Case Study: Colorado Open Lands

Please note: This case study about Colorado Open Lands is excerpted from the Land Trust Alliance's publication, “An Introduction to Mergers for Land Trusts,” which lays out guidelines based on established best practices, including tips from land trusts that have been there and tools to make the process easier.

Merge Date

March 1, 2016

Merging Organizations

• Colorado Open Lands
• Legacy Land Trust

Reasons for Merger

• Solve financial challenges
• Ensure perpetuity of conservation projects
• Generate greater conservation impact
• Enhance public trust in shared geography

Recommendation for Other Land Trusts

Take a systematic, phased approach to a merger.

Colorado Open Lands (COL) and Legacy Land Trust (LLT) had been discussing ways that the two organizations could partner in northern Colorado since May 2014. These conversations started as COL was finalizing a new strategic plan that identified the region as a conservation priority because of its outstanding agricultural and natural values and projected population growth. During the spring of 2015, COL and LLT’s expanded conversations began revealing a natural partnership opportunity. LLT had a number of potential conservation projects in its service area, but lacked the capacity to act on them, while COL was hiring a new northern Colorado project manager who was eager to assist. Around the same time, the relatively new executive director of LLT left, and board members discovered they were facing significant financial challenges that seriously threatened the organization’s sustainability.

LLT had a long history of conservation success but had fallen on hard times. Founded in 1993 and based in Fort Collins, LLT held 109 easements on nearly 43,000 acres of land and had a staff of three and a dedicated board of directors. During a downturn, the organization tapped its stewardship fund to pay operating expenses (including staff) in the form of intra-organizational “loans” and was also projecting a $68,000 loss in revenue by the end of FY 2014. With the support of a consultant funded by the Land Trust Alliance, the board began looking seriously at the future of LLT and how it could continue to operate sustainably.

The LLT board decided that its first priority was to get spending under control. It laid off the staff, keeping only a part-time administrator on contract and closing the office. It agreed not to take on any new conservation easement projects until a clear decision was made about the future. Two board members agreed to be responsible for the conservation easement monitoring program, with back-office assistance from the contract administrator and field assistance from other board members. The conservation director agreed to stay on as an adviser to the board in either a paid or unpaid capacity (she did some of both).

LLT’s hope was to use 2015 to stabilize its finances and to begin the process of rebuilding the organization. In 12-18 months, the board hoped to have brought in enough funding to hire a part-time staff person and to have started the process of restoring the stewardship fund. However, before it could do any of this, it needed to navigate the transition to an organization “staffed” by the board. The board also had to bring together a constituency that would support rebuilding the stewardship fund, as well as the financial stability of the organization as a whole. Recognizing the enormity of the tasks, the Land Trust Alliance was able to secure a grant from Great Outdoors Colorado (GOCO) to provide LLT with a professional mentor to guide it through this transition. Despite everyone’s best efforts, by mid-2015 the board had made limited progress toward stabilizing the organization. It became clear that full revitalization of the land trust was unlikely and that a merger was the best option to protect the conservation projects everyone had worked so hard to achieve.

It was at this time that LLT informed the Land Trust Alliance of its interest in actively pursuing a merger. At the same time, COL staff had come to realize that combining the land trusts’ respective strengths would not only benefit conservation in northern Colorado in the near-term, but in the long-term as well. They also recognized that it would take significant staff time and outside expertise to explore this option. COL had completed another merger in 2013 and knew that it would be particularly time consuming to assess LLT’s conservation portfolio from a legal and conservation perspective and to help LLT monitor its conserved properties before year-end. To that end, the Alliance and COL agreed that the best use of the remaining grant funds from GOCO would be to support the due diligence to allow COL to make an informed decision about a merger with LLT.

In late July 2015, COL sent LLT a memo summarizing what a potential merger could mean for both organizations. The memo included a proposed timeline and plan for merger that both land trusts would have to evaluate. COL also requested certain basic information from LLT to begin the process. This information included:

• A current list of LLT conservation easements and fee properties
• A current list of active conservation easement projects in process
• GIS files for LLT’s conserved properties (existing and active new conservation easement and fee-owned land projects)
• A summary of LLT’s annual monitoring activities and any past, current or pending violations
• Confirmation that LLT was enrolled in Terrafirma (if applicable)
• LLT’s current financial statements (balance sheet and statement of revenues and expenses)
• LLT’s database/spreadsheet recordkeeping system(s) (including access to any online systems)
• Fundraising records for the last three years to help COL assess capacity, methodology and overlap with COL’s donor base.

The boards of both organizations approved the merger evaluation plan and entered into a memorandum of understanding (MOU) “to evaluate the potential merger of LLT into COL to improve the pace, quality and permanence of land conservation in Colorado’s northern Front Range area.” The MOU described the steps that COL and LLT would take in the next three months to develop recommendations to their respective boards regarding the feasibility and desirability of legally merging LLT into COL in 2016. In addition, the MOU set forth certain terms and conditions governing both organizations’ conduct during the MOU’s term. The MOU clarified which activities each organization was independently responsible for and which activities they would collaborate on. It also gave both land trusts a straightforward way to exchange important information regarding conserved properties, stewardship funding and other topics relevant to the potential merger. Obtaining this information was critical for COL because it needed to understand the financial and staffing impacts that a merger would have on its ongoing operations.

At the end of the evaluation phase of the process, COL staff recommended pursuing the merger, having determined that it would ensure the continued protection and stewardship of nearly 43,000 acres in a COL priority area. The merger was also financially feasible (particularly the fact that it would not unduly dilute COL’s existing per-easement stewardship endowment because of the money LLT would bring to COL for stewardship), it would advance a number of COL’s strategic goals and it would enhance the public trust necessary for successful, long-term conservation in a rapidly growing part of the state. Based on this assessment, the COL board unanimously approved pursuing a merger, in large part because of its excitement about what the merger would mean for land and water conservation in a critically important region. Likewise, the LLT board approved the merger out of dedication to permanent conservation in this special region.

To complete the merger, COL and LLT engaged an attorney to represent both organizations and developed a plan of merger (POM) to govern each organization’s formal due diligence. The POM also included a comprehensive checklist covering the legal items required and, importantly, the logistical items that each organization was responsible for completing before merger closing. It also granted COL’s and LLT’s boards a final opportunity to withdraw from the merger before completion. COL and LLT finalized the merger on March 1, 2016. Reflecting on the merger, Jordan Vana, director of programs at COL, can clearly identify the benefits to conservation in the region: “The LLT-COL merger was a true win-win. We focused on the positives, used a process that gave each organization and their boards the information they needed to make the best decisions along the way and achieved our intended outcomes — ensuring the continued stewardship of LLT’s conserved lands and giving interested landowners in northern Colorado a trusted partner to help them achieve their conservation goals.”