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Should You Merge with Another Non-Profit?

Sikich

May 16 2014

2 min read

It’s no secret that non-profit organizations have faced great challenges since the economic downturn began in the late 2000s. In fact, some have even faced the possibility of closure due to financial reasons. If your organization is dealing with a lack of either financial or human resources, you should look for solutions. Joining forces with another non-profit is one strategy you might consider. When researched and executed carefully, a merger can make both organizations stronger. Here are three factors to consider:

Have the Right Reason: The decision to merge isn’t an easy one, but if your organization has experienced steady declines in grants and donations, it’s worth considering. Duplication and overlap of services may be another good reason to merge. Bringing organizations together can be a powerful way to build unity, achieve objectives and use funding efficiently.
Pinpoint Your Goals, Question the Timing: If you’re considering a merger, think about what you really want to achieve. Develop realistic objectives stated in measurable terms, such as striving for a 25 percent increase in donations. You also need to assess your readiness to be a partner. Assemble a committee of key managers, board members and advisers to discuss the financial, legal, public relations and other implications of a potential merger. Invite critical outside stakeholders, such as major funders and service recipients, to provide input.
Identify the Hurdles: Naturally, non-profit mergers involve considerable risk of stakeholder resistance, as well as internal hurdles. For example, if may be difficult for two organizations to combine their cultures. Out of habit and expectation, staff may oppose efforts to act as a united organization when it comes to everything from work hour flexibility to program procedures. Combining technology systems can be challenging as well. Other possible hurdles include objection from program partners and community leaders, legal issues, time and resources, and additional costs.

It’s inevitable that merging organizations will face obstacles. But if going it alone no longer seems realistic, combining resources with another non-profit may be the answer. Ultimately, just ensure that your organization’s plan to merge is as strong as its desire to succeed.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author

Sikich

From accounting, tax and assurance to technology and advisory, Sikich offers a unique formula of professional services to businesses and organizations across the country. By pairing subject matter expertise with the real-world experience gained as entrepreneurial leaders, we provide clarity to your complex challenges and solutions to strengthen every dimension of your business.