March 30, 2015; Marks Paneth
A small survey of 103 professionals working with nonprofits with budgets between $10 million and $100 million suggests that mergers are being considered and attempted by those groups, but not at a particularly overwhelming rate.
Of those they surveyed, 13 percent say their organizations merged during the past three years and 15 percent say their organization considered a merger but didn’t proceed over the same period. That seems to this author to be a fairly subdued rate of activity considering the weakened state of groups post-recession.
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Additionally, it reported that “nearly a third of nonprofit leaders expect notable merger activity in their sectors during the next five years,” with a quarter expecting moderate merger activity in their sector and six percent expecting more significant merger activity. We tend to discount these kinds of speculative responses, however.
Those respondents whose nonprofits had merged in the last three years said they were motivated by “increasing the ability to serve their constituents” and “combating financial difficulties.” And for those who considered but did not complete a merger, the most cited reason for the refusal was that “mission and values were different.”
Considering that the stated dealbreaker is generally a lack of mission alignment, it is probably not surprising that 45 percent of nonprofit leaders say they believe that completed mergers will strengthen the missions and effectiveness of nonprofit organizations. Still, 21 percent say mergers will weaken them and 34 percent say they are unsure.
For more information about the motivations for mergers among nonprofits of various sizes, you can go to Judith Alnes’s “Creating Fertile Soil for the Merger Option” a classic NPQ article which goes into depth on the topic.—Ruth McCambridge