A big decision comes in smaller sizes. A merger can begin as a management agreement, a loan program can begin with a $250,000 commitment and a bank's back office, and joining a larger organization does not have to cost you your name.
If your board keeps postponing a permanent decision, it may have a sound reason: it cannot see how the thing would work, and it cannot take it back. Three organizations found something smaller than all-or-nothing: a merger staged over months, a loan program started with a $250,000 commitment, and a combination whose published terms keep a name and a role.
This week:
- An Illinois YMCA that managed a community center for seven months before a merger was announced.
- A New York foundation lending at 2 percent, with a savings bank doing the paperwork.
- A Texas shelter that joined a larger group and kept its name.
- A retirement match your plan has to choose to accept.
- A $1,700 tax credit your donors may ask about in January.
- Two AI prompts: shrink a decision, and find out how your staff already use AI.
- A board exercise for one postponed decision.
- A note on something I wrote four issues ago.
An Illinois YMCA Took Over a Community Center's Management in February. In September, the Two Announced a Merger Both Boards Had Approved.
Harlem Community Center sits at 900 Roosevelt Road in Machesney Park, Illinois. It runs a child care center, an early learning center, camps, before- and after-school care, youth sports and programs for older adults.
On February 1, 2026, the YMCA of Rock River Valley, based in Rockford, took over the center's management "with an intent to merge," in the words of the announcement on the Y's site. The center's board did not go away. Its chair, Jason Blume, called the arrangement an "operational management agreement," a step "to stabilize the Harlem Community Center while preserving local governance."
So from February on, the Y managed the center and the center's board kept governing it.
On September 22 the two announced their intent to merge effective October 1, and the announcement carried the sentence that matters: "The boards of directors of both organizations have approved the merger." Staff, technology and financial systems were moving to the Y.
Here is the part that turns one deal into a pattern. It was the third such partnership the Y had entered in seven months, the local news site Rock River Current reported in February. The first, with the Belvidere Family YMCA, began July 7, 2025, and ended in a merger effective June 1, 2026, the Y says: nearly eleven months of management first. Under that merger, the Y said, one Belvidere board representative would serve on the Y's board and the rest would become a branch advisory council. The second, with the Dixon Family YMCA, began in December 2025 as a one-year management deal, Rock River Current reported. The Dixon Y stays independent and locally governed for the length of the partnership, Shaw Local reported. How it ends is not yet on the record.
The Y's chief executive, Brent Pentenburg, did not oversell it. "We are trying something new," he said in the February announcement, "and hope it leads to long-term sustainability for our partner organizations and more services for our communities."
Why does the order matter?
A merger vote asks a board to decide a permanent question on a forecast. What will their systems do to our programs? Will our families notice? Will our staff stay? Nobody at the table can know, and a board that cannot know has reason to vote no.
A management agreement replaces part of the forecast with a record. By the time the merger was announced in September, the Harlem board had watched the Y manage the center for more than seven months. Such a decision is still large. A board that decides with a record like that in hand is guessing about less.
Here is what makes this replicable. You do not need to be a YMCA, and the other party does not need to be a merger partner. The same order could serve a shared finance office, a program you might hand to a larger agency, or a back-office contract.
My advice: put five things in writing before the trial starts. What the manager runs and what your board keeps. How long it lasts. What both sides will measure. How either side gets out. And the date both boards decide. A trial without a decision date is drift.
One honest limit on the evidence. The quotations here come from announcements posted on the Y's site. Neither the announcements nor the coverage I read gives the center's current finances, the date either board voted, or the agreement's fee, length or exit terms, so I cannot tell you whether the Y's agreement carried the five things I just listed. The center's latest public tax filing covers the year ending September 2024, before the agreement. It shows a surplus, but most of that year's revenue was contributions, so it does not tell you what "stabilize" meant. When this issue was written, no report had confirmed that the merger took effect on October 1 as announced. Rock River Current and WIFR, the two reports I read, both drew on the release, and both reported a ribbon-cutting scheduled for October 22.
Sources: YMCA of Rock River Valley, "YMCA and Harlem Community Center Announce Merger," September 22, 2026; YMCA of Rock River Valley, announcement of the Harlem Community Center management agreement, February 12, 2026; Kevin Haas, "YMCA takes over management of Harlem Community Center in Machesney Park," Rock River Current, February 5, 2026; Kevin Haas, "YMCA and Harlem Community Center announce intent to merge," Rock River Current, September 23, 2026; Laura Neuzil, Rockford News First (WIFR), September 22, 2026; YMCA of Rock River Valley, "Rockford, Belvidere YMCAs Merge," June 3, 2026; ProPublica Nonprofit Explorer, Harlem Community Center, Form 990 data; Shaw Local, December 16, 2025
A Community Foundation Wanted to Lend to Nonprofits Waiting on Grants. It Started With $250,000, a $50,000 Cap and a Bank to Do the Paperwork.
