Straw Man Draft for Unification, Oct. 8, 2010

MKP STRUCTURE COMMITTEE
STRAW MAN DRAFT FOR UNIFICATION
Version 1
October 8, 2010
I. OVERVIEW
At Glen Ivy (MKP Annual business meeting) in 2010, the Stanford ACT team presented a series of recommendations for restructuring the Project in order to halt the decline in enrollment (see the ACT II Presentation). One of these recommendations was that MKP-USA unifies its 35+ separate 501c3 corporations in order to operate under a single budget. In June of 2010, MKP-USA’s Chairman directed the Structure Committee to begin work on how this unification might be accomplished and what changes might be necessary.

II. PURPOSE
The purpose of this document is to provide a framework for a Project-wide discussion of the merits and drawbacks of unification, to identify the main issues and problems that would need to be addressed, and to make a first pass at a set of recommendations for how these issues and problems could be addressed. This is very much a work in progress and none of these recommendations have been approved by anyone: that is the work to come. So our invitation to you is to read this through with an open mind and then add your two cents to the discussion.

III. BENEFITS
Why unify our independent centers? The benefits that have been raised include:

  1. The ability to concentrate surplus revenues and use them to invest in the growth of the Project, specifically to hire a Marketing specialist, with a real budget, and a Development (fund raising) specialist so that we can begin to draw more men to our trainings and IGroups.
  2. The ability to afford the cost of taking control of our brand back from the hands of our worse detractors
  3. The ability to plan and fund the creation of new Centers
  4. The ability to operate a basic Member Relations Cycle to strengthen the relationship between the Project and its members
  5. The ability to cut costs across the Project by sharing common infrastructure platforms such as a common accounting platform and a common prospect database (CRM).
  6. The ability to reduce volunteer burnout by moving some of the operational functions currently burdening Center volunteers to a small number of professional staffers who can be specialists in these operations.
  7. The ability to support failing Centers and also the authority to make the changes necessary to turn them around.


IV. RISKS
Numerous risks have also been raised, including:

  1. Loss of local control and flexibility
  2. Loss of local energy and involvement
  3. Loss of local scholarship funding
  4. Waste and inefficiency at the HQ level
  5. Overburdening the organization with a large central staff
  6. Rigid and dictatorial policies imposed by a now all-powerful HQ
  7. Forcing stronger Centers to subsidize weaker or less responsible Centers
  8. The risk that unification is not the right answer for restarting our growth


V. THE UNIFICATION PROCESS
The proposed process is as follows:

  1. This Straw Man document is published.
  2. Men in the Project provide commentary and suggestions for improvement through an online forum (see below).
  3. A second improved draft is published for final commentary.
  4. Center Directors canvas their Centers as to whether they want to join the unification process or not.
  5. A formal in/out commitment is brought by each Center to Glen Ivy in February of 2011.
  6. Based on whether the MKP-USA Council believes that there is critical mass to succeed, the Council votes at Glen Ivy on whether to proceed.
  7. If the vote is positive, then we will proceed to enroll three of the smaller Centers as Pilot Centers for the unification process.
  8. Based on this experience, we will perfect the unification procedures.
  9. MKP-USA will then negotiate with the remaining Centers to achieve a rollup schedule for those Centers wishing to unify, which will then be unified at the rate of one Center every 2-4 weeks until all participating Centers have been unified.


VI. WHAT UNIFICATION ACTUALLY MEANS

  1. The Center dissolves its 501c3 corporation and assigns its assets and liabilities to the MKP-USA 501c3 corporation. The Center is now an operating unit within MKP-USA.
  2. The Center will submit a budget for the partial year remaining in the year of unification, based on the total number of trainings it wishes to conduct for the rest of that year.
  3. The current Center Board loses its legal status as a Board of Directors for a 501c3 corporation, but remains as the Center Advisory Board, with the exact same role and functions it holds today in terms of Center governance.
  4. The current Center Director holds his job and any compensation attached to that job for the remainder of his elected term.


VII. THE NEW STRUCTURE
As part of the unification process, MKP-USA will gradually move to a new operating structure. The purpose of this new structure is two-fold:

  1. To achieve a rational span of control so that no one role or entity has to manage more than 6-10 roles or entities below it.
  2. To substantially reduce the operational burden on Centers by moving some of that burdenboth up and down in the organization.

