The venerable Bridgespan Group used the crisis to help nonprofit leaders contemplate the potential benefits of mergers and acquisitions. In an inaugural article on the subject in 2009, “Nonprofit Mergers & Acquisitions: More than a Tool for Tough Times,” Bridgespan explored the many obstacles to nonprofit mergers, as well as the types of strategic benefits nonprofits might realize from merging.
In the for-profit sector, experts are routinely on the hunt for merger opportunities that will reward them with cash windfalls. There is strong financial motivation for mergers and acquisitions (M&A), multi-faceted expertise in how to proceed, and a sector culture in which M&A activity is part of the landscape.
None of these factors holds true for the nonprofit sector, where there is little expertise in M&A, uncertain financial benefit, and, most leaders feel, no time to learn.
However, nonprofits can realize several strategic benefits from mergers and acquisitions. Among those considered by Bridgespan:
· Improvements in the quality and/or efficiencies of existing services.
· Ability to offer a wider range of mission-relevant services.
· Expansion of geographic reach.
· Acquisition of new staff capacities.
· Access to new sources of funding.
Bridgespan offers case studies of two successful sets of nonprofit M&A activity – the Arizona Children’s Association, and the Hillside Family of Agencies in New York. Both studies offer valuable early lessons in dealing with the daunting obstacles to M&A in the nonprofit sector.
Additional discussion of the topic, from around the same time, was hosted by the Chronicle of Philanthropy. This conversation includes Lois Savage, President of the Lodestar Foundation, which established the Collaboration Prize in 2008 both to encourage collaborations and to gather vital information about how collaborations are being pursued in the nonprofit sector. Learn more here, and let me know what you think!