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:
- The M Word: A Board Member's Guide to Nonprofit Mergers by Alfredo Vergara-Lobo, Jan Masaoka, and Sabrina Smith. This free downloadable PDF discusses various reasons why nonprofits seek mergers, alternatives to merger, a step-by-step merger process, merger cost analysis, case studies, and myths about mergers.
- Thinking About Whether to Close Down
- Closing Down the Right Way