A Historic Merger

THE CHALLENGE

A merger focused on tackling food insecurity

in the State of Connecticut

Connecticut Food Bank and Foodshare were two strong, financially solid organizations who together served all eight counties in the State of CT. The two organizations had complementary missions and a history of working together well. Both food banks are currently members of Feeding America – the leading national anti-hunger organization. In 2020, Connecticut Food Bank found itself in the midst of a leadership transition and the two organizations decided the time was right to start serious merger discussions.

At the onset, the merger team was clear that decisions would be based on data and on how to best address food insecurity in the state. As Jason Jakubowski stated quite clearly early in negotiations: “We are dedicated to doing this right.”

The Strategy Group (TSG) was hired to facilitate merger discussions and to help map out what a new organization could look like. The process came down to listening, learning, visioning, deciding, and moving forward. Over and over again.

There is both a science and an art to mergers. The conversations can be hard and sensitive. “It’s really a lot like dating,” Jakubowski said. “At first, there is a mutual attraction and after a while it starts to get serious. And until the board votes actually occurred, there were times I wasn’t sure it was going to be a done deal.” It all came back to the mantra of greater impact with sustained efficiencies.

THE PROCESS

COVID’s silver lining

This merger was born in COVID, and negotiations were all done via Zoom. Getting people from all parts of the state together can be tough, but attendance at our standing Wednesday morning meetings was outstanding as well as the numerous due diligence committee meetings held over the nine-month period. The pandemic and Zoom calls actually may have facilitated an easier merger process, saving miles of travel time for the representatives of both companies.

TSG talked with key stakeholders who had a vested interest in Connecticut Food Bank and Foodshare. Key stakeholders include all board members, staff leadership, top donors, and community partners. The goal was to advise them of the merger conversations and to gauge their input on (1) what makes the organization a strong merger partner, (2) what the organization may gain or risk with a merger, and (3) what are the organizational expectations from a merger.

The exploration stage started with the establishment of a merger committee with staff and board representatives from both organizations. The merger committee investigated merger options and identified the merger type that best fit the needs of both organizations. The last step was developing a letter of intent for board discussion and approval.

Phase began with comprehensive due diligence. Sub-committees were responsible for reviewing issues related to the following:

  1. Financial
  2. Fundraising
  3. Governance
  4. Human Resources
  5. Legal/Regulatory/Insurance
  6. Partner Agency Network/Non-Food Programs
  7. Operations/Food Distribution

In the negotiation phase, the merger committee drafted a joint operating plan, which when used correctly will be an adaptive road map for organizational development. The last step in the negotiation phase was to create a partnership agreement for board approval.

Once the merger has been approved, the real work begins. What the merger committee will have discussed and decided on key elements in the operating plan and partnership agreement, the details of the plan may be challenging. TSG consultants will work with the new entity to implement the new operating plan as smoothly as possible.

THE OUTCOME

Making a bigger impact

After nine months of intensive conversations and due diligence, the boards of directors of Connecticut Food Bank and Foodshare voted to merge in January 2021. This union represented the largest nonprofit (non-health care) merger in the State of CT. 

By leveraging resources and realizing economies of scale and other operational efficiencies, there will be estimated cash savings of close to $2,000,000 annually.  

It all comes down to mission. The most important mark of success with this merger will be increased impact in addressing food insecurity throughout the State of Connecticut. 

LEARNINGS

It takes time

1. You need the right people on your merger committee. They need to have time to dedicate to the process, skills that are useful to the process, and a desire for success in the process.

2. Momentum is key – don’t stop and start the process.

3. Make decisions based on data not feelings.

4. Mergers entail a significant financial investment.

5. There will be pain. Work through it.

6. Mergers take time. The more work you do during the merger process, the better prepared you will be after the merger occurs.

7. Mergers don’t stop after the paperwork is signed. Implementation takes time, patience, and resilience.

“There are a lot of people who spent a lot of time making this merger possible, but I can say with complete confidence that it simply would not have happened without Debra and her team at The Strategy Group. They didn’t arbitrate or referee; instead, they facilitated a collaborative process that ultimately resulted in one of the most high-profile non-profit mergers in Connecticut history. It was a pleasure to work with them.”

Jason Jakubowski | President and CEO, Connecticut Food Bank – Foodshare

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