THE NON PROFIT TIMESChicago United Ways Merger May Start A Consolidation TrendMergers stabilize fundraising machineAugust 1, 2005By Matthew SinclairThe largest merger of United Ways is being developed in Chicago, in an effort to stabilize one of the largestfundraising areas in the United Way system. The merger would occur officially at the start of 2004, with planningalready underway.But Chicago may be Second City again if early discussions about a consolidation in the New York metropolitan areaend up with a merger there well.The Chicago merger, intended to streamline operations for more than 50 United Ways in the area, is the largest in thehistory of the United Way system. It will bring together the United Way in Chicago (UWC) and the United Way ofSuburban Chicago (UWSC), which is a federation of 52 local UWs, into one entity to be called the United Way ofMetropolitan Chicago (UWMC).The UWC is traditionally among the top five UWs in terms of fundraising and has reported more than $100 million in asingle year. But recent corporate downsizings and bankruptcies have caused its workplace campaign to suffer. Therehas also been a revolving door in the top executive office of the urban UW for several years, contributing to instability.There was significant pressure from the national organization for the merger.Though the idea of altering the UW environment in Chicagoland has been a topic of discussion for years, JanetFroetscher, president and CEO of UWC, said the current economic troubles have made it clear that this merger wasnecessary. "This effort was driven by a desire to put more dollars back into the community," she said."(We've) never seen the resources as scarce as they are now," Froetscher added, noting cuts in state and localgovernment in particular. "We're all very well aware of how much the community needs resources."Though the economics and the service were clearly important in bringing the area United Ways together, just as clearwas the frustration of a system that had grown archaic as live-work patterns changed. Brian Gallagher, president andCEO of the United Way of America (UWA), said something about the old system didn't feel right and it simplycouldn't continue.Alexandria, Va.-based UWA got involved after stories of double counting of campaign money from healthcarecompany Baxter International between the Lake County United Way (LCUW) in Gurnee, Ill., and the UWSC, of whichLCUW was not a member."(We) made it clear that we thought that now was the time for a different construct," Gallagher said. "Essentially, whatwe said throughout was we wanted the leadership in Suburban and in Chicago to create something locally. We didn'twant to dive into the detail of what the consolidation would look like." As long as what they came up with was lesscomplex, less costly and less redundant, "then we were perfectly happy to let them do that on their own," he said.The breakthrough came when UWC and UWSC "both said this system just wasn't going to be the system of thefuture," Gallagher said. "It maybe made sense at one point when the suburban communities were far enough away....Geographically, they grew together."If they couldn't come up with an appropriate model, "We would have taken everybody through a membershiprecommendation made some decisions about what the present throughout Chicagoland would have been. And wewould have brought them a different model."Froetscher said the organizations weren't sure yet how many jobs would be lost, but there were sure to be positionseliminated. "We don't have a strong sense of all the costs now," she said. "It won't exceed what we save." She said theexpectation is to eventually see savings of $1 million per year."What we're going to do is involve everyone in a strategic planning exercise," she said, which will determine thecommon mission of the merged entities for UWMC to move forward. Froetscher supported the system-wide goals ofmoving toward community impact but said the strategic plan and mission of the merged entity will help determine itsapproach. "I'd say there's a lot of consensus building involved," Froetscher said. "We want to use the creation of astrategic plan and a mission as the first thing for the new entity."The board will have 25 members, at least five of whom will have experience working with one of the local UWs. Atleast 10 of the board members will live or work in the geographic areas the metro organization will cover. There willalso be zone advisory committees to inform the board of local issues. Froetscher said it has not been determined yethow large those local committees will be."The toughest part is going to be to maintain the localism," Froetscher said, "while at the same time capture thebenefits of the larger organization We'll always have that balance that we want to maintain." Froetscher said theculture of the new organization will draw from the merging entities and will need to be involved and inclusive. "Theculture has got to be true to the organization," she said. "You couldn't take a culture that is totally alien and impose iton the organization. It wouldn't fit.... (Culture) is both built and evolved."Jimmie Alford, a nonprofit management consultant in Evanston, Ill., said he thought the merger would be a positive forChicago-area nonprofits. "What we have to hope is the ultimate result is a much more efficient and high-performingorganization that in fact fulfills its mission of raising funds and getting more resources out to the nonprofits it'sdesigned to serve," he said. "The United Way has reduced its capacity or has been less effective in recent yearsbecause of all the mergers and competition and things of that nature. I hope this will help give them a breath of freshair