Today our structure consists primarily of Centers underneath the MKP-USA operating umbrella, with some Centers recognizing a lower level often termed “Community”. I-Groups are recognized as falling under Centers, though often with little formal connection. Under the proposed new Structure, MKP-USA will reorganize to incorporate four distinct layers:

  1. The I-Group
  2. The Community (6-10 I-Groups)
  3. The Center (6-10 Communities)
  4. The Area (6-10 Centers)

New roles and organs will be formalized at the Community Level to directly support I-Groups and to take over much of the direct communications role with our membership. Areas will each be staffed by one full time professional Area Administrator whose job is to undertake the heavy lifting for planning and executing the logistics of running training operations. Once each unified Center’s Center Director (CD) has ended his term, The CD position will return to being a purely volunteer elected position with no compensation attached. The expectation is that with much of the operational burden moved down to Communities and up to the Area Administrator, CD’s can now focus more on leadership and representing their Centers and less on operations. The idea is also that MKP-USA cannot afford 35+ paid CDs, but might afford 4-6 paid Area Administrators. The Area, not the Center, now becomes the primary budgeting and logistics unit. Each Area shall have an Area Council, consisting of the Center Directors of each of the Centers in the Area. The primary functions of the Area Council are to 1) construct the Area Budget each year, and 2) coordinate training operations and policy across the Area. The Area Administrator shall report directly to the Executive Director for MKP-USA, but shall also have dotted line responsibility to the Area Council. The Area Administrator is an operating role with no governance authority.

Click here and scroll down to the bottom of the document for a detailed graphic of the new Org Chart.

VIII. THE HARD QUESTIONS

How does the cash flow?

  1. All revenues from the operations of all unified Centers are cleared through a single Master Checking Account managed by the MKP-USA CFO.
  2. Each month, the CFO will disburse, in advance, funds sufficient to cover budgeted expenses to each Center’s local Checking Account (this sweep will occur quarterly in advance once we can afford to do that).
  3. Any surplus remains part of the national budget for investment in our growth, but may be allocated to local budgeted purposes in the following year. Investing this surplus in growing our enrollment and I-Group membership is the main point of the unification initiative.4. Centers will still maintain a local Checking Account and a local Savings Account for their own operations, as will Areas. However, most expenses will now be paid out of the Area account.

What happens to our existing cash balances, the funds our Center has saved for a rainy
day?

  1. Technically and legally, these funds become part of the assets of the unified corporation, and the MKP-USA CFO will employ them for operations. However, the proposal is to give each Center that unifies an “Operating Credit” for these funds. The Operating Credit may be used as a budgetary credit to fund trainings and events that do not break even.
  2. Some of the funds held by Centers that unify may come with restrictions on their use. All such restrictions will be honored.

What happens to Scholarships?

Each Center will retain a Scholarship Fund Checking Account for use on local scholarships. Local donations to the local scholarship fund stay local. This fund may be topped up by national donations. MKP-USA will also maintain such an account, and Centers may apply for help here too.

What happens to other fund raising efforts?

MKP-USA will operate fund raising programs across the entire national membership. MKP will also hire a full time Development (fund raising) specialist, who will work on securing large donors, donors outside MKP, and possibly grants from foundations and government programs. Centers and Areas may also choose to launch fund raising efforts (and in fact this will be necessary if a Center runs too many loss making trainings). Local fund raising proceeds may be wholly retained in a Center’s Savings Account and employed as a component of the local budget.

How are budgets constructed and approved?

  1. Centers devise their own annual budgets for each Calendar year, based on the number of trainings of all types that they decide to run, plus other Center activities. The only requirement is that the budgets at least break even, given reasonable assumptions, including the allocation of corporate overhead.
  2. Center budgets are approved by the Center Advisory Boards
  3. Budgets are entered into a common accounting platform
  4. The Area Administrator aggregates his Area Budget and submits it to the Area Council for approval
  5. After approval, the Area Administrator submits the Area budget to the CFO
  6. The CFO reviews the Area budgets
  7. Any budgets that strike the CFO as exceptionally risky are returned to the Areas for comment.
  8. A new budget is negotiated if necessary
  9. The Area Council re-approve any changes
  10. The CFO aggregates Area Budgets into the National Budget and submits the budget to the MKP USA Council for approval.

