Friends of Shaker Square

Why the Buckeye - SHAD merger failed
A personal view by Arnold Berger

I see confusion and division as outcomes of the failed merger of the Buckeye area and Shaker Square community development organizations. Here is my view of why this effort failed.

About balance and fairness

Years ago I worked on our city's largest educational merger, the federation of Case Institute of Technology and Western Reserve University that created Case Western Reserve University. I was on the staff of a study commission which reported to a joint committee of Case and WRU trustees. In enrollment and faculty, Western Reserve was about twice the size of Case. Realizing that an unbalanced committee could "kill" any deal from the start, the committee had an equal number of trustees from each institution.

The merger of these neighboring community development corporations was never between equals.

It began unbalanced, with the Buckeye area group stronger, followed by a year when the Buckeye group became more dominant and the Shaker Square area group (SHAD) grew weaker. In the last month a very weak SHAD group received no respect. The process ended by punishing those who had denied Buckeye the merger it sought -- and could so easily have had.

From the start in late 2010 when the merger planning committee was formed, Buckeye area representatives were given a majority vote. Equality wasn't considered, even on this short-term committee. It wasn't only that Buckeye had a larger staff and a stronger balance sheet. Neighborhood Progress Inc., the foundation-supported group through which much money for CDCs flows, wanting to combine smaller CDCs into larger stronger ones, had told the Shaker Square group that its funding was ending. The Buckeye-area CDC might be expecting to expand, but SHAD (the Shaker Square area CDC) was facing an uncertain future.

In the fall of 2011, SHAD lost its executive director and did not fill the position. Now it had become even weaker. Such inequality can embolden the stronger group and cause the weaker group to feel powerless. The resulting tensions can lead to unpredictable results. They did.

In January 2012 the merger agreement was made public. It shows how Buckeye's dominance had grown. Though SHAD had more than a third of the members of the merger planning committee, its share of the proposed board of trustees dropped to under 25 percent. I don't know the population of the Buckeye and Shaker Square areas, but with the merger plan calling for a 21-person board next year, here are estimated shares and the population-based trustee positions for Shaker Square area residents.

SHAD share of population Trustees
45:55 9
40:60 8
35:65 7
30:70 6
25:75 5

If the SHAD area has 45 percent of the total Buckeye-SHAD population (my estimate), it should have 9 seats on a 21 person board. But the "deal" gave the Shaker Square area only 5 trustees, much less than an equitable outcome. The Buckeye group was showing its control of the deliberations.

Merger approval required each CDC to get approval by its board of trustees, followed by the vote of its membership.

Then what went wrong? 

In late January 2012 the merger process seems to have lost respect for the Shaker Square area group. The proximate cause was the Code of Regulations (bylaws).  Though part of the merger agreement, the bylaws was not shown to SHAD trustees until January 20. The meeting of January 23, at which they were to vote on the agreement, was their first chance to comment. Some SHAD trustees strongly objected to:

  • The lack of a guarantee that even the small number of promised seats on the board would continue.

  • The lack of an assurance that the SHAD area would be represented in the Nominations Committee.

  • The new organization having a self-perpetuating board. That would end 36 years of member voting. (SHAD members don't attend Board meetings but do vote on officers and bylaws.)

The lawyer, having come from the Buckeye meeting, then told the trustees that the Buckeye trustees had just voted to approve the agreement with the new bylaws. SHAD could not make changes to the bylaws.

"Disrespect" is a modern urban term. The SHAD trustees must have sensed it keenly. The bylaws ignored long-held values and was presented in a way that prevented changes. At their meeting of January 23, the SHAD board voted for the merger. They accepted an unfairly small minority position and much more, for the good of the community and the continuation of programs and staff. Days later a small group of present and past SHAD leaders began to draft bylaws amendments they planned to offer at the membership meeting.

The February 25 membership meeting was a controlled event that denied them the chance to speak. It was a member-shouting, gavel-pounding disaster. The merger was rejected. [more on the meeting

Snatching defeat out of the jaws of victory

The vote (53 YES and 57 NO), cast after the brief but stormy meeting, was so close as to suggest that most SHAD members had come to the meeting ready to vote YES on the merger.

But the meeting was conducted coldly, the president reading a prepared statement. Just as the board meeting had given no voice to SHAD trustees, the membership meeting, in an iron-fisted style, gave members no voice. Pushed too hard, many members pushed back by voting NO.

Twice in the last month of a very long merger process the Buckeye CDC and its advisors had gone too far. Like our Cleveland Browns, who get near the goal line and then can't get over it, they had fumbled the final steps. The merger effort failed because its leaders and advisors acted without respect for the Shaker Square area group. They should have known better. They should have acted better.

From disrespect to punishment

That insensitivity continued after the membership meeting. There was no post-February 25th meeting to discuss a resolution. Instead, the powers-that-be orchestrated a resignation of the SHAD board, turning loose a weakened organization, with debts and little assured funding, to reorganize and fend for itself.

Now, instead of the amicable creation of a Buckeye - Shaker community development organization that could more effectively serve our combined area, we are left with confusion and division. SHAD, with new leaders, is working energetically to re-think its mission and to continue to serve this area, but it will not be easy. We've also heard that the Buckeye area group plans to change its name to Buckeye - Shaker, to add trustees from the SHAD area, and to operate as if the merger had been approved!

And now, what?

My hope is that Neighborhood Progress, Inc., its president Joel Ratner, its major funder, the Cleveland Foundation, and others will recognize that it is not too late to resolve this situation, to the benefit of all.

Arnold Berger
March 31, 2012

The author, who earned a PhD in Management at Case, is a former professor and software executive, who for years consulted with the Cleveland Foundation. He was a member of the old Friends of Shaker Square, served on the SHAD board, and is a SHAD member. He has owned a condominium near the Square since 1992 and since 2004 has been the volunteer webmaster of the independent Shaker Square website.

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