Recession Fueling Nonprofit Mergers?

July 5, 2011; Source: Pittsburgh Tribune-Review | What a difference a recession makes. Two years ago Kate Dewey, a Pittsburgh-based management consultant to nonprofits, said that 5 percent of her firm's business was devoted to helping clients explore mergers or other kinds of combinations to help them fare better financially.  Today, she says that work takes up about 30 percent of her business. "Much of the financial environment for many organizations has changed significantly," Dewey said. "Unless they had a reserve fund, these organizations have eaten into any reserves they might have had."

According to the Pittsburgh Tribune-Review, Dewey is not the only one seeing the uptick in requests for help that includes possible mergers. The newspaper reports that The Forbes Funds, a branch of The Pittsburgh Foundation, has been engaged in 32 restructuring projects since 2005. In the past two years, however, requests for that kind of assistance have grown 44 percent, said Diana Bucco, president. "Driving these (mergers) are shrinking resources at a time when there are growing needs, so organizations are asking what's the best way to provide help to those in need with limited resources."

How do organizations fare after a merger? The newspaper cites the case of the Western Pennsylvania chapter of the Multiple Sclerosis Service Society, which merged last year with UCP/CLASS, a nonprofit that serves residents with cerebral palsy or other disabilities. Before the merger, the society was running deficits approaching $90,000 a year on an annual budget of $750,000. It was also watching its reserve fund erode. Its merger with UCP, which has a $30 million budget, has saved thousands of dollars that the group previously spent on audits, bookkeeping and liability insurance. 

A merger of the Fort Pitt Museum and the Heinz History Center resulted in attendance jumping to 19,000 from 12,000 visitors a year. And it's not stopping there, according to Andrew Masich, president and CEO of the Heinz Center . "Just this calendar year, we're seeing a doubling of school groups.

Tell us, are you seeing more mergers in your region? And if so tell us about them."—Bruce S. Trachtenberg