Recession Not Leading to Wave of Mergers
Foundation Center
September 3, 2009
As the economic crisis began to squeeze foundations and nonprofits last fall, predictions of a wave of mergers spread through the nonprofit sector. But in the months since, no such wave has emerged, at least not on the scale predicted, Crain's Chicago Business reports.
According to surveys of nonprofit leaders conducted in November 2008 and May 2009 by the Boston-based Bridgespan Group, roughly 20 percent of respondents were considering a strategic merger or alliance as the recession deepened. But a March 2009 survey by the Nonprofit Finance Fund found that only 5 percent of the nearly one thousand organizations it surveyed had merged or intended to merge with another organization.
The reasons given are varied. If the logistics of a merger are daunting to some, so, too, are the costs. A merger can cost upward of $250,000, depending on the size of the organizations involved. And while funders often express interest in having grantees streamline their operations, there isn't enough foundation money available to help all the organizations that want to merge, said Jean Butzen, president of Mission Plus Strategy, a Chicago-area consulting firm that advises clients on mergers and alliances.
Still, some mergers in the Chicagoland nonprofit community have taken place. When Bethel New Life, a community-development group, was looking to divest a supportive housing operation that was losing $50,000 a month and missing its occupancy goals, it found a partner in the Chicago Christian Industrial League. The key to success was planning, said Richard Townsell, Bethel's executive vice president and chief operating officer. "Work on your board of directors as early as possible," he said. "Show how families will continue to be served. [And] have a transition team from each agency meet weekly to iron out any issues."
Reprinted with permission of Foundation Center.