You have been promised money and you do not have it. The grant agreement is signed, the work has to start, and the reimbursement arrives after the invoices do. Issue #37 covered a Colorado loan fund built for that gap. This one is small, and the size is the point.
Early in 2026, Community Foundations of the Hudson Valley, in New York, announced what it called a pilot. Its release, which the business site citybiz posted on February 25, said it had committed $250,000 from its Trustees' Endowment to make low-interest bridge loans to nonprofits in Dutchess, Ulster and Putnam counties.
The terms are narrow. Loans stop at $50,000. The rate is 2 percent. A borrower has to show what the program page lists as "Guaranteed incoming funding (executed grants and contracts)", meaning signed ones, and a plan to repay. The design is that when the grant money lands, the loan is repaid and the dollars go out again to another nonprofit.
The foundation did not try to become a bank. Ulster Savings Bank originates and services the loans, which means it handles the paperwork and the repayments, and it reviews each applicant, a step the foundation's guidelines put at two to four weeks. The application page puts the whole wait for an answer at seven to twelve weeks.
Two loans have been announced so far. The first went to Walkway Over the Hudson, to finish a lighting project while it waits for reimbursement from a state parks capital grant. The foundation's president and chief executive, Laura Washington, said in a Mid Hudson News report that "the first loan that we made was literally to support a bridge." The next went to the Rosendale Theatre Collective for new siding and insulation while it waits on committed grant funding.
Do the arithmetic on the foundation's own commitment. At the cap, and before any money from the bank or the foundation's fundholders, $250,000 is five loans at a time. That is not a regional solution. It is a test of three things: whether nonprofits apply, whether the bank's process works, and whether the money comes back.
That is the lesson for anyone designing something new. A cap, a partner and a short list of rules let a foundation try lending without building a lending department.
Here is what makes this replicable, whether you would borrow or lend.
If you are waiting on a signed reimbursement grant, call your community foundation and ask whether it lends against signed grants. If it does not, ask whether it would look at how the Hudson Valley program is built. Bring the grant agreement and your repayment date.
If you sit on a foundation's board, or know someone who does, the design starts with three decisions: how much, what cap, and who services the loans. Add a fourth that this foundation has not published: who takes the loss.
One honest limit on the evidence. The foundation has not published the size or length of either loan. Its program page says no collateral is required, and nothing it has published says who absorbs the loss if a grant never arrives. Neither loan is reported repaid, so the third part of the test has no result yet. The $250,000 figure comes from that release, which I could read only in the citybiz copy, and I found one newsroom, Mid Hudson News, that has covered the loans. The foundation's accounts of the bank's stake also differ: the release said the bank "may purchase a participating interest" in each loan, meaning a share of it, and later posts say it contributes 10 percent of each loan.
Sources: Community Foundations of the Hudson Valley, "CFHV Makes Its First LIFT Loan to Walkway Over the Hudson," August 25, 2026; Community Foundations of the Hudson Valley, "CFHV LIFT Loan Supports Rosendale Theatre Improvements," September 15, 2026; Community Foundations of the Hudson Valley, Local Impact Fund for Tomorrow program page; Community Foundations of the Hudson Valley, bridge loan program guidelines; Community Foundations of the Hudson Valley, LIFT application page; Hank Gross, "Community Foundations offers first bridge loan," Mid Hudson News, September 10, 2026; Community Foundations of the Hudson Valley launch release, February 25, 2026, as reprinted by citybiz
A Texas Animal Shelter Spent More Than It Took In for Three Years and Closed a Campus. It Joined a Larger Group and Kept Its Name.
PAWS Shelter of Central Texas has worked in Hays County, Texas, since 1986. Its tax filings show the problem plainly. In 2024 it brought in $1,010,040 and spent $1,465,804. It also spent more than it took in during 2022 and 2023, after a surplus in 2021.
In October 2025, CBS Austin reported, it announced a temporary closure of its campus in Kyle. Donations kept the campus open month to month, the Hays Free Press reported that month. On July 17, 2026, it announced it was closing the Kyle campus and keeping its other campus, in Dripping Springs. Monthly donations did not cover the monthly costs of both, its shelter manager told the Hays Free Press.
On September 22, Austin Pets Alive! announced that the two organizations were joining forces and called reopening the Kyle location "a top priority."
