AbilityFirst and FVO Solutions

THE CHALLENGE

Two deeply impactful and beloved service organizations based in Pasadena, AbilityFirst and FVO Solutions, wanted to expand and innovate opportunities for people with disabilities in the form of employment and social enterprise. The two organizations shared a similar vision, mission and core values. Each organization’s unique strengths presented the opportunity for better outcomes and a larger variety of programs by joining forces. With more than 90 years of experience and more than 50 years in Pasadena, AbilityFirst (formerly known as the Crippled Children’s Society of Southern California) provides a variety of programs designed to help people with disabilities achieve their full potential throughout their lives. AbilityFirst programs help individuals successfully transition from childhood to adult life; provide employment preparation, training, and experience; build social connections and independence; and offer both participants and their caregivers an opportunity to refresh and recharge through recreational activities. AbilityFirst has over 450 staff members, 13 centers/programs, strong governance, and extensive marketing capabilities. With more than 50 years of experience in Pasadena, FVO Solutions (formerly known as Foothill Vocational Opportunities) is one of the most innovative nonprofit organizations serving people with developmental disabilities by providing vocational opportunities through social enterprise. With approximately 30 staff members and deep operational expertise, FVO Solutions runs a production facility with a variety of job and training opportunities for individuals with developmental disabilities.

THE SOLUTION

Envision Consulting was engaged by AbilityFirst and FVO Solutions in late 2018 to facilitate the strategic restructuring exploration process. We started by forming a “design committee” representing both organizations to lead the exploration. Then we conducted a comprehensive survey with both boards to understand goals and motivations for a possible strategic restructuring, candid perspectives on strengths and weaknesses, and potential issues that might hinder an agreement. By facilitating a discussion about the survey findings with the design committee, we were able to kickstart a transparent and productive process. The next phase involved due diligence assessments for each organization across the categories of governance, programs, financials, fundraising, human resources, and operations. To prepare our assessments and recommendations, we reviewed hundreds of documents and conducted stakeholder interviews. Each organization reviewed their respective due diligence reports first with Envision, which provided the opportunity for organizational growth and development, even if a strategic restructuring was not pursued. Then we “swapped” reports and helped each organization better understand the other’s current situation, as well as where the opportunities and potential issues might arise through a partnership. By spring 2019, AbilityFirst and FVO Solutions were ready to move forward with negotiating conditions for a merger, and then both boards of directors voted to engage attorneys and take steps to formalize the partnership. This concluded the first phase of “exploration.” From June 2019 – February 2020, Envision worked with AbilityFirst and FVO Solutions on implementation planning (the second phase of the NSI engagement). Our work included facilitating the merger implementation committee, planning and implementing communications, updating the new organizational chart and key job descriptions, conducting compensation comparisons, preparing merger impact fundraising analysis, creating and supporting fund development action plan with current and potential funders/donors, and supporting local government approvals. Meanwhile, attorneys for each organization conducted additional legal due diligence to support the vetting and approval process.

THE OUTCOMES

The merger agreement between AbilityFirst and FVO Solutions was finalized in February 2020, and it was approved by the state in May 2020. AbilityFirst continues to work through long-term merger integration in order to fully realize the potential benefits of joining forces. The long-term goals for the merger are to offer innovative, person-centered employment opportunities to more individuals with developmental disabilities in the Pasadena area, while also building internal capacity and increasing operational efficiencies.

Dubnoff Center for Child Development

THE CHALLENGE

In February 2011, the Dubnoff Center for Child Development projected a $400,000 loss for the fiscal year due to a reliance on government contracts and falling enrollments in the Day School. An independent financial audit confirmed this projection and further estimated significant cash shortfalls within months that threatened to halt agency operations and programs. Immediate actions were taken, including administrative pay cuts and furloughs. However, projections remained weak and the agency was forced to draw down the entire line of credit ($150,000) to keep programs running. Envision Consulting was contracted directly by the Board of Directors to perform a two-week analysis on the revenues, fundraising and internal operations of the Dubnoff Center to ascertain both the causes for the financial situation and to make recommendations to avoid possibly agency closure (including consideration of a strategic restructure and other operational, partnership, and merger models).

THE SOLUTION

Envision conducted data-gathering of the Dubnoff Center, learning background information, touring facilities, and interviewing key staff. We also analyzed documents and data to fully understand the agency’s past and current situation. We proposed four viable, strategic options to address the Dubnoff Center’s financial hardships: • Agency acquisition or merger • Partial agency closure • Community center transformation • Programming growth with a focus on autism We also proposed the following initiatives to strengthen the agency’s operations: • Increasing volunteer driven projects • Gaining earned income through facility leasing • Creating compelling programming to attract new donors • Outsourcing certain operational functions • Community engaging events for agency awareness

THE OUTCOMES

After reviewing recommendations from Envision, the Board of Directors opted to pursue a merger. Additionally, they engaged Envision to act as Interim CEO. Multiple organizations were considered for the merger and Penny Lane was determined to be the best fit. Envision facilitated the entire merger process, including negotiation of contracts (ie. with Department of Children and Family Services, Departments Mental Health). Envision hosted contractor and partner meetings to facilitate the transfer of clients and licenses. Envision also closed out Dubnoff’s outstanding audit. The process resulted in a successful acquisition of Dubnoff Center for Child Development by Penny Lane. During the 15 months of Interim CEO engagement, Envision helped the agency achieve: • A successful merger and acquisition • Reduction in expenses (22% administration and 13% overall) • Beautification and enhancement of facility for community use through significant repairs and equipment additions • New funding from grants, direct mail and fundraising yielding more than $125,000 and an additional $75,000 from facility rental contracts