Pannone Lopes & Devereaux LLC will present a series of free quarterly seminars this year to help nonprofit organizations cope with the challenges of a down economy, including the need for consolidation.
How to consolidate nonprofits will be a key theme, according to attorney Gary R. Pannone, a principal of the law firm, and Tony Maione, president and CEO of the United Way of Rhode Island, which is working with Pannone Lopes & Devereaux on planning the seminars.
The sessions will be a “nuts and bolts program,” Pannone said, for nonprofits in such areas as financing, governance, ethics, conflicts of interest, compliance with regulations, consolidations, mergers and joint ventures. Members of the law firm will conduct the seminars, at a location to be announced, but Pannone said experts in fields such as accounting will be brought in as well. He expects enrollment will be limited to 15 to 25 people.
“What is going to emerge from this challenge,” Pannone said of current economic conditions, “is consolidation.”
He expects that, by the end of 2010, there will be fewer nonprofits than today because of “an awful lot of duplication.” The seminars will address more than just the legal issues involved in consolidation. “There are nonlegal issues that have to be worked through,” he said.
Case in point is the Arc of Blackstone Valley, a Pawtucket-based agency with a $15 million annual operating budget that serves 425 developmentally disabled clients in Pawtucket, Central Falls, East Providence, Cumberland and Lincoln. The law firm has been working on revamping the 54-year-old agency for about two years.
When Lester B. Keats, president of the Arc’s board of directors, showed Pannone the agency’s bylaws a few years ago, “Gary sort of laughed,” Keats recalled. He said his agency went to the Pannone firm because “we could see … our funding probably was going to go down.” Most of its $15 million budget comes from Medicaid reimbursements.
Sensitive issues can arise when revamping an agency founded by the families of the developmentally disabled, who may not have the skill sets to direct such an organization nowadays but still want to play an active role, Keats and Pannone said.
Under CEO John J. Padien, the agency has changed its administrative structure, eliminated some jobs and consolidated others, Keats said, because “we want to keep all of our programs going.” Asked if the Arc is considering a merger or consolidation with similar agencies, Keats replied that, “We have a lot of balls in the air.”
Maione said “We encourage nonprofits to come together and combine administrative functions so they have more money for programs,” adding that the United Way has a “small” merger and consolidation fund of approximately $100,000 to assist in this effort.
A national study conducted several years ago, Maione said, found that $100 billion in administrative costs is wasted nationwide due to duplication of effort among charitable agencies. He noted that consolidation need not involve an outright merger, but can be as basic as sharing purchasing or fundraising services, or even a copy machine.
Specific topics for the seminars, and the dates the sessions will be held, have not been decided yet. The United Way in March will hold its third annual merger and consolidation conference for nonprofits, where participants will be surveyed to see what topics they would like covered. Pannone expects the seminars to begin in March.
Pannone Lopes & Devereaux LLC is no stranger to helping the community. The four principals of the firm – Pannone, Matthew A. Lopes Jr., William P. Devereaux and William E. O’Gara – are Rhode Island natives.
Opened in March of 2006 with five attorneys, the firm today has 20 lawyers, and its spacious headquarters in the former Struever Bros. Eccles & Rouse’s American Locomotive Works development is being expanded to add seven more offices.
Taking their cue from the humanitarian work of the international law firm of Holland & Knight LLP, where the four principals practiced in the Providence office before opening their own firm, Pannone Lopes & Devereaux actively encourages its associates and employees to be involved in the community.
Pannone noted that many nonprofits don’t have the resources to effectively deal with such matters as financing, governance and conflicts of interest, so the firm has broadened its reach to help charitable agencies in other critical areas.
Pannone estimates that the firm now works with 15 nonprofits. •
