After The Merger: Grameen Foundation, One Year Later
After The Merger: Grameen Foundation, One Year Later
There’s been a lot of talk about mergers and acquisitions in the development sector this year, with announcements coming from RTI and the International Resources Group (IRG), The Rainforest Alliance and Utz, and our own announcement in July. But mergers aren’t new; Grameen Foundation and Freedom from Hunger announced their integration one year ago this month. Seeking some insights on what a combined organization looks like one year down the road, I met with Grameen Foundation’s Chief Financial Officer Bonnie Cockman (at right). With 25 years of development sector experience, Cockman has been CFO at Grameen Foundation since February this year. Here she shares with us what the experience has been like for staff, donors, and the people the organization serves.
Q: It’s been almost a year since Grameen Foundation and Freedom from Hunger announced their merger. Tell us what led to the decision to form a single unified organization.
Bonnie Cockman (BC): Both organizations have their roots in microfinance. They’ve known each other and had a lot of respect for each other for a long time and had partnered on a few projects over the years. They saw an opportunity to break down some of the silos that exist in development work in a more powerful way, by strengthening the work that the two organizations had been doing at the intersection of digital financial services, agriculture, nutrition, and health. They saw that their strengths were complementary and that as a combined organization, they could have a larger impact and benefit a larger number of people than before.
Steve Hollingworth had been president and CEO at Freedom from Hunger before coming to Grameen Foundation in January 2016. Having a CEO with a deep appreciation for both organizations prompted a deep discussion of a possible integration. People from Freedom from Hunger knew Steve, and so it created a comfort and continuity of his leadership. Kathleen Stack, the interim CEO at Freedom from Hunger, later became the executive vice president for global programs in the new Grameen Foundation, which also created continuity and confidence in the leadership.
On an operational note, Freedom from Hunger continues to be a 509(a)(2) supporting organization of Grameen Foundation. We did that intentionally because there are some projects that were designed and implemented by funders through Freedom from Hunger and it ensured a continuity of those programs. Some donors had also made legacy gifts as part of estate planning, and as the legal documents were all in place, it would have been hard for the donors to redirect those funds to Grameen Foundation.
Q: Do you think that will endure? Or could you see that maybe changing five years or any number of years down the road?
BC: Time will tell. If it turns out that it is valuable to continue with the structure of a supporting organization, it is likely to endure.
Q: What has the transition been like and where are you now in the overall process?
BC: On the whole, it has gone well. We feel that we learn every day. As we come up with new programs, we have exciting insights into how to combine digital financial services, agriculture, and health. That piece feels very empowering.
The board has provided good leadership. They have met about three times now, and one of the things that we did to help the two boards come together was to have co-chairs, one from each originating organization. We have co-chairs of the full board and of all the board committees. Seeing the board members really engaged has been a big plus for us. We feel their support.
Inside, we’re doing quite a bit to strengthen the organizational culture. One of the things we did right up front was hold a staff retreat for the senior level folks from the two organizations in early February 2017. A large number of the staff from all over the world came together and spent a week in California at the former Freedom from Hunger headquarters (see photo at right). That was a chance for people to get to know each other, have important conversations, and develop camaraderie. We came up with a thematic goal for the year, “One Voice, One Vision,” and we committed to “the will to listen, to learn, and to become one voice with one vision.” We created a series of six goals beneath the commitment. We are tracking those and making sure that we’re putting those into place during the course of FY 2018.
One way that we’ve helped to build our culture is simply by doing the work together. Since we’ve come together as one organization we have submitted proposals in every region where we work. By crafting these programs, we have started feeling like one team.
The operational side is the last piece, and it’s a huge amount of work. One of the things that we did well up front was create an integration team to manage all the various workstreams. The big buckets here are the merging of accounting and financial reporting; the merging of the donor and grants management databases; and then the merging of our policies. At this point, we have integrated our supporter/fundraising databases and our grants management databases. Accounting was integrated within the last few weeks. And most, but not all, of our policies are integrated—that’s a work in progress. The other thing that we recently completed, which was part of the One Vision, One Voice, is what we call our “solutions nomenclature.” This is the language that we use to talk about our work. Every place has its own acronyms and language, and so we are developing new terminology to ensure that we speak the same language.
Q: What have been some of the biggest obstacles you and the senior level management have faced with this change and how have you dealt with them?
BC: There are two to highlight. The first one was our accounting and financial reporting systems. The program teams started to work together before the accounting and financial reporting systems were integrated. What that meant was that in order to have good financial reports to drive our decision-making, we had to combine a lot of data in Excel; we had to do it manually. That was time-consuming.
