Nonprofit Collaborations and Mergers

Opportunity to Grow Mission Impact – Yes!

Greater Efficiency – Good Chance

Lower Costs – Not Necessarily

At the recent Clinton Global Initiative University, Chelsea Clinton asked 1,100 entrepreneurs if they had the courage to “come second.” Instead of founding an organization, could they create social, economic, or environmental impact by collaborating—plugging into another founder’s proven approach and building on it? It’s a question that nonprofit social innovators, startups or established organizations, should be asking.

Thought leadership and a body of research have emerged in this field – as have funders. The largest funder of collaborations nationally is the SeaChange Lodestar Fund (200+ collaborations funded) – a collaboration of the Lodestar Foundation and SeaChange Capital Partners.  Your organization may be eligible. SeaChange Capital partner John MacIntosh has discussed his experience of the starting points for such collaborations:

Most common motives for nonprofit collaboration (in order)

  1. Leadership transition prompts CEO or board to think about change and possible new models
  2. At hand of a strategic planning exercise or newly arisen opportunity to grow mission impact
  3. There is a fiscal crisis (generally a bad reason)
  4. Pushed by funders

In a series of case studies by other thought leaders – the Bridgespan Group, LaPiana Consulting, The Lodestar Foundation and The Catalyst Fund for Nonprofits a few key points emerged as success indicators:

Think mission vs. organization

Rachel Haag, CEO of Boston’s AIDS Action Committee completed three mergers in four years. She said the key in each situation was for leaders to check egos at the door and focus on future missions, not current organizations or even their own jobs. “It was paramount that our mission was preserved; organizational integrity or the future role of board members or senior staff was secondary.”

Pay Attention to culture

Sister Paulette LoMonaco, executive director of Good Shepherds’ Services says: “[We] require what we call cultural due diligence, which we define as spending the time, energy, and money to carefully plan how we will incorporate staff from the merged entities into the culture of Good Shepherd Services.

Involve staff as architects of integration

Elisabeth Babcock, executive director of Crittenton Women’s Union found that board and staff egos can be the greatest barriers to strategic unions. “Tap your senior staff and trust their ability to provide valuable analysis on the potential upsides and roadblocks of this type of transition.”

 Count costs carefully and align funders

The series opened with a story of a planned merger that fell apart once the organizations surfaced the true costs of blending back offices. Due diligence and integration can be expensive – funders need to be aware of the need to cover true costs when supporting a union.  Elisabeth Babcock of CWU said, “Always look for the least complicated form of collaboration to achieve the impact you seek.” Sometimes this will call for merging.  But there are many simpler ways for nonprofits to collaborate—from loose coalitions for advocacy, to joint ventures to share and manage assets, to co-locating to share services.

Focus on maximizing mission impact, remember culture and finally – focus on cost efficiencies.            

(Impact Consults provides collaboration advisory services as well as support to access SeaChange/Lodestar funding.)