Despite growing support for nonprofit mergers, promising combinations often stumble over three emotionally charged issues: getting the boards aligned, finding roles for senior staff, and blending the brands.
Boston, MA (PRWEB) February 20, 2014
A new study released by The Bridgespan Group analyzing merger activity among nonprofit organizations in four states across the country found that the overall rate of registered mergers remained largely unchanged from 2007-2012—this despite financial pressure due to reductions in government funding and private donations. In Massachusetts and Florida, the research also looked at how merger activity differed by revenue and field and found that mergers did increase significantly among organizations in the child and family services field. Another significant finding from the Massachusetts data pointed to the emergence of a dominant type of merger—large nonprofits rolling up smaller organizations.
According to Bridgespan Partner and the paper’s co-author Katie Smith Milway, “Although leaders are looking more seriously at mergers as part of their growth strategies—there were more merger filings during this time-period—the number of new nonprofits also grew by seven percent, keeping the rate flat.” Milway also noted a lowering of systemic barriers in the past five years, like lack of matchmakers and know how (identified in a 2009 Bridgespan publication “Nonprofits M&A: More than a Tool for Tough Times.” But interviews surfaced a number of soft barriers in due diligence that derailed strategically aligned combinations.
“Despite growing support for nonprofit mergers, promising combinations often stumble over three emotionally charged issues: getting the boards aligned, finding roles for senior staff, and blending the brands. Creating a due diligence process that overcomes these hurdles is critical in order to translate increasing skill to merge into will to merge,” says Milway.
According to Maria Orozco, co-author and Bridgespan manager, “Although this research focused on mergers and acquisitions, a survey of nonprofit leaders that we released in 2011 showed a majority (81 percent) of those surveyed were engaged in some form of collaboration, a jump of 20 percentage points from answers to the same question on a survey two years earlier.”
In conjunction with partners, Lodestar Foundation, Catalyst Fund and La Piana Consulting, on March 4th, The Bridgespan Group will release a collection of merger cases and launch a blog series from practitioners in an effort to advance resources for the field. In addition, Stanford Social Innovation Review will host a webinar on mergers and collaborations March 11th for further discussion on the topic (additional information to be announced).
About The Bridgespan Group
The Bridgespan Group (http://www.bridgespan.org) is a nonprofit advisor and resource for mission-driven organizations and philanthropists. We collaborate with social sector leaders to help scale impact, build leadership, advance philanthropic effectiveness and accelerate learning. We work on issues related to society’s most important challenges and to break cycles of intergenerational poverty. Our services include strategy consulting, leadership development, philanthropy advising, and developing and sharing practical insights.