Businesses strive constantly to gain efficiencies and to make their operations more effective. They scrutinize their budgets to trim fat and reallocate their resources where they’ll get the greatest return.
That’s fundamental business management. We should expect no less from organizations whose mission is to further business and economic development in the Fargo-Moorhead metro area.
We’re thinking of the Chamber of Fargo Moorhead West Fargo and the Greater Fargo Moorhead Economic Development Corp., separate entities that often work closely together to achieve shared goals.
Just recently, for example, the two organizations joined forces in a partnership called “Fueling our Future.” The $5 million initiative aims to strengthen the metro area’s workforce, attract new businesses within targeted sectors and improve amenities that improve quality of life and make the area more business friendly.
We can’t help but wonder: Could these two complimentary organizations work better together if they took their cooperation a big step further by merging?
The idea warrants serious consideration. That’s especially the case given that one of them, the chamber, has a vacant CEO position following the recent tragic death of Craig Whitney.
Consider their dovetailing missions.
The chamber works to “unify and advance business and community interests” in Cass and Clay counties. Similarly, the EDC defines its mission as “to grow and diversify the economies” of Cass and Clay counties.
Even a cursory glance of their operations shows real opportunities for trimming expenses.
Most obviously, a combined operation could save on executive salaries. The chamber CEO was paid $287,968 in 2018, the most recent filing available. That was 13% of the chamber’s $2.1 million budget.
The EDC’s top executive earned total compensation of $248,546 in 2017, or 16% of the $1.5 million budget, according to the most recent figures available.
Combined, the two CEO positions cost well more than $500,000 per year. We shouldn’t be the only ones asking: Do we really need two CEOs when we could have one under a merged organization?
Similar examples abound. The EDC paid rent of $82,866 in 2017, while the chamber paid $42,456 in 2018. The chamber paid office expenses of $49,009, while the EDC’s office expenses totaled $17,735. The chamber’s information technology budget was $53,064, while the EDC spent $39,307.
The boards of these two organizations, their members and local government leaders should ask what could be gained by merging these two operations, which have combined budgets approaching $4 million.
It’s not hard to imagine better uses for much of that $4 million. Their combined budgets, in fact, equal to almost 80% of the $5 million “Fueling our Future” effort.
Each of these organizations operated at a deficit in the two most recent years for which we have documents. The chamber had a deficit of $100,073 in 2018 and a deficit of $155,919 in 2017, while the EDC ran a deficit of $199,405 in 2017 and $116,012 in 2016.
It certainly appears that the missions of these two operations could benefit from greater efficiencies. As it turns out, the new head of the Greater Fargo Moorhead EDC, Joe Raso, has previous experience merging such organizations. Business development leaders should tap that expertise.
Beyond efficiencies, what kind of synergies could result from a combined organization?
Not long ago, leaders of the Bismarck-Mandan Chamber and and Bismarck-Mandan Development Association asked those questions. Their answer was a resounding decision to merge the two organizations, effective Jan. 1, 2019.
Leaders said the merger was driven by factors that included common missions and efficiencies.
It’s time for the Chamber of Fargo Moorhead West Fargo and the Greater Fargo Moorhead Economic Development Corp. to ask those questions. They owe it to their members and the communities they serve.