Ninety-five years ago, Toledo’s “wayward women” were housed in the local jail. Seeing that these women were more victims than perpitrators, Helen Beach, the wife of Toledo’s legendary Mayor, Golden Rule Jones, gave her home to create what is now the Beach House Family Shelter.
In 1982, ten area churches that were working separately to help the homeless recognized their work would be much more effective if they joined forces, and created FOCUS — Family Outreach Church-Community United Services.
And in 2009, the United States Congress enacted new legislation that dramatically affected both organizations. This is the story of how, with the support of Toledo Community Foundation, these two established, successful nonprofits merged to respond to changing needs, and in so doing, became stronger together.
When the U.S. government created the Federal Strategic Plan to Prevent and End Homelessness seven years ago, it effectively ended one-to-one government reimbursements to nonprofit agencies for services rendered to the homeless. Instead, those payments would now be based on the performance of the entire community in meeting government goals for addressing homelessness and its causes.
The core of this plan was an approach called rapid re-housing. This replaced indefinite stays in homeless shelters with a mandate that communities place the homeless in transitional housing within 72 hours, and connect them with support services to address issues that led to the loss of their housing.
“We were already following this model to a large degree before the federal changes,” said Jim Karasek, interim executive director of FOCUS. Tammy Holder, executive director of Beach House, agreed. “We were already doing reciprocal referrals with FOCUS and had an extensive collective network of resource relationships to help identify homelessness causes, as well as, address and decrease barriers to permanent housing.”
But the new model created challenges. FOCUS, which had a well-established revenue stream of government reimbursements, was seeing a decrease each year. Beach House, which had strong private funding sources was primarily a shelter and wanted to expand programs and services without competing with other local organizations.
A leadership change leads to organizational transformation
When the executive director of FOCUS announced her retirement in 2014, a colleague suggested to Tammy that she apply for the job. “But,” said Tammy, “my thought was, why not join forces?” As it turned out, Michelle Klinger, former director of The Center for Nonprofit Resources and program officer for the Foundation’s Strategic Alliance Partnership* (SAP), had already been assisting FOCUS with their search for a new leader, and suggested applying for a SAP grant to support formal discussion of a merger.
With their first SAP grant, FOCUS and Beach House hired Aurora Consulting to lead meetings with agency stakeholders and conduct formal investigation of one another’s organizational culture, finances, vendor contracts, and donor relationships. The grant also covered legal services in the event of a merger.
“These consultants are experts in helping people think through what it means to have one organization instead of two,” said Michelle, who notes that the least successful mergers are done without this process. “Too many rush into a merger without properly facilitated discussions. This creates a situation where people can become misundertstood and alienated. The facilitators funded by these grants make both organizations feel welcome at the table and see that everyone’s voice has been heard.
“The process doesn’t always lead to a merger,” she notes, ”but that’s OK, too. Stakeholders learn about their own organizations and the sector they are serving, and that is useful regardless of whether the two organizations join forces. Sometimes it turns out that the two are not a good match, but someone else is.”
After a careful investigation, FOCUS and Beach House decided the two would indeed be a good match — and on January 1, 2016, their two boards of directors merged into one. A second SAP grant is funding the transitional steps to creating a well-functioning single organization, including technology changes, staff training, board integration, and branding the new entity.
“It’s important to have a strong balance between compassion and accountability,” noted Tammy. “We hope we’re a model to the community, and that this will show effective use of donor funds.”