious group with a specific dedication language in its charter. CAL. CORP.CODE § 6010[a]. In addition, a copy of the proposed merger agreement must be provided to the Attorney General, which must contain specific terms and conditions, including but not limited to its general terms, amendments [if any], and articles of association and bylaws. Survival company, and a detailed description of how to transfer membership from a disappearing company to a surviving entity. CAL. CORP.CODE§6010[b]; CAL. CORP.CODE § 6011. Many other provisions should also be clearly and accurately stated in the merger agreement between the two organizations, including but not limited to the treatment of employees of disappearing companies [ie they will be employed in surviving companies, and if so, in the due diligence process What kind of benefits, holidays, etc., guarantees and statements will be generated in the accuracy and completeness of the documents provided by each relevant organization [for obvious reasons, such guarantees will help protect the organization. Dependent on the other party] The documents provided, such as financial statements and annual reports, and the obligations of both parties after the “closing” of the combined transaction. The merger agreement must then be approved by the board of directors [and members, if applicable] of each organization, and the surviving company A copy of the agreement must be submitted to the senior management's certificate.
As mentioned above, for merger transactions, the number of recommended due diligence increases, as surviving companies not only acquire the assets of another organization, but also assume their responsibilities. As is known to all, " If the merger of non-profit public interest enterprises takes effect, the independent existence of the parties that disappeared in the merger will be terminated, the survivors of the merger will succeed, and no other assignments will be required, and all rights and property of each disappearing party will be merged, And should be subject to all debts and liabilities for each debt and debt…" Catholic Medical West v. California Insurance Association, 178 Cal. App. 4th 15, 28  [citing CAL.CORP.CODE § 6020 [a ]]. Therefore, documents and information that should be reviewed and analysed in the merger transaction include organizational documents [eg articles such as…].Ultimate Cleaning Business Package, Click here!