The descriptions vary. The Hays Free Press calls it a merger, and Austin Pets Alive!'s own announcement says leaders of the two boards "met to explore a collaborative merger." The same announcement says PAWS will operate "in partnership with" a new initiative, Hays County Pets Alive!. That initiative's website calls Austin Pets Alive! "our 501(c)(3) parent organization" and says Austin Pets Alive! "assumed operational responsibility for PAWS on September 21, 2026." No source says what becomes of PAWS's own corporation.
What the sources do spell out is the split, and the split is the story.
What moves: current PAWS staff "will become APA! employees," the initiative's site says. The larger group supplies "administrative, medical and operational support," the Hays Free Press reported. Donations are processed through Austin Pets Alive!.
What stays, according to the Hays Free Press's report: PAWS will continue under its name at both locations. (Austin Pets Alive! appends "in partnership with Hays County Pets Alive!" to it.) Two PAWS board members will be invited onto the Austin Pets Alive! board, and others will serve on an advisory committee. New donations designated for PAWS operations will be restricted to that purpose.
"No positions have been eliminated and there is no plan for layoffs," said Suzie Chase, community affairs officer for Austin Pets Alive!. Staff roles remain the same for now, the Hays Free Press reported.
Chase was also careful about what the deal does not do. Growth, she said, "doesn't happen automatically just because APA! is involved."
Why call this a smaller version of anything? Because the choice in front of a board in that position can look like two doors: stay independent and keep shrinking, or merge and disappear. Whatever its legal form, this arrangement sits between them. Payroll, the back office and day-to-day operations go to the larger group. The name, an invitation to two board seats and a restriction on new gifts designated for PAWS stay.
Here is what makes this replicable. Issue #44's board exercise, the Keepers List, had you sort what you would keep in a combination before anyone was negotiating. The published PAWS terms read like the result: one list of what moves, one of what stays. Write yours as two columns: what you would hand over without regret (payroll, benefits, accounting, the database) and what your community would not forgive you for losing. If you ever negotiate, get the second column into the agreement.
One honest limit on the evidence. No one from PAWS is quoted on the deal in the reports I read. The terms come from Austin Pets Alive!'s announcement, its initiative's website and the Hays Free Press report, which quotes only Austin Pets Alive!'s community affairs officer. No dollar figure for the arrangement is public. And when this issue was written, the Kyle campus had not reopened. The Hays Free Press reported it could reopen within about 60 days, Community Impact said by the end of the year, and the initiative's own site says "later this year or early 2027."
Sources: Austin Pets Alive!, "PAWS Shelter of Central Texas and Hays County Pets Alive!," September 22, 2026; Hays County Pets Alive!; Lance Winter, "PAWS merger aims to expand animal care in Hays County, reopen Kyle shelter," Hays Free Press, September 30, 2026; Michael Milliorn, "PAWS partners with Austin animal organization to strengthen Hays County services," Community Impact, September 23, 2026; Michael Milliorn, "PAWS Shelter of Central Texas to close Kyle location," Community Impact, July 22, 2026; Stephanie Becerra, "PAWS Shelter of Central Texas to temporarily close Kyle campus amid financial strain," CBS Austin, October 15, 2025; The Public for Animal Welfare Inc., Form 990 filings, ProPublica Nonprofit Explorer; Hays Free Press, "PAWS Shelter to keep doors open at Kyle facility," October 29, 2025; Hays Free Press, "PAWS of Central Texas closes Kyle campus, transitions focus to Dripping Springs," July 2026
Ask Your Retirement Plan One Question Before January: Will It Accept the Saver's Match?
Starting with the 2027 tax year, a federal Saver's Match replaces the Saver's Credit for lower-income workers who save for retirement. The match is 50 percent of the first $2,000 a worker contributes, up to $1,000 a year. A single person gets the full match with income up to $20,500 and none at $35,500.
In general the Treasury deposits the match in the worker's retirement account and does not pay it out. Here is the catch, in the words of IRS Notice 2026-48: "Neither retirement plans nor IRAs are required to accept Saver's Match contributions directly from the Treasury Department." The notice says a plan has to be amended before it can.
Action: Three steps. First, email your plan's recordkeeper (the company that runs your 401(k) or 403(b)) and ask whether the plan will be amended to accept Saver's Match deposits for 2027. Second, list the employees you pay less than $35,500, as a rough guide to who may qualify. Third, tell them in January what the match is and whether your plan will take it.
ROI: Up to $1,000 a year for each eligible employee who contributes and has an account that will take it.
Time: 30 minutes.
