Jul. 13, 2016 12:25 pm

Here’s how Tech Impact’s newly inked merger deal with 501cTECH went down

Hint: The two technology nonprofits are former affiliates of the same service network.

Tech Impact and 501cTECH are both former NPower affiliates.

(Photo by Flickr user *n3wjack's world in pixels, used under a Creative Commons license

Merging two nonprofits is a lot easier when both organizations share a parent.

Tech Impact, the local nonprofit provider of IT services, announced this week that it will be merging with D.C.-based nonprofit 501cTECH. Both organizations were spawned from NPower, a national network of IT services originally founded by Microsoft.

The two will now reunite under the name Tech Impact.

Longtime Tech Impact Executive Director Patrick Callihan, lauded by stakeholders in the regional tech and nonprofit communities alike, led the charge in 2013 to transform NPower Pennsylvania and Delaware into the reportedly $4.4 million nonprofit Tech Impact is today.

“We’ve always been part of a network with these folks,” said Callihan, who added that he and 501cTECH President and CEO Julie Chapman have had ongoing conversations about merging for years. “One of the conversations we had was, if the network had been designed a different way, we would be a bigger organization and be helping more nonprofits across the country.”

But NPower wasn’t designed that way, despite having potential to maximize impact by sharing resources. Instead, NPower affiliates were siloed and left to fend for themselves in their respective cities.

Nonprofits flirting with a merger should take things slow and be honest about what the new organization will look like moving forward.

After the recession, national NPower affiliates began struggling with a business model that tasked each branch with finding local funders to match Microsoft’s  investment. Many shuttered, a few merged with big consulting firms, and some — like Tech Impact and 501cTECH — decided to rebrand and make a go of it on their own.

Callihan and Chapman’s conversations about merging became serious this past December, and by February, a merger agreement was drawn up and awaiting signatures.

The costs of the merger — making tools and software unilateral across the organization, buying new licenses, accounting fees — are being funded by Arizona-based Lodestar Foundation.

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Callihan said there were talks with the Nonprofit Repositioning Fund, which, despite its mission, was unable to provide support due to the merger happening across state borders (marking at least the second time the Fund has been unable to support a merger so far this year).

But even though the organizations have secured funds that will alleviate some of the pangs associated with merging, Callihan said the transition is still “really hard to do.”

“Some board members are giving up their seat. Some people are giving up positions they held. Assets are getting merged,” he said. “There’s a lot of emotion in it and a lot of complication to it. It’s not something anyone should rush into.”

Callihan’s advice?

“Make sure you deal with all the issues that come up in a fair and honest way so that everyone is at least comfortable with the outcomes and direction it’s going,” he said.

Nonprofits flirting with a merger, Callihan said, should take things slow and be honest about what the new organization will look like moving forward. As for Tech Impact in Philadelphia, Callihan said no noticeable changes will take place across the nonprofit’s program offerings.


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