As valuable as it is to remain optimistic in the face of adversity, it’s also important to step back and survey the landscape before us. Our economy is in the early stages of what may be a devastating recession for the nonprofit sector. Some organizations are already fighting for survival. Others risk a weakened position for the coming decade. A third group may be in an enviable position to reinvent its business model or grow.
All three of these groups should be considering merger right now.
I’m not suggesting that merger is necessarily the right strategy for your organization–there are many variables that can influence this–but rather that examining the possible benefits of merger is a matter of due diligence. It should be on the table as an option, even if it hasn’t been a topic of discussion before, especially in times like this.
Many people react intuitively to the idea of merger. Usually that first reaction is negative. (They call it “the M-word” for a reason!) Yet merger has proven itself to be a highly successful strategy for many nonprofits over the past century.
Big decisions shouldn’t be made purely on intuition, but rather on the best information we can gather. Merger often grows on folks after they try the hat on a few times. And even if it doesn’t, you’ll be better off for having evaluated your options.
Photo by Brendan Church via Unsplash
I recommend that leaders of nonprofits consider these three questions as the pandemic economy takes root:
1. What are our critical organizational challenges over the coming years?
2. What characteristics would a partner organization need to have in order to help us address our challenges?
3. What are 3-5 nonprofits we could imagine consolidating with, hypothetically, and what are our compatibilities/incompatibilities?
This will help start a useful conversation among leadership teams. Keep in mind two filters:
What is best for the community
What is best for the long-term sustainability of your organization.
If the answers suggest potential opportunities, you can proceed to the next step of gathering more data on potential partners, desired outcomes, and possibly even starting exploratory (and confidential) discussions.
Our impulse, as humans, is often to start with answers. Challenging times, however, demand that we start with hard questions. One reason, in this case, is that the mechanics of merger are not as obvious as many assume. For example some obstacles, such as staffing, governance and brand identity, can be addressed through negotiation or a variety of legal structures. They may be easily resolved.
Either way, when we ultimately get to the answers, we’ll have greater clarity about our options. And clear options are what nonprofit leaders need most this year.