When Merger Doesn’t Add Up

When nonprofits undertake merger explorations or negotiations, they devote significant time and effort to making the partnership work. But sometimes, it just doesn’t add up. After investing so much and still not getting to “yes,” it can be discouraging. Participants may come away wanting nothing more than to pack up and go their separate ways. But there is no reason to give up just because a merger doesn’t add up. There is still the potential for other kinds of alliances that can advance shared goals.

Lessons for Nonprofit Leaders: One challenge for organizations needing to back off from a merger may be letting go of what could be when what was originally envisioned is not the right path. (Think of it as the organizational equivalent of shifting from “let’s get married” to “let’s be friends.” A little awkward!) This is where it is critical for organizations to consider the impact they could have by partnering in some form other than merger. The shared vision is still there, though perhaps not as grand, when considering a less integrative alliance. It takes strong leadership to be able to set aside the emotional letdown of not getting to a merger and instead focus on the potential benefit of bringing together programs to enhance services to clients, or consolidating administrative services to streamline and strengthen operations.

Lessons for Capacity Builders: As a consultant, it is important to be with the clients where they are.   This can be a challenge, especially when we can see the potential benefits of a more integrative form of partnership than the organizations themselves are likely to pursue. But our job is to help organizations find the right form of partnership for them. That may mean backing away from a merger and exploring other partnership options. This requires skill in helping participants focus on the shared vision, adjust and reconcile expectations as necessary, and persevere in exploring other ways of working together.

Lessons for Funders: Funders supporting a partnership exploration by their grantees may also need to step back from the idea that a merger is the solution. Of course, their interest is in seeing greater impact and efficiency, but it is important to recognize the significant benefit from non-merger alliances such as program and administrative consolidation. There is also the long view to be considered: the level of trust required for a merger is not built overnight, but other forms of partnership can often lead, over time, to opportunities for deeper consolidation.

When talking about nonprofit mergers, it is important to consider what options are still on the table if organizations determine that merger is not the best form of partnership for them. There are many other high-impact options to explore, as seen in case studies on joint programming (Habitat Metrolina Partners, YWCA of Sonoma County and Community & Family Service Agency (formerly West County Community Services)), administrative consolidation (Chattanooga Museums), and the combination of both (Ready, Set, Parent!). Rather than viewing unconsummated merger negotiations as a failure, consider the groundwork that has already been put in place for other ways of working together and the potential that could still be realized.