The Nonprofit Merger Decision

     What if you wake up one day and realize that the nonprofit down the road seems to be doing the same exact thing as your nonprofit? You might wonder if you're both needed. Perhaps you're struggling financially and you feel like that other nonprofit down the road isn't struggling at all. Well, today I want to share some guidance on how to navigate nonprofit mergers. 

     The scenarios above present unique opportunities to evaluate whether a nonprofit merger could benefit your organization, either through being absorbed into the other nonprofit or being the one that's accepting another nonprofit into your operations. 

How to Begin the Nonprofit Merger Process

     So, where do you start? Well, first you begin with the conversation and trust the process. I've seen these conversations result in a merger, and I've also seen them simply refocus the vision without leading to a merger. (I’ll share a great success story at the end of this article!) There are two important elements to consider when beginning this important conversation. 

Consider Nonprofit Mission Alignment

     Start the conversation by comparing the missions of both nonprofits. Meet. Talk. Explore. How do your missions and your core values align? Consider whether a merger could enhance this and allow you to achieve your mission more effectively. Discuss if there's a shared vision and purpose that could make for a successful merger. Chances are, you have more in common than you realize! You may have just seen each other as “competitors” for too long.

Assess Financial Compatibility

      The next important piece of this conversation is financial compatibility. You’ll definitely want to do some due diligence in this area. Assess their assets, their obligations and liabilities, and of course, their overall financial stability. 

     Examine the financial health of both organizations. You may find that one is stronger than the other. It may make sense to save certain costs by reducing some of the overhead and therefore strengthening your ability  to thrive financially and fulfill your mission.

     Starting this process with a thorough consideration of mission alignment and financial compatibility will typically lead you to a proverbial traffic light indicating “go” or “stop”. In some cases, you may find more of a “yellow light” warning you to simply proceed with caution.     

Evaluate the Cultural Fit of Both Organizations

     The next step is equally as important. Don’t forget to really consider the cultural fit of the two organizations. Will your organizational cultures actually mesh well together? It’s possible to be financially compatible, but culturally incompatible. 

Determine the Impact on Nonprofit Operations

      Take some time to think through how togetherness might impact your day-to-day operations or your delivery of your mission to the people that you serve. As promised, I want to share a story to illustrate this point because I love how this one ended! It was unexpected, but beautiful.

     I had a fun experience where two nonprofits came to the table, just like we're covering today. They confirmed that their missions aligned and confirmed that their finances were incredibly compatible. But, their operational delivery (how they delivered their mission) actually prevented the merger from being truly beneficial. Ultimately, the main issue was the number of days per week that they each served; however, they identified a way to share resources. Which resources? Facilities! They realized that their different schedules actually allowed them to share these facilities. This actually empowered each organization  to more effectively steward the resources they’d each been entrusted with. Even though they did not merge, they discovered they were able to work together in a way that kept each of them from duplicating their efforts toward facilities.  And you know what? This served both nonprofits very well! It was an incredible outcome to a journey that began with a conversation about whether a merger should be considered. Without any obligation or resistance, they trusted the process. 

     It’s always easy to find reasons to say “no”, but you really won't know the answer until you explore it. I hope that challenges you to take a fresh look at the environment that you're operating in today! If you're considering a merger and would like to speak with me in greater detail about how to navigate this crucial decision, you can book a strategic consult with me here!