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NGO restructuring – embrace the change

The NGO world is a dynamic environment, constantly evolving to meet new needs and reach new beneficiaries.

A modern NGO needs to be agile to deliver on its mission, and change is paramount to that process. We know that change can be unsettling and often disruptive. However, in our experience, it is frequently necessary to ensure an organisation’s survival.

NGO restructuring is a core part of MzN’s business. MzN consultants help NGOs with their restructuring challenges, working collaboratively to change their organisation’s operational model for the better. Here we share some of our experiences in restructuring, looking at the challenges, as well as the opportunities, we have encountered.

Why Restructure?

Though many factors drive organisational restructuring, the end goal is often financial sustainability and programmatic growth. In our experience, these are the three most common reasons our clients come to us for assistance in the restructuring process:

Organisational efficiency

Historic structures, old practices, new technology and methods often leave NGOs with multiple people completing the same tasks in a number of locations. Some colleagues are overworked, while others struggle to keep busy. The sense that it is the way it has always been done, and therefore the right thing, reigns supreme. Our clients come to us to help optimise their organisation and release the full potential of their staff and programmes.

Financial distress

Sadly, financial distress is currently a common occurrence caused by declining funding, or by the issues of organisational efficiency not being dealt with soon enough. Restructuring forced by the need to reduce costs tends to be the most distressing. It is our role to communicate the required changes clearly and work to rebuild a sustainable platform for the future.

Digital transformation

The pandemic has taught us the importance of agility and digitalisation. However, we observed that digitalisation often requires a significant change of an operating model. Existing staff, locations and infrastructure are not always suited or sufficient for a full digital transformation. Agile transformations are fundamental for the future of the NGO, and we actively support our clients in this transformation.

Whatever the factors driving change, our clients are all striving for one thing: financial sustainability. They want to build organisations that will thrive in the future, meet the needs of the world’s poorest and provide a secure workplace for the staff that share their ambitions. Our role is to help them achieve that goal.

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Four Steps Towards Restructuring

MzN consultants are engaged throughout the organisational restructuring process, providing upfront analysis right through to support in change implementation. These are the four key steps we outline when talking to our clients about organisational change:

Get an outside view

An external perspective can help see what is going wrong and what needs to be done. Our consultants are experts in organisational and strategic reviews, collaborative deep dives into the workings of the organisation to uncover the issues that those involved daily might be too close to see. What is found in those reviews determines the work that lies ahead.

Seek help

Restructuring is a complex, complicated, and often emotionally charged operation. Mistakes can be costly, and communication is critical. Change is also time-consuming, and there is a danger that management focuses so much on change that programmes, activities and funding get forgotten.

Expert consultants exist to assist with all aspects and types of organisational change. Talking with specialists will help you determine whether financial restructuring specialists, digital transformation experts or even an interim chief restructuring officer (CRO) are required to help restructure your organisation.

Get the timing right

Seeking advice early is critical. All too often we are called at the last minute with little option but to reduce costs quickly. The gap between problem identification and “last resort” for an organisation is often too short. Unaddressed problems are likely to continue to grow, causing greater problems in the future. Since timing is critical, we work with NGO leaders to ensure that they start planning for disruptive times. A preemptive restructure often has the greatest chance of success.

Be clear with communication

Though frequently overlooked, communication is one of the more important components of successful restructuring. How the process is consulted on, announced, and presented to staff, donors, the public and other stakeholders matters. Confidence from all those groups is key. Staff motivation and the willingness of donors to donate can be affected if trust in management and the process of change are not maintained.

Ultimately, restructuring exercises are all uniquely different, yet we use the principles outlined here almost daily. Be it for reasons of financial distress or digitalisation, an outside perspective can help organisations focus on what is important and understand what needs to be done.

Mission Drift: A Special Case for Restructuring

Most MzN consultants have a professional services background and have acquired experience in restructuring corporations before moving on to work in the NGO sector. Our private sector experience allows us to understand the reasons why organisations fail and require restructuring: from obsolete products and high costs to over-expansion and poorly targeted diversification. Many of the challenges we have observed in the corporate sector, our NGO clients face today. However, there is one special case that we often find in NGOs that we feel is prudent to the whole sector.

NGOs are mission-driven organisations, founded to address a particular symptom of inequality and staffed by those who believe in the cause. Yet most NGOs that call on us to help restructure are suffering from some form of mission drift. Somewhere along the line, these NGOs have made trade-offs between their funding sources and their original mission.

Reconnect With Your Mission

When we are conducting our review of NGOs, we look closely at the founding documents, mission, and current programming. We regularly find a gap between the NGO’s mission and the programmes they implement. We are frequently told that the donors wanted a different sort of programme for which funding was applied, leaving the organisation in financial distress whilst doing work that barely reflects their original purpose.

Strengthening finances might often be the main goal of restructuring, but we believe that to ensure the financial sustainability of an organisation, its mission must remain at the heart of the organisation, where it belongs. Our reviews are an opportunity for NGOs to reconnect with, or reassess, its original mission and return to its core strengths. It is a chance to redraw strategy for the century ahead and to look at how the NGO’s goals can be better aligned with the current landscape.