The second one was related to creating culture as quickly as possible. How do we transfer loyalty from two separate organizations to one? By nature, everyone feels attached to what they know. The staff retreat and the One Vision, One Voice piece were both quite intentional to help foster loyalty for the combined organization. One of the things that we just put into place in our monthly staff meeting, that I have found inspiring personally, is what we call our “Mission Moment.” It’s about 10 minutes at the end of the staff meeting. For a recent one, Brigitta Nyawira from our Kenya field office put up a big image on our video screen of Elizabeth Wainaina, a farmer, in front of her farm (see Elizabeth's photo at top of this page). She had a big smile on her face, she looked healthy and happy and strong. Brigitta explained how Elizabeth had prospered after receiving a digital-based loan that we helped to develop. Just seeing her picture and hearing her story let all of us feel connected to our mission.
We also implemented an internal learning agenda that is part of One Vision, One Voice. We came up with six topics that we want everyone in the organization to learn about so that we all understand our work in the same way. We’ve been holding a meeting about every six weeks where we come together and learn. By the end of the year, everybody will have had an opportunity participate in conversations across the spectrum of our work.
Q: Culture is such an important factor in any merger and is one of the things that teams often struggle with when merging operations. Tell us a little more about creating culture in your new organization.
BC: I believe that culture is about creating shared experience over time, and so I think it’s unreasonable to assume that a unified culture is going to emerge as soon as we come together. I think our culture is developing now in a number of ways. By working together on new projects. By having a common language, which we’re developing. By implementing the learning agenda and creating opportunities for people to discuss our strategies. It’s not just talking at people, it’s having people talk together. By instituting the Mission Moments, and staff retreats.
Q: How have your donors reacted to the change?
BC: Because the work of the two organizations was so much alike, for the most part our donors are positive. The institutional donors have appreciated the value that can come from having stronger, more interconnected programs inside the same organization. And of course, if we do that well, we should create cost efficiencies and have a lower indirect cost rate over time. For our individual donors, a key statistic to watch is the donor retention rate. For the two separate organizations, it hasn’t changed in a material way. That’s an indicator that people are comfortable. We’ve heard some feedback that the donors want to make sure that their favorite programs continue—there have been some concerns that something that they really loved about their old organization would end. It was important to reassure them directly. Also, by surveying donors and paying attention to feedback, we have been able to both address donors’ concerns and communicate retention data to our team.
Q: It’s a year later. What do you think is the biggest success coming out of the merger?
BC: It’s the impact that we’re having as a combined organization. We all feel super proud about the fact that the combined organization is continuing to benefit hundreds of thousands of folks on the ground in just the past year. We see that by integrating our work more closely, we have an opportunity to make that number grow larger and larger. Here’s an example from India. In our Rajasthan Nutrition Project, we’ve reached 30,000 women and their families, providing women with nutrition information, agricultural knowledge, and financial services. Our gender dialogues have also helped them to talk with their husbands to overcome barriers to food security and balanced nutrition within the household itself. As a result, the percentage of female heads of households reporting that they are food secure increased from 21 to 53 percent, with similar increases for their children. Nutrition advocates on the ground did this training with tools developed through a Freedom from Hunger program. Meanwhile, a Grameen Foundation India project has connected and trained 30,000 women to use digital financial services. This saves them time and money in travel costs and empowers them to take control of their financial lives. Now we see increasing opportunities—in India and elsewhere—to use the digital tools that Grameen Foundation is known for and the training platforms, knowledge, and expertise on the Freedom from Hunger side to create more powerful, integrated programs.
Q: Any advice that you would give to a counterpart in another organization facing a similar situation?
BC: We have seven tips to share:
- Create an integration team to oversee the projects associated with the integration.
- Do as much planning and pre-work up front as possible. We can see in hindsight that it would have been helpful to have had more lead time—to do everything from preparing to integrate financial reports and databases, to having a fuller communications plan with time for everybody impacted by the integration to understand it. Steve came onboard in January, and the integration was launched—all of us on the same payroll—within eleven months.
- Hire extra staff resources. It takes extra bandwidth for staff to stay on top of the regular work and then have the additional work that comes from combining two organizations. And so, to the extent it is possible, identify a little extra pot of cash.
- As you unfold your communications strategy, plan to constantly evaluate how your messages are being received, know what questions people continue to have or what new questions arise, and have in place clear channels for addressing those questions, whether through webinars, social media, website, email, print—you name it. After you merge, your audience may shift, and you need to understand your new, combined audience. You have to communicate often and listen well.
- Think about the impact on your employees beyond the work: the pay scales of the two organizations, the health care benefits, the retirement plans. Understand how you’re going to bring things together and, at the end of the day, have everybody feel that it was fair.
- Fund staff retreats to include as many staff as possible. I believe the camaraderie and connection that you build through those retreats, if not done too extravagantly, is worth the money.
- Avoid non-vital changes in the midst of combining organizations. Integration is tough as it is, and adding extra deadlines and workload is where teams get overburdened and even overwhelmed. We experienced this when we decided to change our fiscal year just four months after integrating, which meant an extra audit and updating our software to account for this new fiscal year. In retrospect, we would have been more focused on the immediate integration challenges if we had waited to make this change.