Helping Board Members Read the Signs for a Nonprofit Merger
In this age of tremendous change and economic uncertainty, I am often asked by board members if they should consider a merger strategy for their nonprofit organization. Board members who work in the for-profit sector are familiar with the signs leading up to a merger in their own business arena, but not necessarily for the nonprofit sector. Have you seen these signs?
- Are you having trouble raising unrestricted dollars? Are you looking to expand your programs or your geography?
- Do you require new licenses or certifications to grow?
- Do you have a need for deepening the quality of your back office services, particularly for I.T. or outcome measurement, but do not have the capital to do so?
- Do your clients, donors, and others frequently confuse your nonprofit with another organization?
- Do Donors frequently encourage you to consider a merger?
In general, it’s a good idea to regularly review a merger or restructuring strategy for your nonprofit at least every few years when you complete a strategic plan. By doing so, you will become comfortable with a merger strategy and learn how to assess it. You never know when a good merger opportunity might come along, such as when the CEO of a trusted partner suddenly announces s/he is leaving. One Minnesota study of nonprofit mergers noted that over 80% of the mergers had a vacancy in one of the CEO positions.
Strong nonprofits are in a better position to merge, than those which are weak. It can be very hard to find a merger partner for a nonprofit with little or no assets and a history of financial deficits. If you think a merger may be in the future of your nonprofit, the sooner you act when your financial position is strong, the better.
These are just a few of the signs you and your fellow board members can watch for regarding a potential merger strategy for your nonprofit. To learn more about the signs like the ones in this posting, take our “Merger Test” at Mission + Strategy Consulting. For a free consultation, contact us at: 800-343-2510.
- Jean Butzen is the President and Founder of Mission + Strategy Consulting, the Midwest’s largest consulting firm providing nonprofit restructuring services.