Several employees have expressed zero confidence in the current CEO of a nonprofit organization. One program is considering breaking off and starting a new nonprofit. What resources should this group turn to so that they can minimize damage to the parent organization while at the same time setting up for success with the new organization?
This is a little like asking a doctor what resources you need for surgery. The doctor’s likely answer is a surgeon.
The group ought to hire a lawyer who is experienced in nonprofit transactions, like mergers, acquisitions and divisions. If you can’t find someone with nonprofit experience, someone with similar business experience would be helpful in spotting and seeking to resolve the issues the group will face.
I appreciate the group’s interest in not hurting the existing organization (which might not be as likely with a for-profit spin-off). But there are a lot of issues here. Do the employees have any sort of non-compete agreements? Is there equipment or intellectual property owned by the existing nonprofit that is essential for the new operation? Are there existing contracts with funders or vendors that have to be modified? How will the new venture be funded? Does the group have the capital required until it is self-sustaining? Where will it be based? Will the group have access to the current donors (or will it entail an ethical or legal violation of confidentiality to solicit them)?
Will the groups be competitors in the future, or will the entire program by moved? Will the board of the current organization be willing to negotiate an arrangement? (The group may be trying to take away a significant part of the organization’s identity.) Is there some benefit that the current nonprofit will receive from the change? Is the group able and willing to buy the assets of the program? Will any proposal be met with all-out war? Is the spin-off group prepared to fight an all-out war? What do the group members think it would do to their professional reputations, and possibly their standard of living, if they jump off the cliff and fail?
Does the current board know of the lack of confidence in the CEO, and would things change so that the staff could stay if the CEO changed behavior or was terminated? I could go on for pages about the issues and options, but I think these questions will help you get the point. There is no standard play-book for a nonprofit division or staff walk-out, especially if it is not consensual. But the group really ought to think through the entire range of issues with someone who has considered them in other contexts before coming forward with a proposal. The members need to know what is negotiable, what is not, and what they will do if they don’t accomplish their goals. Knowing these limits will help them strategize how to proceed.