Should You Be Considering a Nonprofit Merger?
When times are tough, funders start to think that mergers are a good idea for nonprofits. And sometimes nonprofits themselves agree.
Is it time for your nonprofit to explore ways to combine with another organization?
Mergers, joint ventures, fiscal sponsorship arrangements, and virtual nonprofits are all examples of “strategic restructuring.”
This goes beyond collaboration to bring organizations into formal, deeper forms of alliance.
Nonprofits are viewing these options with increasing interest in an economic downturn.
You organization and your board might be interested in these intense partnerships:
If your organization is, alas, weak, (unable to find or keep an executive director, unable to maintain an active board, or too small to compete effectively in a particular market), you might seek to merge into a larger organization that has what you lack or with other smaller organizations with whom you can develop the necessary strengths.
If you are ready to grow (want to augment a continuum of services; want to create a program from scratch, need to increase market share, or hope to reduce competition), you are probably a strong nonprofit and see mergers or other partnerships as ways to further grow the organization.
If you think a merger might enhance your mission and services (reduce consumer confusion, lower overhead and put more dollars into direct service, increase political clout by speaking with one stronger voice), you might partner with others with whom you have a significant mission, program, or identity overlap.
For both the voluntary and paid leadership of nonprofits, strategic restructuring choices often come after years of building organizations, so such partnerships may threaten the organization’s autonomy and identity.
But if our true goals are to serve our communities (rather than our own organizations), shouldn’t we be as willing to serve by partnering as we are willing to serve by building our own organizations?
See also:
About the Author
David La Piana is President of La Piana Consulting; he has spent nearly three decades in the nonprofit sector as a consultant, executive director, program director and community organizer. He has served on many nonprofit boards and is chair of the board’s Governance Committee at the Craigslist Foundation.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.
5 thoughts on “Should You Be Considering a Nonprofit Merger?”
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If the problem is costs and staffing, why not think about fiscal sponsorship? As a fiscal sponsor in Baltimore, we have had organizations downsize, disband their 501 c3 and come under us for fiscal sponsorship to save money and adminstrative costs. I think mergers are much more difficult,
Thanks for providing resources on this important issue. Here is a link to some other good articles on types and levels of collaboration developed by the folks at Burlington Associates in Community Development: http://www.burlingtonassociates.com/resources/archives/collaboration/index.html They were written with Community Land Trusts in mind, but most apply nicely to other organizations. Tasha Harmon, CPCC New Perspectives Coaching, Training and Facilitation 503-788-2333 www.Tasha-Harmon.com Making it easier for you to do your good work
Thanks for this – a great resource for those in the sector exploring options for restructuring.
Our foundation, Ontario Trillium Foundation, recently published a report exploring five stories of organizations that have restructured (including one that went the fiscal sponsorship route), lessons learned and implications for funders. Incidentally we referenced David La Piana’s “Merging Wisely” as part of our research. You can check out the report here: http://bit.ly/mgmr6U
Jenn
In Tucson, AZ this April, FIVE boards voted to merge and create one powerful organization to lead a literacy movement. We now offer programs from birth to adulthood, one group melds art and creative expression with literacy, and in the future we plan to identify and address gaps in services. This is an excellent example of mission-oriented groups working together to advance a mission and create change in a community. I’m excited and proud to be a part of this. http://tucsonliteracymovement.org/ Elizabeth
In Tucson, AZ this April, FIVE boards voted to merge and create one powerful organization to lead a literacy movement. We now offer programs from birth to adulthood, one group melds art and creative expression with literacy, and in the future we plan to identify and address gaps in services. This is an excellent example of mission-oriented groups working together to advance a mission and create change in a community. I’m excited and proud to be a part of this. http://tucsonliteracymovement.org/ Elizabeth
Thanks David for your insights and service. I recently shepherded a merger of 26 independent centers for a national nonprofit into a single centralized office for everything financial and corporate. The results have been astounding! Cost savings, more efficient payment processing, better financial reporting… but the most amazing benefit has been in the increased collaboration and best practice sharing. Because all spending comes through our office, we are able to see trends, good ideas and share these in monthly webinars with our 26 centers.