After the global pandemic broke out in March 2020, many nonprofits had to resort to extreme actions to overcome the new challenges it presented to the charitable sector. Most organizational leaders have never had to either drastically reduce or close their programs and layoff most or all of their workforces. It made conversations around, and a mindful approach to, organizational closure necessary.
The Muttart Foundation engaged a group of students in the Masters in Philanthropy & Nonprofit Leadership (MPNL) program at Carleton University, Ottawa, to conduct a study of best practices in order to develop a workbook to assist charitable sector leaders through the process of dissolving their organizations. The goal of the workbook is to provide a framework for nonprofit dissolution. Tasks involved an in-depth review of crisis and change-management literature and other material as well as interviews of nonprofit leaders.
Insights from interviews and the research affirmed that when we think about the important work nonprofits do, it is impossible not to believe that closing is the ultimate disaster. Leaders and their boards might weigh different alternatives to closing. However, financial constraints or other challenges specific to their context may lead them to ultimately decide that closing is in the best interest of both the organization and the community served. Ultimately, the organization must make an informed decision to close its doors. Best practices in decision making are based on an analysis of the current organizational position and its short and long-term outlook.
The process of closing an organization is a time of uncertainty and mixed emotion, but it is also a time for agility and planning. The results of our study reinforced the perspective that closing is a change management process. It should be managed like a project, with decisions grounded in mission and organizational values. A closure management team should be appointed, who will be responsible for identifying the tasks involved in closing, establishing timelines, and putting the plan to close in action. Legal advice should also be obtained for specific closing processes particular to your jurisdiction.
Closing can be difficult for staff, volunteers and other stakeholders and can make them upset, sad, or angry. A ‘soft’ approach, which involves ensuring that they are treated with consideration and compassion is invaluable through changes. Additionally, thorough and personalized communications can help to make a difficult process smoother, and reduce the emotional impact on staff, volunteers, and stakeholders. Employees are at the heart of the process. It is essential to treat them with fairness, dignity, and respect.
They need clear and frequent communication from leaders who are visible and available. They need to understand what is required of them through the changes, why they are losing their jobs, and how the organization will help them cope. Leading with empathy and being mindful of the staff and volunteers’ need to be seen and heard through the process will contribute to positive responses to organizational change. Donors and funders are valued partners and must also be immediately advised and engaged in dialogue. Leaders should not worry about over communicating or about having all the answers. The critical thing is to do it promptly and consistently.
The board of directors can be uniquely positioned to supply expertise and to help steer the organization through the process of shutting down. The partnership between leader and board is more important than ever during this time. It is important to understand how the board functions, and how best it makes decisions, so that staff can support effective decision-making by the board.
Lastly, endings can be celebrated! Closing events can celebrate an organization’s mission and past successes and allow opportunities to honour staff, volunteers and donors while simultaneously acknowledging and accepting its imminent closure. Legacy projects and other means of ensuring that the spirit of the organization’s work lives on may also prove useful. The workbook sections contain different guidelines for charitable sector leaders in light of our research. We understand nonprofits are varied in size and operations, and as such the guidelines are not a one size fits all approach to dissolution. However, we hope you will find them useful in organizing your closing activities.
Download the full report here.
The Muttart Foundation considers a robust charitable sector as central to a strong, healthy society. Through their work charities build community and address key social issues and concerns. To learn more about the Foundation, click here
The Master and Graduate Diploma of Philanthropy and Nonprofit Leadership at Carleton University produces leaders, innovators and change-makers for philanthropy and civil society. The graduates will be capable of critical, audacious thinking, understand emerging trends and issues in the increasingly global world of philanthropy and nonprofits, and be able to apply their knowledge to solving real-world problems.
