Should You Be Considering a Merger?

When times are tough, funders start to think that mergers are a good idea for nonprofits. And sometimes nonprofits themselves agree, but don't know how to think about it or how to go about it. Here's a short article by merger consultant David La Piana, and a link to a free downloadable comprehensive booklet on nonprofit mergers.

Should your nonprofit be considering a merger or some other way to combine formally with another organization? Mergers, joint ventures, fiscal sponsorship arrangements, and virtual nonprofits are all examples of "strategic restructuring." This goes beyond collaboration to bring orgnaizations 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?

David La Piana is principal of La Piana Associates, Inc., a consulting firm providing services to nonprofits and philanthropy on "strategic restructuring" and other strategic issues. For a longer report by the same author, see In Search of Strategic Solutions here.

See also in Blue Avocado:

Comments (5)

  • Anonymous

    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,

    May 17, 2011
  • 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: 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 Making it easier for you to do your good work

    May 18, 2011
  • Anonymous

    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: Jenn

    May 19, 2011
  • Anonymous

    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. Elizabeth

    Jun 07, 2011
  • Anonymous

    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.

    Apr 12, 2015

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