Mergers/Collaboration
Description
It is clear that the nonprofits that survive in the long term are those that remain flexible and adaptive first to the mission they serve, second in the way they manage their balance sheet and third in their ability to do more with limited resources and through innovative operating models. Pursuing “innovative operating models” is rooted in the concept of collaboration.
Collaboration is defined as a mutually beneficial relationship between two or more organizations that includes:
- A commitment to shared relationships and goals
- A jointly developed structure with shared responsibility
- Mutual authority and accountability for success
- Sharing of resources and rewards
For more information, click here to read Nonprofit Mergers: An assessment of Nonprofits’ Experiences with the Merger Process (PDF) from the 2007 Tropman Reports.
In contrast, merger is the process by which at least two nonprofit corporations join to form one legal entity and includes outright mergers, asset transfers, interlocking boards, parent-subsidiary arrangements.
Click here to read “What Makes Mergers and Collaborations Work?” from The Forbes Funds (PPT).
Key Considerations
The Forbes Funds has commissioned several research projects on the issues surrounding mergers and collaborations. The table below provides some of the issues that surfaced as the most important for your consideration.
| Definition of the Business Problem | Our research indicates that the primary driver for merger exploration is expansion of capacity to deliver on the mission, closely followed by increased competition and the viability of one of the two organizations. |
| Board Members | Leadership questions are key in mergers; vacancy of leadership reduces challenges about deciding who will lead the merged organization. |
| Existing Alliances or Collaborations | Strong ties already exist with potential partner; high level of previous relationships already involved program alliances or collaborations. |
| Possible Expansion of Capacity | Primary driver for merger exploration is expansion of capacity to deliver on mission. |
| Full Integration Typically Takes Years | Although the timeline to complete the merger typically met leaders’ expectations, full integration takes much longer to address due to challenges and obstacles resulting from cultural differences. |
Relevant Links
- Nonprofit collaboration and merger resources
- Nonprofit collaborations, mergers and saving the safety net
- Nonprofit collaborations and mergers - finding the right fit (PDF)
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