as they try to increase their impact."More UW mergersFresh air may blow into another of the largest funding areas in the United Way system. When asked where he expectedthe next merger to occur, Gallagher said, "I think it's New York." He explained that there were certain similaritiesbetween New York and Chicago and even the Twin Cities in Minnesota and Tampa, Fla., looking at live/work patterns,media, and technology. "The leaders in that community understand it," he said of the New York City area. "It's got tochange. There's key leadership on the same page.... They're open to our facilitative leaders."Larry Mandell, executive vice president and chief operating officer of the Untied Way of New York City, saidconsolidation discussions are at a very preliminary stage, but there may be ways to have a regional focus and find costsavings. "There are so many opportunities for United Ways in the region to share best practices," he said. "There areopportunities to bring things together (and) possibly find ways to save costs, better market, share learning acrossboundaries."Mandell emphasized that it was too early to speculate about what a new structure would look like if it is formed amongsome of the 31 UWs in the metropolitan region. "I think the United Way of America is encouraging United Ways towork more closely together," he said. "Certainly there's no mandate taking place.... As I said, these are verypreliminary discussions."3. CommentaryThe aftermath of the Chicago merger have proved Gallagher's predictions to be relativelyaccurate. A similar merger has already been completed in Tampa, although like New-York,Miami-Dade continues to wrestle with the concept. A merger is however near completion inMinneapolis-St. Paul.4. What to doComplete the table after carefully reading the article. If you think that any of the fifteen issuesshow both similarities and differences you may check both the S and D columns. In a singlephrase, give your for each entry. Each of the numbered points corresponds either directly orindirectly to something in the article.#Comparing NPOs & for-profits1Stabilize Fundraising2Merger of competitors3Leadership issues4Affected by poor economy5Archaic system6Loose affiliation to parent7"Something doesn't feel right"8Eliminating jobs9Initiated strategic planning10Governance changes11Concern for localism12Not to impose alien culture13Hired management consultantGoal to create synergyFollowing the leader1415Total similarities and differences5. Grade yourselfS D ReasoningThis exercise is a self-test of your critical thinking ability. Compare your answers tothe answer sheet" that will be sent you after everyone has completed the exercise.

Question

THE NON PROFIT TIMESChicago United Ways Merger May Start A Consolidation TrendMergers stabilize fundraising machineAugust 1, 2005By Matthew SinclairThe largest merger of United Ways is being developed in Chicago, in an effort to stabilize one of the largestfundraising areas in the United Way system. The merger would occur officially at the start of 2004, with planningalready underway.But Chicago may be Second City again if early discussions about a consolidation in the New York metropolitan areaend up with a merger there well.The Chicago merger, intended to streamline operations for more than 50 United Ways in the area, is the largest in thehistory of the United Way system. It will bring together the United Way in Chicago (UWC) and the United Way ofSuburban Chicago (UWSC), which is a federation of 52 local UWs, into one entity to be called the United Way ofMetropolitan Chicago (UWMC).The UWC is traditionally among the top five UWs in terms of fundraising and has reported more than $100 million in asingle year. But recent corporate downsizings and bankruptcies have caused its workplace campaign to suffer. Therehas also been a revolving door in the top executive office of the urban UW for several years, contributing to instability.There was significant pressure from the national organization for the merger.Though the idea of altering the UW environment in Chicagoland has been a topic of discussion for years, JanetFroetscher, president and CEO of UWC, said the current economic troubles have made it clear that this merger wasnecessary. &#34;This effort was driven by a desire to put more dollars back into the community,&#34; she said.&#34;(We've) never seen the resources as scarce as they are now,&#34; Froetscher added, noting cuts in state and localgovernment in particular. &#34;We're all very well aware of how much the community needs resources.&#34;Though the economics and the service were clearly important in bringing the area United Ways together, just as clearwas the frustration of a system that had grown archaic as live-work patterns changed. Brian Gallagher, president andCEO of the United Way of America (UWA), said something about the old system didn't feel right and it simplycouldn't continue.Alexandria, Va.-based UWA got involved after stories of double counting of campaign money from healthcarecompany Baxter International between the Lake County United Way (LCUW) in Gurnee, Ill., and the UWSC, of whichLCUW was not a member.&#34;(We) made it clear that we thought that now was the time for a different construct,&#34; Gallagher said. &#34;Essentially, whatwe said throughout was we wanted the leadership in Suburban and in Chicago to create something locally. We didn'twant to dive into the detail of what the consolidation would look like.&#34; As long as what they came up with was lesscomplex, less costly and less redundant, &#34;then we were perfectly happy to let them do that on their own,&#34; he said.The breakthrough came when UWC and UWSC &#34;both said this system just wasn't going to be the system of thefuture,&#34; Gallagher said. &#34;It maybe made sense at one point when the suburban communities were far enough away....Geographically, they grew together.