Five years after their first exploration of merger and acquisition (M&A) activity in the nonprofit sector, the Bridgespan Group found itself asking, “Why Nonprofit Mergers Continue to Lag.” Not only has the needle on successful nonprofit mergers barely budged since 2008, the number of U.S. nonprofits has actually grown.
Nonprofit mergers fail for several reasons: because they are undertaken as a last resort, when one or both organizations is already in severe trouble; because leaders lack expertise in how to manage mergers; because few funds are available to support the real up-front costs of merging, including due diligence; because few matchmakers exist to help potentially compatible organizations find each other and begin conversations.
The Lodestar Foundation is one of the increasing number of funders actively supporting nonprofit M&A activity, with its Collaboration Prize and with “mixers” of funded organizations that might find common cause over cocktails.
The Foundation Center highlights other foundations committed to supporting nonprofit collaborations and mergers, and has created the invaluable Nonprofit Collaboration Database to inspire, inform, and suggest potential matches for nonprofits looking for the full range of collaborative opportunities, up to and including M&A.
Meantime, the Bridgespan Group continues to support M&A activity with advice on all aspects of the process. Of particular interest is attention to the emotions involved in the prospect of merging.*
Worries about the loss of identity, jobs, autonomy, service quality, funding, and established relationships are legitimate, pervasive, and often acted out as obstruction rather than openly aired and considered as part of the process of due diligence and planning. Any M&A effort will be doomed if senior staff and board members are not actively involved in considering and planning it from the outset.
And, of course, it’s always possible that M&A is a bridge too far. David LaPiana and Associates provide a concise explanation of partnership possibilities short of merging that can have strategic value for the organization and are generally much easier to achieve. You can view LaPiana’s “Partnership Matrix” here.
--------------
*The rare organization with an established culture of expressive change, or "inscaping," about which I've written earlier, will find the process much easier.
Nonprofit mergers fail for several reasons: because they are undertaken as a last resort, when one or both organizations is already in severe trouble; because leaders lack expertise in how to manage mergers; because few funds are available to support the real up-front costs of merging, including due diligence; because few matchmakers exist to help potentially compatible organizations find each other and begin conversations.
The Lodestar Foundation is one of the increasing number of funders actively supporting nonprofit M&A activity, with its Collaboration Prize and with “mixers” of funded organizations that might find common cause over cocktails.
The Foundation Center highlights other foundations committed to supporting nonprofit collaborations and mergers, and has created the invaluable Nonprofit Collaboration Database to inspire, inform, and suggest potential matches for nonprofits looking for the full range of collaborative opportunities, up to and including M&A.
Meantime, the Bridgespan Group continues to support M&A activity with advice on all aspects of the process. Of particular interest is attention to the emotions involved in the prospect of merging.*
Worries about the loss of identity, jobs, autonomy, service quality, funding, and established relationships are legitimate, pervasive, and often acted out as obstruction rather than openly aired and considered as part of the process of due diligence and planning. Any M&A effort will be doomed if senior staff and board members are not actively involved in considering and planning it from the outset.
And, of course, it’s always possible that M&A is a bridge too far. David LaPiana and Associates provide a concise explanation of partnership possibilities short of merging that can have strategic value for the organization and are generally much easier to achieve. You can view LaPiana’s “Partnership Matrix” here.
--------------
*The rare organization with an established culture of expressive change, or "inscaping," about which I've written earlier, will find the process much easier.
RSS Feed
