These are troubling times for local chapters and local affiliates of national organizations. Since COVID and video conferencing, geography has become less relevant in uniting members. Add to this mix aging leaders, and an overall loss of membership at the national and local levels, and the closing comes to mind. While money is a factor for some, a more common problem is lack of emerging leaders and the perception that the organization no longer has value because the membership has gotten smaller and attendance is down.
In the past, one generation phased out and another gradually phased in. It was natural and just a replica of the human life cycle. In recent years, however, this natural cycle has given way to a big gap in emerging new leaders. When the baby boomers hit their 60s and 70s, there was no one coming along behind them to lead. Gen Xer’s were not attracted to organizations at that stage of life. They were working, having babies later in life, going to the gym, and traveling on business. Boomers have stayed at the helm.
Board leaders feel frustrated and helpless. They remember the days when the organization was vibrant and engaged and much larger. Some see closing as a way out, thus it becomes an annual conversation.
When organizations lack emerging leaders, they can limp along until attrition leaves them no option than to close. We know from experience that most organizations that limp along will eventually close. We also know that when organizations close, it is painful for the dwindling few who care. A few people must stomach having an organization fail on their watch.
Closing is the easy way out, but is it the right thing to do?
Fiduciary responsibility comes into play as boards contemplate closure. Board members have legal responsibilities, but most don’t know it or choose to ignore this important role. A board has three legal duties — loyalty, care and obedience. Three short, but powerful words!
The duty of loyalty refers to the mission, as well as the organization. This applies to conflict of interest, as well as the organization itself. This also means that the board needs to remember that they are responsible for the well-being of the organization. That is not necessarily what they might want to do personally.
The duty of care basically is doing what a reasonable and prudent person would do in that situation. It means doing your due diligence before planning. It means looking at what others have done in similar circumstances. As an affiliate of a national organization, a good question to ask is if some affiliates are alive and well. If they are, that is an indication that the organization can be saved.
The third duty is the duty of obedience. This means following the law and nonprofit organizations have special requirements. This is not optional. So if the decision is to dissolve, it is imperative to do it right. It is not a difficult process, nor does it need a lot of lead time.
When boards consider dissolution, anecdotal evidence shows that there are some common factors.
- Aging membership
- Perceived to be “old”
- Resist change
- Leaders feel burned out
- Fear of loss of control
- Setting the bar too high
- Frustration with technology
The hardest part is for aging leaders to get into a mindset that is open to change. They may or may not favor dissolution, but reinvention is scary and sounds like a lot of work. It is easier to limp along and never address this elephant in the room. Closing seems enticing.
There are two options worth considering – Redefinition and Reinvention.
Redefinition is the simpler of the two options. If the group is only attracting seniors, accept that and build on it. There is an endless supply of seniors trying to find their way in a new stage of life.
Here are some guidelines for Redefinition:
- Stop talking about dissolution. Nobody wants to take a cruise on the Titanic.
- If dissolution needs to come at some point, that is the time to talk about it. It is wrong to assume that there will be a leadership void if the leaders now in key positions step down. If the organization is perceived as healthy, others will step forward, particularly if asked.
- Encourage board members who are feeling burned out to step down and leave it to the organization to find their replacements. Also encourage them to stay involved by attending meetings and helping in small ways.
- Accept that the group will likely never have the large numbers it had at one point, and even a dozen people who get together regularly and work on the mission has value.
- As younger seniors cycle in, technology will gradually cease to be an issue. In the meantime, offer other ways to pay dues and register to attend events.
Reinvention is a great option for some groups. It may be easier than it appears. Basically it involves shifting the dialogue from saving the organization to building a new, reinvented organization. It is given that some long-time members will resist reinvention and the changes it requires.
This step is a big one but can leave a powerful legacy.
The first step is finding younger members to take over running the organization. That can be done with the help of the national organization and members reaching out into the community. It should be billed not as saving the organization, but as designing an organization for today, from the ground up.
The existing board must be willing to step down from their positions. There may be a place for one or more in an advisory role. The target audience for reinvention is young, and they have families and work obligations. They communicate in different ways, including social media, and they enjoy different things than older members. A provision of the handoff should be that older members can still be involved in ways that work for them. They don’t need to carry the weight of running the organization. They should be given the freedom to have their own activities, while continuing to support the mission.
Meeting time is a natural barrier to building an organization that includes multiple generations. Some older members have vision issues that makes driving at night irresponsible. Younger members work during the daytime, and they must have their meetings at night or on weekends. Until there is a major vision breakthrough, this is out of everyone’s control. The best way to bring the generations together at an occasion is to have an all weekend event. Some groups have a fundraising event with a reinvented organization; this should be done on a weekend.
While it may be disturbing to watch organizations shrink, it is just a sign of the times. A smart organization adapts to the new reality.
Dissolving a nonprofit corporation is a legal process, and it should be taken seriously and done correctly.
Dissolution requires filing articles of dissolution with the state and notifying the IRS. The funds must be dispersed in accordance with the bylaws/articles of incorporation. Typically this must go to a nonprofit or be given to the national organization. Another alternative is to use all the remaining money in support of the mission prior to dissolution.
The simplest time to close any organization is at the close of the fiscal year. This makes everything align properly, particularly member dues. If an organization closes mid-year, it will need to offer to return prorated dues or plan with another organization to take on member fulfillment.
If an organization votes to dissolve, one knowledgeable person should be named to take on shepherding the process or an attorney should be engaged.
