Intentionally seeking collaboration or merger can be keys to a nonprofit’s long-term impact and sustainability.
With so many nonprofits in the Central Texas region alone, I have always encouraged collaboration between like organizations or those which complement one another, as the potential benefits of working together can be tremendous.
Intentionally seeking formal collaboration or a legal merger can be keys to a nonprofit’s long-term impact and sustainability. Whether formally collaborating or legally combining, organizations have an opportunity to capitalize on their synergies, share resources, reduce costs, generate more funds, and achieve greater outreach to increase awareness, capacity, and enhance their services.
However, over time, I have also seen wonderfully passionate people lose the fire in their bellies and the will to continue because they hadn’t realized how much work was involved in establishing and maintaining successfully an impactful organization. For that reason, sometimes collaboration is not enough and considering a merger or combination for the good of the mission can be the best way to achieve long-term impact.
While merging is not always right for every organization, taking the time to at least explore the opportunity is worthwhile. Intentional and collaborative due diligence will enable the entities involved to arrive at a logical conclusion, whether it is a go or no-go. Being open to listening, setting egos aside, and focusing on the long-term sustainability of your organization for mission impact needs to be the intent.
I once worked with four independent chapters of a great Texas organization to merge. Ten years before the merger, it would not have been possible as no one was willing to consider losing their independent status. Fast forward to 2014 and the four Chapter boards recognized that they would have greater impact together for the good of the mission, than continuing to ‘do their own thing’. They were willing to at least explore the pros and cons. Noone was committing to anything through phase one of the process. The outcome was hugely positive with the formation of a combined Texas chapter and the development of five regions.
If considering a merger or combination, you might want to use a three-phase approach to exploring and deciding on the way forward.
The First phase should focus on assessment of the situation, identifying potential merger partners, and facilitating the conversation to get a clear understanding of the pros and cons for each organization, and for the community as a whole.
There are some simple steps to take, starting with defining the goal and purpose of a possible merger between the organizations; assessing how they are aligned, and deciding what the due diligence process might be. Planned communication to address the various stakeholders involved is also essential to ensure clarity and understanding of the why and the how the change is being considered.
While there are many questions to consider in this phase, some immediate questions to ask are:
- How and why did this conversation start? What is the situation each organization is facing that has prompted this conversation? Who is driving the conversation?
- Do we have the active support of our leadership – board and staff?
- What potential benefits will merging with another organization or organizations result in over time?
- Will you need to hire a facilitator and a lawyer? If so, how will they be paid? Is there a grant from a Foundation that might cover this?
The Second phase would be to develop options, in other words define what the merger or combination might look like. Establishing a merger task force with representatives from each organization can help ensure that everything is thought through before a final proposal is put to each board.
The Final phase entails working with each of the Boards to decide what they would like to do and developing a plan for moving forward depending on the outcome/decision.
If the merger is confirmed, there is, of course, more work to be done. Of particular importance is acknowledging and managing the different cultures of each organization. In both the for-profit and nonprofit worlds, how the different cultures are integrated often plays a significant role in how successful a merger will be. Intentionally developing a plan for integration needs to be a priority. Culture also plays a significant role in a collaboration, particularly as it relates to asking “are our values aligned?”.
Mergers are not for every organization and enhancing collaboration with strategic partners may be enough. Either way, working together to support our community is essential for us all to achieve long-term impact and sustainability.
If you would like a more comprehensive guideline or to discuss facilitation of a merger exploration, reach out to me, Jane Baxter Lynn, at jbl@jblstrategies.com.