October 2024 Community Gathering with Catarina Moreno, serial interim executive director
In October we were pleased to welcome, Catarina Moreno as our guest. As a serial interim executive director and board member, she has found herself in the uncomfortable situation of having to shift into organization wind down after assessing that it is no longer a viable operation.
Here are some of the valuable insights she shared:
Financial Sustainability and People Sustainability
While it is well-known in the world of nonprofit endings that a lack of funds can quickly precipitate a closure, what is often less considered is the effect of having the wrong people in particular roles. Simply because someone is a founder or has been with the group a long time, it doesn’t mean they are best suited to the position. In some cases, these personnel issues might be so long-lasting that they have created a vicious spiral: you don’t have the right people in place to find the right people and you simply have to close.
Another angle on this that Catarina shared was related to knowing who you want to hire but not having the funds to make that a reality. In one of her closures, the team realized they needed more technical capability to realize their vision but they could not make the salaries that the kind of developers they wanted command. In this case, the project could not achieve its lofty goals and had to accept defeat.
Brainstorming With The Board
Because she is always brought in by the board, Catarina is keen to always keep the line of communication open with them, first and foremost. When she starts a new interim role, she does a thorough assessment of the organization to ensure that people, finances, processes, the market, and the overall landscape makes it a viable operation. In the case that she finds issues there, she is quick to bring them to the board.
Nonprofit leaders can often be afraid to come to the board with issues, fearing they will be misunderstood or penalized, but since Catarina is an interim, she finds she is not desperately clinging to the job, and is thus able to broach difficult topics. She highly recommends the board prompts in the “Closing The Doors” guide from The Power of Possibility for leading conversations on problem areas.
“I do see myself as ‘pre-fired’, because a sign of success for me is supporting a permanent leader to come in and set them up for success, but that also means that I oftentimes have a lot less emotional attachment to that role. I’m not the founder. I didn’t, you know, plan for this to be for the next 10 years. For me this is not super, super connected to every fiber of my being.”
— Catarina Moreno
A Wind Down Costs
In talking about the details of a shutdown, Catarina hastens to strongly recommend that organizations start the process early, making sure they are connecting with the right professional resources with an eye to ensuring there is enough money in the bank. She highlights the need to pay out costs like leases, severance, and professionals’ fees.
“It’s not cheap to wind down an organization. Even if you do a program transfer [to another organization], it definitely helps to have some seed funds available for them.”
— Catarina Moreno
She also stresses that while a merger or acquisition can sound good on paper, it usually ends up being a closure of a sort. True mergers in the nonprofit space are are increasingly rare these days and when one org absorbs another, it usually comes with the loss of branding and oftentimes many employees being made redundant. While some programmatic areas may be saved, the organization is rarely saved.
Finally, she made the point that money should likely be laid aside for a clean up staff person or staff people, bills that appear at the end, and any other requirements that may not have been anticipated but must be met to ensure good standing with the government. She advocates for keeping a prudent reserve to be certain things “end in a good way”.