Sources: IRS Notice 2026-48, "Notice of Intent to Issue Regulations with Respect to Saver's Match Contributions"
Learn the $1,700 Tax Credit Before Your Donors Ask About It in January
A new federal tax credit starts with the 2027 tax year. A taxpayer who gives to a "scholarship granting organization" on a participating state's list can take up to $1,700 off the tax bill. Proposed rules published October 2 would allow a married couple $3,400 if each spouse gives.
Why it matters to a charity with no scholarships: your donors may ask about it, and a gift claimed for the credit cannot also be deducted. The Treasury secretary said in an October 1 IRS release that thirty states had opted in.
Among the tests for listing: be a public charity, give scholarships to ten or more students who do not all attend the same school, and spend at least 90 percent of income on scholarships.
Action: Three steps. First, check whether your state has opted in, on the Federal Scholarship Tax Credit page at IRS.gov. Second, if you award scholarships, ask your state's revenue department which office keeps its list. Third, give your fundraisers two sentences: the credit is for gifts to listed scholarship organizations, and a credited gift is not also deductible.
ROI: When a donor asks in January, your staff has the answer.
Time: 45 minutes.
Sources: IRS news release IR-2026-117, October 1, 2026; IRS, Federal Scholarship Tax Credit page (participating states); Treasury and IRS, "Federal Scholarship Tax Credit," proposed rule, Federal Register, October 2, 2026; Treasury and IRS, "Federal Scholarship Tax Credit," temporary rule, Federal Register, October 2, 2026
Two prompts this week. The first builds the smaller version of a decision your board has postponed. The second looks at what may be a trial already under way at your organization, with no design: how your staff use AI. Paste each into the assistant you use and edit the output hard; it is a first draft.
Design the Smaller Version of a Decision You Keep Postponing
You are a nonprofit strategy adviser who has structured trial arrangements between organizations: management agreements, pilot programs, shared-staff contracts and time-limited partnerships. I am going to describe one large decision my board has postponed (a merger, a new program, a shared back office, a building). Ask me, one at a time, and wait for each answer: what the full decision is and why it keeps getting postponed; what we fear losing; what we do not know that makes the vote feel like a guess; who the other party is, if there is one; and how much money and staff time we could put at risk without endangering the organization. Then design three smaller versions of the decision: one staged in time (try it for a fixed period before committing), one capped in size (limit the dollars, sites or people involved), and one partial in scope (hand over some functions and keep others). For each, give me a one-page summary of terms with five parts: what each party does and what our board keeps authority over; how long it lasts; three things we will measure and how; how either side exits and what happens to staff, money and data if they do; and the date the board votes on the full decision. Tell me which version you would bring to the board first and what would make you wrong. Mark anything you had to guess.
What makes it worth trying: the Illinois YMCA in the first story managed a community center for seven months before a merger was announced. The prompt gives you three ways to test your own decision before you vote on it, and a one-page summary of terms for each that ends with the date the board decides.
Find Out How Your Staff Already Use AI
You are an operations adviser helping a small nonprofit learn how its staff already use AI tools, without scaring anyone into hiding it. First, write a six-question anonymous staff survey. It should ask which AI tools people use for work, including free personal accounts; what tasks they use them for; what kinds of information they have pasted or uploaded (drafts, donor names, client details, financial data); whether they check the output and how; what has gone wrong; and what they want approved or paid for. Open it with two sentences promising that nobody will be disciplined for an honest answer. Second, give me a table to fill in from the responses, one row per tool and task, with columns for how many people use it, what information goes in, what could go wrong, and a recommendation: approve, approve with a rule, or stop. Third, draft a one-page memo to staff reporting what we learned and what happens next. Fourth, list the three findings that should go to the board. Give me the survey, the blank table and a memo outline now. Fill in the table, the memo and the board findings only after I paste in the real responses; do not invent any.
What makes it worth trying: in a survey of 917 nonprofit staff and executives that NTEN and the Bridgespan Group ran from late April to mid-June 2026, 44 percent of staff said AI at their organization is used informally by individual staff and is not organization-supported. Among executives, 32 percent gave that answer. The survey went out through the two groups' lists and partners, so it reflects people who chose to answer. The prompt gives you a survey, an inventory table and a staff memo, so you know what is in use before you write rules.
Sources: NTEN and The Bridgespan Group, "2026 State of Nonprofit AI Adoption and Governance Report"; Richard H. Levey, The NonProfit Times, September 14, 2026
The Smaller Version — A 30-Minute Board Exercise
What it is for. A board that keeps postponing a large decision may have good reason: it cannot see how the thing would work, and it cannot take it back. This exercise takes one postponed decision and designs a version small enough to try. (Issue #44's Keepers List sorted what you would keep in a combination. This asks a different question: what could you test before you decide?)
