4 Keys to Successful Nonprofit Mergers

Your board and leadership have accepted that your nonprofit isn’t sustainable and can’t continue alone. You’ve decided to do it: Your clients will be better served if your nonprofit merges with another organization. That is, by the way, the only reason for a nonprofit to do anything: continue, expand or improve services to clients.

Remember that. As the process goes on, it gets more difficult -- and more important -- to remember why you are doing what you’re doing.

A positive vision that this is a good thing for clients, coupled with recognition that it is also a loss, are key to making the merger go well, says Barbara Krasne, Managing Director, of KrasnePlows, a consulting firm that specializes in facilitating nonprofit mergers.

In other words, a merger is a paradox, a birth and a death at the same time.

1. Vision: The most successful mergers are driven by someone at the top -- on the board or at the executive level -- who can articulate an aspirational goal, something the organization is moving toward, and communicate it clearly to staff.

“We go back to first principles. Why are you collaborating? What are your goals? How do they align with what you want individually as partners? How do they align with each other,” Krasne says.

Again, the focus must be on the long-term benefit to the mission, not on the loss.

2. Communication throughout the merger process is so critical that Krasne often starts the process by developing a communication strategy that includes regular, two-way communication with staff about their concerns as well as clear lines of communication between the merging organizations. This means details: Who will the spokesperson be? How will the merging organizations communicate with each other?

3. Recognize limitations: A do-it-yourself merger is like building a house yourself: not a good idea for most of us. It requires specific skills and knowledge as well as a lot of time.. The devil is always in the details and the details are many:

• How will programs and staff change?
• Will the history, name, and values of the weaker party be retained?
• How will the corporate legalities and existing contracts be handled?
• How will seniority, pensions, and compensation be handled for line staff?

These operational and organizational details cut across all functions, and affect all internal and external stakeholders, Krasne says, and dealing with them adds another full-time job for your staff members, one for which they have no experience and no time. That can imperil good service to clients, prolong the merger process unnecessarily, and lead to mistakes.

“[Both organizations] need to work out new relationships within their communities, their funders, their clients,” Krasne says. “It’s more than just thinking about how they combine staff and boards.”

That’s why mergers often require the help of an outside consultant. Yes, it is a cost but so are low employee moral, reduced quality of programs, and “i’s” left undotted. As an objective third party, consultants can also help define the goals and benefits of the merger and plan communication strategy as well as taking care of the details.

4. Acknowledge loss: “Frankly, a merger is a death,” Krasne says. “If it is a true merger, you will see the death of an institution as it was known. You have to leave room for the bereavement process and celebrate a birth and honor the legacies of the institutions involved.” This “touchy-feelly” stuff is where people often trip up, she says. Each organization has a history and culture, with rituals, values, and ways of operating. Both histories and both cultures need to be acknowledged and honored.

And, back to that vision thing: What you are trying to achieve is the anchor that will get people through the loss and create a vibrant combined organization. It is a sign of successful merger, Krasne says, when staff members from both organizations talk about “our clients” and “our resources.”