2018 Fall issue of Horizons

INDUSTRY UPDATE NOT-FOR-PROFIT

Not-For-Profits Can Create Value through Strategic Restructuring by Christina Solomon, CPA, CFE, CFF, CGMA

T oo often, not-for-profit (NFP) their missions when in financial distress. By changing this mindset, nonprofits can create value by combining resources and aligning strategies. According to a recent survey, more than 60% of NFPs are open to the possibility of some type of restructuring; however, not-for-profits are considering such options at a significantly slower pace than their for-profit counterparts. organizations explore restructuring only as a last resort – a way to preserve

Why Consider a Merger? There are many reasons to consider strategic restructuring, including: Address Financial Concerns Many nonprofits are in financial distress. Roughly half of NFPs have less than one month of operating reserves and less than six months of cash. Just under 10% are insolvent, which translates to a $40-50 billion funding gap nationwide. A merger or an acquisition with another organization is often an effective way to work out of a financial crisis or prevent one before it is unavoidable.

28 Not-For-Profits Can Create Value though Strategic Restructuring