During the past few of months a number of charities have decided to merge as a response to mounting challenges. These organizations are finding bold, strategic ways to serve their constituents, while ensuring their future sustainability. They see the benefits of their merger as ‘being stronger together’.
Undertaking a merger requires a high level of due diligence and an investment of resources in order to reach the decision. The basis being an intent to act in the best interest of both organizations, and mitigate any current or future risks.
In this article, I have laid out common challenges charities face, common factors that impede mergers, and rationale some charities express to justify unification.
8 Common Challenges
Of course there are diverse challenges charities grapple with unique to their circumstance, however the top-line challenges often heard across the nonprofit sector have been:
- The sector is cluttered with over 89,000 charities,
- Similar mission-based charities are competing in same markets,
- The shifting labour market has created leadership gaps and increased pressure to recruit talent,
- Financial operating pressure continues to grow,
- Ability to raise more funds,
- Corporate partnerships and government relationship expectations are evolving,
- Increasing donor and volunteer fatigue, and
- Increasing expectations for demonstratives social change.
“Embracing change and leading prudent, strategic response is part of the process of creating stronger, healthier communities…”K. Publicover, kdpconsulting.ca
4 Common Impeding Factors
As Boards and executive teams weigh their options to navigate what is in the best interest of their recipients/communities, it is prudent to be mindful of four common factors that have held charities back from successful mergers, as highlighted below:
- A lack of open dialogue deep within and/or between each organization,
- Differing management styles of executive and boards,
- Differing visions for the future of individual and/or an amalgamated organization, and
- An ability to maintain momentum thru the entire process.
Reference article: Four Common Factors Hold Charities Back From Merging, K. Publicover, March 20, 2018
12 Reasons for Merging
For charities open to examining if a merger you may want to reflect on the reasons other charities have used in justifying their merger, as highlighted below:
- Similar guiding missions, visions and values; improve performance, increase opportunities,
- Current and future community needs outweigh current separate capacity to meet the need as separate orgs;
- Enable deeper support to constituents, more programs and services in more communities;
- Serve more individuals;
- Enhance advocacy efforts
- Stronger single organization, broader donor base;
- Growth in strategic delivery partners;
- More sustainable financial structure;
- Reduce costs, expand resources,
- Stronger governance and operational model, including improved staff supports and opportunities;
- Leveraging combined strength, and
- Increase reach, greater impact.
Whether your charity operates as a singular organization or as a member in a federated network, merging with a complementary organization(s) may be an attractive, viable option to address your environmental challenges, means to increase operational performance, and a way to improve your long-term community impact.
Embracing change and leading prudent, strategic response is part of the process of creating stronger, healthier communities; regardless if a merger makes the best fit for your charity. It’s one bold alternate worth consideration.
Notable Charity Mergers
- Children’s Wish Foundation of Canada and Make-A-Wish Canada, October 2, 2019, Press Release
- Camp Trillium and Camp Oochigeas, September 26, 2019, Press Release
- YMCA of Brockville and Area & YMCA of Kingston, April 3, 2019, Press Release
- YMCAs across Southwestern Ontario and YMCA of Western Ontario, November 1, 2018, Press Release
- Canadian Cancer Society and Canadian Breast Cancer Foundation, October 28, 2016, Press Release