&#34;If they couldn't come up with an appropriate model, &#34;We would have taken everybody through a membershiprecommendation made some decisions about what the present throughout Chicagoland would have been. And wewould have brought them a different model.&#34;Froetscher said the organizations weren't sure yet how many jobs would be lost, but there were sure to be positionseliminated. &#34;We don't have a strong sense of all the costs now,&#34; she said. &#34;It won't exceed what we save.&#34; She said theexpectation is to eventually see savings of $1 million per year.&#34;What we're going to do is involve everyone in a strategic planning exercise,&#34; she said, which will determine thecommon mission of the merged entities for UWMC to move forward. Froetscher supported the system-wide goals ofmoving toward community impact but said the strategic plan and mission of the merged entity will help determine itsapproach. &#34;I'd say there's a lot of consensus building involved,&#34; Froetscher said. &#34;We want to use the creation of astrategic plan and a mission as the first thing for the new entity.&#34;The board will have 25 members, at least five of whom will have experience working with one of the local UWs. Atleast 10 of the board members will live or work in the geographic areas the metro organization will cover. There willalso be zone advisory committees to inform the board of local issues. Froetscher said it has not been determined yethow large those local committees will be.&#34;The toughest part is going to be to maintain the localism,&#34; Froetscher said, &#34;while at the same time capture thebenefits of the larger organization We'll always have that balance that we want to maintain.&#34; Froetscher said theculture of the new organization will draw from the merging entities and will need to be involved and inclusive. &#34;Theculture has got to be true to the organization,&#34; she said. &#34;You couldn't take a culture that is totally alien and impose iton the organization. It wouldn't fit.... (Culture) is both built and evolved.&#34;Jimmie Alford, a nonprofit management consultant in Evanston, Ill., said he thought the merger would be a positive forChicago-area nonprofits. &#34;What we have to hope is the ultimate result is a much more efficient and high-performingorganization that in fact fulfills its mission of raising funds and getting more resources out to the nonprofits it'sdesigned to serve,&#34; he said. &#34;The United Way has reduced its capacity or has been less effective in recent yearsbecause of all the mergers and competition and things of that nature. I hope this will help give them a breath of freshair as they try to increase their impact.&#34;More UW mergersFresh air may blow into another of the largest funding areas in the United Way system. When asked where he expectedthe next merger to occur, Gallagher said, &#34;I think it's New York.&#34; He explained that there were certain similaritiesbetween New York and Chicago and even the Twin Cities in Minnesota and Tampa, Fla., looking at live/work patterns,media, and technology. &#34;The leaders in that community understand it,&#34; he said of the New York City area. &#34;It's got tochange. There's key leadership on the same page.... They're open to our facilitative leaders.&#34;Larry Mandell, executive vice president and chief operating officer of the Untied Way of New York City, saidconsolidation discussions are at a very preliminary stage, but there may be ways to have a regional focus and find costsavings. &#34;There are so many opportunities for United Ways in the region to share best practices,&#34; he said. &#34;There areopportunities to bring things together (and) possibly find ways to save costs, better market, share learning acrossboundaries.&#34;Mandell emphasized that it was too early to speculate about what a new structure would look like if it is formed amongsome of the 31 UWs in the metropolitan region. &#34;I think the United Way of America is encouraging United Ways towork more closely together,&#34; he said. &#34;Certainly there's no mandate taking place.... As I said, these are verypreliminary discussions.&#34;3. CommentaryThe aftermath of the Chicago merger have proved Gallagher's predictions to be relativelyaccurate. A similar merger has already been completed in Tampa, although like New-York,Miami-Dade continues to wrestle with the concept. A merger is however near completion inMinneapolis-St. Paul.4. What to doComplete the table after carefully reading the article. If you think that any of the fifteen issuesshow both similarities and differences you may check both the S and D columns. In a singlephrase, give your for each entry. Each of the numbered points corresponds either directly orindirectly to something in the article.#Comparing NPOs & for-profits1Stabilize Fundraising2Merger of competitors3Leadership issues4Affected by poor economy5Archaic system6Loose affiliation to parent7&#34;Something doesn't feel right&#34;8Eliminating jobs9Initiated strategic planning10Governance changes11Concern for localism12Not to impose alien culture13Hired management consultantGoal to create synergyFollowing the leader1415Total similarities and differences5. Grade yourselfS D ReasoningThis exercise is a self-test of your critical thinking ability. Compare your answers tothe answer sheet&#34; that will be sent you after everyone has completed the exercise.

Accepted Answer

#SDReasoning1X Both aim to stabilize their primary source of income for sustainability.2X Mergers…