Paving the Way for our Future

Several weeks ago, I blogged about Sunny Hills’ approach to nonprofit M&A and, specifically, how it plays a critical role in our organization’s strategic planning.

For any nonprofit organization considering an affiliation, or perhaps a merger, I highly recommend David LaPiana’s body of work as a valuable tool to organize and guide the planning process. LaPiana’s The Nonprofit Mergers Workbook, Part I and Part II served as a critical guideposts for our own board and executive staff as we explored potential alliances with partner agencies, most recently with East Bay provider, Bay Area Youth Centers (BAYC).

This week, I am pleased to welcome Josh Leonard, Executive Director of BAYC, as our guest blogger. A 17-year veteran of BAYC and its Executive Director for the last seven years, Josh brings a valuable perspective to the merger process our two agencies employed. We hope you’ll benefit from learning about our approach as we take a closer look at the process that led to Sunny Hills’ affiliation, and later merger, with BAYC.

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It all started with a conversation. I was approached by Barry Feinberg (Chief Program Officer at Sunny Hills) in 2007. We discussed the commonalities between our agencies, our mutual struggles, and our goals -- and how we might partner to get there. After a number of conversations with Barry, and later Joe, I began to see how a merger could work in our favor—not just for BAYC, but for Sunny Hills, too.

As an executive director, one of my primary responsibilities is to be future focused. For me, the philosophical question of ‘who do we want to be’ and the more practical aspect of ‘how are we going to get there’ are always top of mind. BAYC was founded in 1974 as a group home provider for youth in foster care; several years ago, I saw the system of care changing rapidly and knew that we needed to change with it or risk obsolescence. I believed that we had unique set of competencies that added value to Alameda County’s system of care. The challenge, then, was to package and parlay these competencies in a way that was relevant and sustainable given the larger forces at play.

After a number of conversations, I gleaned that Sunny Hills was facing a similar set of issues. Known for its residential treatment program for emotionally disturbed children, Sunny Hills was transitioning out of residential care—which had been critically under-funded for a number of years—in order to provide a broader array of community-based services for children, youth and families. Once we saw the potential value of an affiliation, the question turned to what this would this look like?

At that point, each agency identified representatives to serve on a merger study taskforce. I participated along with two BAYC board members, Joe Costa and Barry Feinberg of Sunny Hills, and three Sunny Hills board members. Our taskforce was facilitated by Mary Denton, an experienced management professional who now serves in the role of Chief Financial & Administrative Officer for Sunny Hills. Our group met monthly—sometimes more frequently—for a period of about eight months. Each meeting focused on a singular topic, for example mission/vision, human resources, or programmatic goals. The process was intensive, but it allowed us to get to know one another and establish a foundation of trust. By the end, we had solidified our initial inclination: by coming together, we could create social value and impact on a broader scale.

It wasn’t always as easy as I make it sound. For me, the hardest part was the notion we would be letting go of our 30-year history. Sunny Hills was a larger agency and had been around for decades longer than BAYC. What would a merger really look like? The hierarchy of command? Our creativity, responsiveness and nimbleness that had defined our agency, would it be lost? It was the fear of the unknown.

Our taskforce held the value of open and honest communication. It was important that I clearly communicated my concerns and highlighted any ‘deal-breakers.’ Once I realized that our agency wasn’t going away, I began to focus more so on the pros of this affiliation as the cons dwindled away. With the strength of Sunny Hills’ administrative infrastructure, we would have the capacity to deliver our services on a broader scale than ever before. BAYC held a strong brand in the East Bay, a region that Sunny Hills had yet to tap. Sunny Hills had a solid foothold in Marin County and was beginning to expand its reach to Sonoma County. Together, we had a regional footprint and an infrastructure that would afford us the ability to deliver the scale and quality of programming we desired. And BAYC could focus on what we do best: ensuring transitional age youth have the opportunity they deserve to reach their full potential.

At the conclusion of our taskforce, a recommendation was made to our respective boards to affiliate; BAYC completed its merger with Sunny Hills in October 2008. Roughly one year later, we have managed to integrate our systems—accounting, payroll, case management etc.—and have begun an exercise to strengthen our brand. Our programs are expanding, and we are beginning to disseminate our knowledge and expertise on a broader scale.

We are moving ahead as an agency, and I have greater aspirations for our future. Without a doubt, this has been a real win for BAYC…for our youth, our partners, and our donors, too.

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You can reach Josh by calling (510) 727-9401 ext. 104 or email him at josh@bayareayouthcenters.org.