Greenlights recently released the report, Nonprofit Mergers: A Strategic Tool for Impact & Sustainability which offers in-depth insights into the nonprofit merger process. Leaders from twelve merged Central Texas organizations shared their experiences with us, including what lead them to initially explore merger, their successes, challenges, and ultimate outcomes.
So what did we learn?
We found the majority of nonprofits pursued merger as a way to strengthen their organization’s impact in the community by serving more people or increasing their effectiveness. For example, when United Cerebral Palsy of Texas began merger negotiations with Easter Seals of Central Texas, they realized that each organization offered a unique complement of services to clients. They were confident that as a merged organization they could provide a greater continuum of care to individuals and families in the community.
Most organizations also hoped merging would enhance their long-term sustainability. Leaders noted that nonprofits today are faced with increased competition for funding and resources. They viewed merger as a strategic step that could provide their organizations with a competitive advantage. (It is important to note that while mergers can enhance sustainability, mergers rarely save organizations money.)
We also identified specific triggers that put merger talks in motion. The most common trigger was the departure of the executive director. Six of the organizations in our study were experiencing an executive transition at the time the merger was considered. One interviewee noted the resignation of their long serving ED was the impetus that forced the board to consider a merger.
Our study also identified a number of key factors that were seen as critical to merger success including:
- Strong leadership from board members and/or executive directors who shared a passionate belief that merging was the right thing to do for the organization. These leaders served as merger champions and demonstrated a willingness to set aside personal considerations for the larger good of the agency and community.
- The development of trusting relationships among key leadership. “Trust” and “transparency” were repeatedly used to describe an absolutely critical element of the process.
- A deliberate due diligence process to ensure there was an adequate assessment of the risks and potential benefits of merging. The leaders in our study stressed the importance of taking this process seriously in order to ensure the merger was a good choice for both organizations and those they serve.
To learn more about other success factors, along with merger pitfalls to avoid and the ultimate benefits of merging, click here for the full report.
And for additional resources related to nonprofit mergers and other forms of strategic collaboration, check out our Merger & Collaboration Resource Page. Here are a couple of the free resources you will find:
Insights from the Town Hall on Collaborations & Mergers
Greenlights, the RGK Center, and the OneStar Foundation partnered to host a community wide forum in Austin, Texas on the topic of collaborations and mergers. This report summarizes key content from the event which brought together David La Piana, a national expert on nonprofit partnership, and over 200 local leaders.
Merger Analysis Matrix
If your organization is contemplating a merger, check out this assessment tool which will help you explore whether a potential merger is appropriate and mutually beneficial to pursue.