Why do nonprofits merge?
There are a lot of things that can prompt merger conversations between nonprofit executives. The most successful mergers are those driven by expanding mission impact or seizing an opportunity. The best time to pursue a merger is when your organization is strong, well-resourced, and thriving. It doesn’t mean that you can’t use merger to solve problems, but it’s important to remember that merger is not just an escape plan.
When considering merger - or formalizing any type of collaboration or affiliation - it helps to know what’s driving it. In my work as a collaboration consultant, I find that those drivers exist on two axis:
Focus Mindset v. Growth Mindset
Solving a Problem v. Seizing an Opportunity
Focus or Growth?
Some organizations seek collaboration to expand geographically or add complementary program offerings. It’s not about growth for growth’s sake but growth as intentional strategy. In this case, the drivers might be more about seizing an opportunity or expanding services.
But collaboration is not just for organizations that want to grow. I know lots of small, community-based organizations who continue to thrive by doing what they do well. These focused organizations know their market, understand their target audience, and have clarity on their role in the broader ecosystem. By staying in their lane, they can have a meaningful impact and concentrate energy and resources on a specific cause. But many small organizations struggle with capacity and burnout - collaborating on administrative functions like sharing a bookkeeper can free up time for small organizations to focus on the mission.
Problem or Opportunity?
When identifying your drivers for collaboration, consider both the internal and external factors that might be making your work harder. Things out of your control like pandemic recovery, economic uncertainty, and a competitive job market can all put pressure on our organizations. Internally, organizations experience financial instability or issues with staff recruitment and retention, or board engagement. Collaboration might be one way to address these common problems. For example, merging two organizations might achieve a level of scale that provides better benefits and compensation, helping you recruit and retain a great team.
It’s no secret that top executives are in short supply. But taken from a collaborators perspective, they can also present great opportunities. If you’re thinking of poaching a CEO from another nonprofit to fill your leadership gap, consider what it could look like to merge two complementary organizations under one umbrella. If that CEO is looking for career growth opportunities, why offer a parallel move to your organization when you can offer expansion and bigger mission impact under a combined entity that just might entice that CEO to take on an exciting new opportunity?
And remember, sometimes one man’s trash is another man’s treasure. The pandemic has really changed the way we use office space. If you’re an organization that owns a building but can’t use all the space, look to partner with an organization that needs office, meeting, or event space. Solving one organization's problem might look like seizing an opportunity for another. If you understand what’s driving your desire to collaborate, it can open doors to creative solutions you haven’t yet dreamed of.
