Success Factors in Nonprofit Mergers - Minnesota Council of ...

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Success Factors in nonprofit mergers Factors proven to make nonprofits mergers more likely to succeed Pre-merger relationships were another common attribute related to organizational fit. In over one-half (54%) of the mergers studied, there was consistent agreement among respondents that the pre-merger organizations shared a similar vision and mission. Sharing client or member populations (44%) and program focus (34%) were slightly less common among the pre-merger organizations. I would think we finally found somebody that matched our vision and mission. [W]ith this particular merger, it was about the match. –Program administrator or management I would say we had some similar programs and also we had other programs that were related. I think from a program prospective, we thought it would be a good fit. –Executive leadership Interestingly, factors related to the internal operations of the organizations were less similar among the pre-merger organizations. For roughly one-quarter or fewer of the mergers studied, respondents consistently agreed that the pre-merger organizations were similar in their ways of going about their business (27%), their approach to the work (20%), or the ways staff related to organizational leaders (12%). External conditions Conditions outside of the organization’s control can also play a key role in an organization’s decision to merge. These could include changes in the economic climate, increased competition for resources, or funder pressure to consolidate. External conditions were mentioned as a reason for merging in about one-third of the cases studied. Sometimes these external factors were a critical motivator of the merger. Increased competition One of the external conditions most often noted by respondents in this study was the competition for funding. This study found that competition for funding was a primary motivation to merge in at least one of the pre-merger organizations in almost onehalf (46%) of all mergers. Fewer mergers were the result of increased competition for providing services. In fact, less than one-third (29%) of the mergers in this sample identified increased competition for providing services as a primary reason for merging. The belief, at the end of the day, was that the combined organization could do better, financially, because they wouldn’t be competing for the grants. –Board of directors or governance Success Factors In Nonprofit Mergers 33 MAP for Nonprofits & Wilder Research 2012
Success Factors in nonprofit mergers Factors proven to make nonprofits mergers more likely to succeed Merger Processes National mandates and funder pressure Pressure from funders to merge can come from either local funders or the national headquarters of local affiliates. Respondents for at least one of the pre-merger organizations in 12 percent of mergers identified funder pressure to merge as a primary reason for merging. In addition, respondents said the funder played matchmaker in the case of three of the 41 mergers (7%) in the sample. It was the external messages from the funders; that was the reason it started. I think we pursued it because we felt it could be better. Our target populations for both organizations were the same. –Board of directors or governance It was really brought down by the national office; otherwise it wouldn’t have been pursued. They were told that they had to. –Financial administrator or accounting Economic downturn Another external factor that can influence an organization’s decision to merge is the state of the economy. For context, 28 of the 41 mergers studied (68%) had completed the merger prior to the economic downturn in 2008. In one-third of the mergers (34%), respondents from at least one organization said the economy was a primary reason for merging. In only five of the 41 mergers (12%) did respondents for both organizations entering into the merger identify the external economic environment as a primary reason for merging. National organizations National organizations were often at the forefront of nonprofit merger activity. In the Twin Cities in particular, where there were local affiliates in Minneapolis and Saint Paul, many were encouraged to join forces beginning in early 2000. There are many examples of this trend in the Twin Cities area including United Way, American Red Cross, Big Brothers/Big Sisters, Planned Parenthood, Boy Scouts, Girl Scouts, and YMCAs. There are at least five examples of this type of merger included in this study. These mergers were generally influenced by the national organization which then provided support and guidance during the merger process. Occasionally national organizations provide a fairly strong directive to move toward the combining of operations. This national movement provided a blueprint for others to follow. By sharing their merger experience, nonprofit organizations were able to learn about the value and the pitfalls of joining forces. With the downturn in the economy in 2008, smaller local nonprofits began to seriously explore collaboration and merger as an option for survival and growth. Success Factors In Nonprofit Mergers 34 MAP for Nonprofits & Wilder Research 2012
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4a. Are you currently involved with
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LOGIC FOR DETERMINING WHAT SECTIONS
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[IF MORE THAN ONE CHAMPTION > ASK A
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31a. Did they continue to fund the
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2. Merging process My next question
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