What you need. One postponed decision, chosen in advance by the chair and the executive director and written as a single sentence. A flip chart or a shared document. No financial packet is needed.
How to run it (30 minutes).
- Name the decision and the fear (5 minutes). Read the sentence aloud. Each board member says, in one sentence, what they are afraid would happen if the board voted yes today. Write the fears down without discussion.
- Sort the fears (5 minutes). Mark each one as "we do not know how it would work" or "we could not undo it." A trial period answers the first kind. A written way out answers the second.
- Sketch three smaller versions (10 minutes). As a group, with the chair writing. One staged in time: try it for six or twelve months. One capped in size: one site, one program, a fixed dollar limit. One partial in scope: hand over some functions and keep others. One sentence each.
- Pick one and write five lines (7 minutes). Choose by show of hands. For that version: who does what and what the board keeps; how long it runs; what you will measure; how either side gets out; and the date the board votes on the full decision.
- Assign it (3 minutes). One board member and the executive director take the five lines to the other party, or to staff, within thirty days. Record the assignment in the minutes.
In-person: Put the three versions on separate flip-chart sheets and, in place of the show of hands, have each member stand by one.
Virtual: Use a poll in place of the show of hands and have a board member, not the executive director, type the five lines.
Watch out for: The trial with no end. A pilot nobody evaluates can become the permanent arrangement by default, on terms nobody agreed to. The decision date is the line that matters, so do not leave the meeting without it.
You'll know it worked when: the board member who has opposed the full decision for a year offers to help write the trial.
They Kept the Name
Four issues ago I wrote about the sentence that ends merger conversations. It arrives about forty minutes in, warmly and with no hostility at all: "And of course we'd keep our name."
I argued then that the trouble is not the attachment. It is the attachment working as a veto nobody voted on.
So I have to tell you about this week's third story, because in Hays County, Texas, they kept the name.
PAWS Shelter of Central Texas spent more than it took in during 2022, 2023 and 2024, according to its tax filings, and it closed one of its two campuses, which had not reopened when I wrote this. It joined Austin Pets Alive!. The terms that have been published read like the sentence I warned you about, except written down. PAWS will continue under its name. Two of its board members are to be invited onto the larger board. New gifts designated for PAWS are to be restricted to PAWS.
Here is what I notice. On the published terms, the name was not the end of the conversation. It is one term among several, listed next to the terms about employees and board seats, with something on the other side: the staff are to become employees of the larger organization, which has taken over operations.
I do not know how that negotiation went. Nobody from PAWS is quoted in the reports I read, and an organization with deficits like those is unlikely to be bargaining from strength. It is possible these terms were all it could get.
But look at what the other two stories share with it, because I think it is where careful boards go wrong.
We treat a large decision as if it comes in one size. Merge or don't. Lend or don't. Stay independent or disappear. Framed that way, the careful answer is no. A board can give that answer year after year and call it prudence.
The Y in Illinois took over with a stated intent to merge. But it managed the place first, and the merger announcement came seven months later. The foundation in New York did not open a lending department. It committed $250,000, capped each loan at $50,000 and had a savings bank do the lending work. In each, the first commitment was a small one.
There is a way to do this badly, and you have seen it. The pilot with no end date. The interim arrangement in its sixth year. The shared-staff arrangement nobody ever reviewed. What separates the good version from the bad one, I think, is a date: the day the board looks at what happened and votes on the real question.
So here is the assignment. Find the decision your board has said no to more than once. Ask whether anyone ever proposed a year of it, or a capped amount of it, or part of it. Then put a date on the vote.
Forward this issue to one person — the board chair who keeps hearing "we're not ready" about the same decision. Then hit reply and tell me the decision your board keeps postponing. I read every reply myself.
If someone forwarded this to you: sign up here. It is free, it arrives Wednesdays, and that is the whole arrangement.
Three organizations, one move: each found something smaller than all or nothing. Months of management before a merger announcement. A lending pilot with a small first commitment. A shelter joining a larger organization on published terms that keep its name.
This week, take the decision your board has postponed longest and write the smaller version in five lines: who does what, how long, what you will measure, how you get out, and the date you decide.
See you next week.
— Ted
P.S. One forward. One reply naming the decision you keep postponing. I keep a list.
|
|
Founder and CEO
Risk Alternatives, LLC
202.758.7572 (cell)
Website
Author of Managing Your Nonprofit for Resilience
I help nonprofits thrive by providing practical tools and support to address uncertainty and improve resilience.
|
Did a cool person forward you this email?
Sign up here