Four Common Factors Hold Charities Back From Merging

The merging of businesses is common in the private sector but not so popular amoungst charities or non-profits; however some universities, churches, health promotion/research groups and service-based organizations have achieved great success after amalgamating with other charities. A merger can make good business sense as a response to financial changes, duplication of services, and a desire to achieve greater social impact.

Today’s competitive nonprofit sector environment can be the incubator that brings organizations together. Many executive leaders recognize an organization must continuously change and a merger – by their very nature – create new models to leverage resources, while creating financial efficiencies, broader stakeholder engagement, increase mind share and create new platforms to serve the greater good.

Executives who have successfully orchestrated mergers understand the risk of maintaining the status-quo. Without strong brand presence, financial health, proper infrastructure and demonstrative impact, charities risk the compounding pressure of maintaining sustainable levels of support. Merged charities understood these risks and committed themselves to evolving the business of their organizations.

The growing public narrative surrounding administrative and operational costs have added pressure to the nonprofit sector. The focus on program delivery, management salaries, technology investment and maintaining physical assets have opened up the discussion for charities to consider a merger model.

If joining forces can build greater capacity, create healthier balance sheets, retain talent and attract new investment, why are not more charities looking at merging?

It has been my experience that 4 common factors hold charities back from merging:

1. Often the opposition that arises with staff is due to a lack of open dialogue. Without a robust communication strategy staff lack a full appreciation of the current state of the organization, the market trends, the benefits to the mission or the business case that supports the strategy. The employees’ readiness to embrace change is critical to achieving a successful merger.
2. The management styles of executive teams help shape culture, but also present challenges when developing merger relationships. It is vital in the process to examine how ‘style’ can support and detract from achieving the desired outcome.
3. Differing visions for the organization(s) can derail a merger if not built on strong common ground.
4. Lastly, success is directly linked to management and governance volunteers maintaining momentum on the execution of the plan. Project management teams, executive leaders and governance boards need to ensure all parties work together  – on task and on schedule.

Imagine Canada reports there are 170,000 charities and non-profits organizations in Canada of which 85,000 of these organizations are registered charities (recognized by the CRA). To succeed in an already crowded charitable sector it is now, more than ever, to  consider the benefits of responsible mergers and by doing so increase the social impact of the organization and strengthen our communities.

Share your thoughts of merging charities in the comment box below. Thank you!