What financial controls will be put in place?

The main financial controls will come in two areas: 1) making losses and 2) measurement. The
main reason that Center’s make losses is by running NWTAs that don’t cover their costs. The
proposed policy for this case is as follows:


  1. Typically, there are multiple internal cancellation points examined by a Center, and this process will remain unchanged.
  2. The Area Administrator will report to the MKP-USA CFO at a predetermined point before a training is run (typically two weeks), if it looks like it will not break even.
  3. The CFO makes a determination to cancel if this will cost less money than proceeding (at some level, we lose less money proceeding with an underwater training than canceling it because if we cancel there is no revenue to offset non-refundable deposits and expenses)
  4. The responsible Center, or the Area Administrator, may override the CFO veto, but it then becomes their responsibility to make up the full loss from their own resources (either internal fundraising efforts or the profit from other trainings).


In addition, the purchase of a common accounting platform will allow the CFO to measure the performance of each Center and Area on a real-time basis to determine if a given unit is on track to make budget or fail. In the event that it looks like a given unit is going to fail to meet budget, then the CFO will work with the Center or Area Administrator to take measures to get back into the black. In this way, all CD’s can be ensured that a common standard of fiscal responsibility is being applied to everyone equally, and that no Center will be expected to subsidize another Center for long.

So if the point of unification is to boost enrollment, how will you actually do it?

MKP-USA will hire a Marketing specialist and give him a real budget (at least $100K annually).
He will have two primary objectives:

  1. Manage a Member Relations Cycle to:
    • Know our members
    • Communicate with our members about their concerns and wishes
    • Serve our members
    • Enroll our members in supporting our mission
  2. Design and execute a marketing campaign to expand enrollment by:
    • Taking our brand back from our worst detractors and define it positively
    • Communicating the benefits of initiating and sitting in I-Groups to the public
    • Working with other non-profits to co-sponsor events
    • Placing dynamic speakers at conferences and conventions
    • Seeking out and communicating with possible advocates in specific professions such as therapists and social workers

What happens to my Center if we choose not to unify?

The intention is that unification is a benefit. There is no penalty for not joining. A Center that does not join will continue to operate under its current relationship with MKP-USA. Since the point of unification is to pool resources for use in marketing to bring in new enrollment, there is a “free rider” issue for those Centers that do not join. Accordingly, there needs to be some kind of compensation from independent Centers to MKP-USA for funds that MKP-USA will be poring into the improvements in enrollment. The current proposal is that MKP-USA would add a Marketing surcharge for each initiate who enrolls in an independent Center’s training through the MKP-USA website, so that the charge is essentially “pay for performance”. Regardless of whether a Center is unified or independent, all men who pass through an NWTA will be eligible to enroll as a member of MKP-USA Centers that choose not to unify will be under no obligation to change any part of their existing organization, and may continue to send representatives to the various national councils, except that they will not get a vote in matters that affect MKP-USA and CDs from non-unified Centers may not stand for election to the MKP-USA Council.

Will the governance structure for MKP-USA change as a result of this reorganization?

Other than the addition of Area Councils, it won’t.

How will unified Centers hold the new structure accountable for good results?

Under the existing governance structure, it will be up to the MKP-USA Council to hold the Executive Director accountable for results. The intended results are:

  1. A substantial increase in enrollment in trainings
  2. An improvement in Initiate conversion from NWTA to I-Groups
  3. An improvement in I-Group retention rates

We are slashing budgets everywhere across the organization. How will all this get funded?

Men have stepped up to lead a Fund The Plan campaign, with the intention of raising at least
$400K to fund the first year of the reorganization. After the first year, the expectation is that the
new structure will be self-funding. The budget for this $400K will be spent as follows:

  1. Hire a new Executive Director
  2. Hire a Marketing specialist
  3. Hire a Development specialist
  4. Fund a marketing budget of $100K
  5. Cover the legal and accounting costs for consolidating the 501c3 corporations

Concerns are frequently raised about burdening the organization with too many HQ staff. The proposed budget expands our HQ staff from 4 people to 6 people.
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