What could your organization gain by working formally with other organizations? What could the sector gain? Is a merger in the cards? You have choices when it comes to the structure of your organization. However, the choices have trade-offs.
Take a look at the La Piana model for strategic restructuring. Where could your organization find opportunities through partnerships or restructuring?
Combining with another organization may increase your ability to achieve your mission. It could be that another organization offers services or has the resources you don’t. Joining forces could really make a difference. However, working with other organizations adds a new layer of complexity as you will need to coordinate activities and sometimes work as a united front.
Alliances between organizations are based on a shared vision and mission, but they need to be cemented by formal agreements. Generally, the agreements lay out rules of conduct, governance, financial commitment, and accountability.
Often the most challenging part of working with other organizations is aligning the different cultures. Before joining an alliance, make sure you’re okay with what they are trying to achieve and the way they do business. And be prepared to commit leadership and resources of your own.
The word merger evokes dread in some people. Mergers can be painful, but they can also lead to better service delivery or social action. Reasons for merging vary: some organizations merge as a last resort and others merge to reduce redundancy or to capture a new opportunity.
Thing to consider in a merger (in no particular order):
- Decision making and governance
- Staff retention, benefits, and compensation
- Cost of doing business
- Branding and marketing
- Financial viability and cash flow
- Vision and mission
- Culture - "the way we do things around here"
Before you take any actions or speak publicly about your intentions, be sure to have board members read the Compasspoint - Guide for Nonprofit Mergers.
Finding a Consultant
Alliances and mergers are tricky: these efforts involve difficult discussions about the core of the organization, and balancing competing priorities. You’ll need somebody with the objectivity to weigh the pros and cons appropriately. Consultants experienced with alliances and mergers and interim executive directors are the usual suspects. Look for familiarity with your mission and the players in your service area, deep experience with operations, and pragmatism about the funding landscape.
Timelines, Legalities, and Costs
Alliances and mergers may take several months or even a year to set up. And they can be pricey—in addition to your consultant’s fees, there may be transaction or dues costs and tax implications to consider. Some of the alliance’s activities might put your nonprofit status at risk. So be sure to run your plans by legal and tax advisors.