Two Food & Community Groups Strike Operations Deal

By The NonProfit Times - February 12, 2013

Feed the Children (FTC) and World Neighbors (WN), both headquartered in Oklahoma City, Okla., have agreed to a partnership will allow World Neighbors to keep its brand, board, staff and programs, while utilizing FTC’s support infrastructure for administrative processes such as human resources, information technology, marketing and communications, and fundraising.

FTC, in turn, will benefit from WN’s focus on long-term outcomes and its grant expertise. The deal kicks in on March 1.

“It’s a really wonderful blend in that each organization is getting something they need from the other,” said Melanie Macdonald, WN’s president and CEO. “(FTC President and CEO) Kevin (Hagan) and I felt there was such tremendous synergy.”

Hagan said he was most attracted by WN’s reputation for long-term, sustainable community development. “They’ve been doing it since the ‘50s and the whole concept of their methodology meshes very nicely into our child-focused community development,” he said. “It’s an enhancement of the work we do and will take our work to the next level.”

The partnership will be a parent-subsidiary relationship. FTC will have approval rights over WN’s board appointments and budget. WN will retain its brand and name. It will run programs autonomously, as well as in conjunction with FTC. Neither organization expects WN’s 13-member board to change.

Staff redundancies will be limited, and both Macdonald and Hagan expect a full migration of WN’s staff. “We’re only going to have around 10 positions at World Neighbors that have administration capacities, and we’re going to attempt to bring as many of those positions over as we can,” said Hagan.

WN has put its headquarters up for sale and will move into an Oklahoma City building owned by FTC. The organizations will file separate federal Forms 990, “but due to the parent-subsidiary relationship World Neighbors will roll into our consolidated financial statement,” said Hagan. According to FTC’s federal Form 990 for fiscal year ending June 2011 (the latest available), total revenue was $436.4 million. That same year, revenue for WN totaled about $5.2 million.

FTC will take over WN’s administrative operations. “Because we maintain such a large operation, we’re easily able to subsume administrative functions,” said Hagan. WN will submit its yearly budgets to FTC for approval or modification, allowing the smaller organization to take advantage of FTC’s much larger revenue. “They have huge economies of scale that we could never realize as a small organization,” said Macdonald.

WN will train FTC’s 650 field staff in its methodology for long-term impact. The partnership will also allow FTC to leverage WN’s relationships with grantmakers and foundations. “Our grants expertise is really deep and broad,” said Macdonald. “We’ve had a comprehensive grants program for 40 years, and Feed the Children doesn’t have that depth of experience.”

Hagan said there’s plenty of work to be done between now and March 1, when the legal transfer of control takes place. FTC will have to transfer World Neighbors’ “financial systems, IT infrastructure, relocating their offices,” said Hagan. “It’s going to be a substantial undertaking. Over the course of the next few weeks and months we’ll be transitioning.” Though Hagan could not put a precise price tag on the partnership, “it’s definitely a multi-million dollar annual investment for Feed the Children,” he said.