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Faced with dramatic cuts in government funding and the constant challenge to secure giving from private donors, nonprofits may look to a merger to solve its issues and remain sustainable.
From a strategic perspective, mergers are typically pursued for various motives. In a study of 41 nonprofit mergers, organizations decided to undergo a merger for a variety of reasons, including the following: to increase the delivery of services (93 percent), to align with a partner organization that shared the same vision (66 percent) and to improve their financial standing (61 percent).
No matter an organization’s motive for merging, the most critical factor that will directly affect the transition’s success is leadership. Integrating the board members and executive leaders of the nonprofits involved in the merger will allow for the most effective combination, where both entities collectively add value and meld their missions, cultures and personalities. By honing in on the shared vision for the future, leaders from both organizations can thoughtfully and responsibly work through the complicated transition process together without disrupting services or losing support of donors.
To understand the vital role of leadership during a merger, it is important to first recognize why many mergers are unsuccessful.
Why Most Mergers Fail
Although mergers have the potential to add significant value to the nonprofit sector and enhance the work that organizations can do, there are several obstacles that keep nonprofits from realizing these possibilities:
Overcoming each of these obstacles will likely delay the process of a deal, even if a merger is the most viable option for a nonprofit’s current affairs. This is why leaders must take an active role, involving board members in the process of confronting each challenge, finding solutions and ultimately maximizing the impact of the newly revised vision for the joint organization.
Lessons for Leadership
No matter the scenario, nonprofit leaders must begin discussions about the integration process early so that every decision can align with both organizations’ objectives. During the initial stages, board members, staff, executive management and other key stakeholders should be involved. This way, all supporters of the organizations will be engaged in the creation of a shared mission, outlining the timeframe, expectations and agreed-upon roles and responsibilities.
With community at the forefront, leaders should keep these lessons in mind as the merger moves forward:
Since it is the responsibility of the leaders to make the decision to merge and develop the transition process, unifying two nonprofits requires patience, selflessness and skilled collaboration. The ultimate success of the merger will reflect a culmination of months or years of leadership work that will elevate the underlying mission of serving the community.
For more information, contact your Marvin and Company, P.C. representative.