nonprofit mergers and how to do it smart
Findings from Research on Successful (and Unsuccessful) Mergers
There are good reasons for doing a merger of two (or more) nonprofits, but I’ve already written that little newsletter. This one is about how to do it smart. Happily, on this point, we can draw from a very well-designed study, the “Metropolitan Chicago Nonprofit Merger Research Study” done by Northwestern University’s Kellogg School of Management, Mission, and Strategy Consulting, and eight Chicago foundations. They analyzed 25 nonprofit mergers in the Chicago area between 2004 and 2014. They also looked at uncompleted and dissolved mergers to learn what could go wrong. So thanks to these good people for doing this study, and thanks the funders for making it happen.
From that (and other good sources), here goes.
1. Make sure there is a very strong mission match between the two nonprofits. There can even be legal problems if this is not met. Do it for the common mission.
2. For both boards: do due diligence. Gather facts about each other. Know what you’re getting into, in detail. Map out the pros and cons. Understand the competencies on both sides and how those will mesh. Understand the cultures on both sides and how they might align – or not.
3. Start with affiliation. Find ways to join forces while remaining separate legal entities. Draw up a carefully-formed affiliation agreement.
4. Enlist the help of a third-party consultant or advisor. Present executives already have their time more than filled with present tasks and responsibilities, and this is a lot of work. Hey I’m not saying this just because I’m seeking more work (though yeah, there is that), but it was a definite recommendation coming out of this research.
5. Make sure both boards are not only accepting of the merger, but supportive and engaged. They should be advocates.
6. Trust is key. It grows in a context rich in communication and transparency. Trust overcomes fear.
7. Extend transparency and communication to all team members on both sides. Don’t surprise them; prepare them. Involve the staff on both sides - before, during, and after.
Good news: in 88% of the cases studied, the aquired and the aquirers reported they were better off, with greater impact, after the merger. So, yay!
love, joy, peace … Michael
www.michaeljaffarian.com. Michael is a freelance consultant to nonprofits, with an emphasis on research. Contact him for a free, one-hour consultation. emichaeljaffarian@gmail.com.
Vol. 1 No. 17
Was this email forwarded to you?