MERGERS: Not a Four-Letter Word
MERGERS: Not a
Four-Letter Word (pdf)
Mergers have long
occupied a complicated place within the not-for-profit (NFP) sector. NFPs
pursue mergers to increase their impact and improve services while becoming more
efficient over the long term. On the other hand, mergers are seen as
funder-driven. Some NFPs fear that mergers can cause a loss of identity,
autonomy or even a sense of failure.
Through our Challenging Times
research (pdf), community roundtables, collaboration
research project (pdf), the Ontario Trillium Foundation has heard
that collaboration is increasing and the sector is experimenting with different
forms of strategic restructuring such as shared services or spaces. We also
heard the sector say it is highly fragmented, with NFPs and charities trying to
carve out their place on the crowded landscape.
While there seems to be a
great deal of excitement around collaboration, there is little information and
dialogue around mergers in Ontario's NFP sector. Between April 1, 2004 and June
30, 2010, OTF has approved 15 grants worth close to $1.3M in Ontario communities
for projects related to mergers and amalgamations of organizations. Through
these grants we have learned that merging is complex but can be very
Given both the risks and opportunities that mergers present, we
are keen to engage in a conversation about what this changing landscape means
for communities, the sector, and its funders. We are taking the first step in
that dialogue by exploring five stories of organizations that have merged,
lessons learned and implications for funders
Big Brothers Big Sisters of Windsor & Essex
County: This case reminds us that a merger is a long-term serious
commitment that requires thoughtful consideration and consent from both sides in
order to be successful.
Club Action Hearst: The story of two organizations from
Northern Ontario that decided to merge into a single entityafter recognizing
that they were providing almost identical services to Franco-Ontario
Centre Wellington Minor Hockey Association: How two
competing hockey associations realized they need to come together in a single
organization, illustrating a merger requires as much psychological and emotional
preparation as it does organizational.
East Scarborough Storefront: The partnership between a
network of agencies and residents with an alternative governance platform
highlights Storefront's creativity and innovation in searching for a practical
solution to their unique situation.
North York Meals on Wheels and More: A story about an
organization that pursued two mergers, one that did not come to fruition and one
that was successful. This example highlights the importance of choosing your
partners carefully, not all matches are made in heaven
Our sector is changing. While this is not a new phenomenon, the current
climate of decreased revenues and increased service demands is challenging
non-for-profit organizations to think more creatively about how they fulfill
their missions. Likewise, funders are being challenged to think about how best
to support this work, particularly to drive innovation and greater impact in the
sector. Pursuing partnership and collaboration are effective ways to achieve
A merger can be transformative when the right conditions are in
- Sound strategic and community benefit: The primary motivation to merge
cannot be for the sake of survival - nor should it been seen as a rescue boat
for failing organizations. There has to be positive outcomes for the
organizations involved and the communities impacted.
- Full commitment of leaders of both organizations: Buy-in is important at the
staff, volunteer and board levels. Moreover, both entities have to be committed
to make the merger work. A successful merger is not possible if only one party
is moving the ball forward.
- Merger is well resourced: Mergers are complex endeavors that require both
financial and non-financial resources.
- Cultures are compatible: Combining very different organizational cultures
is sometime more challenging than the administration and legalities associated
with amalgamation. On the other hand, compatible organizational cultures can be
essential driving forces behind successful mergers.
The Funder's Role:
Many respondents interviewed through OTF's Collaboration research
project stressed the importance of enabling, not mandating collaborations.
Research confirms that the most successful collaborations are those that happen
because individuals, groups and NFP organizations identify a shared need, not
because a funder requires it2.
We have the best impact when we think and act systematically and
strategically about types of support that we provide at different stages across
the collaboration spectrum. Ultimately we should work to create a climate where
mergers and other partnerships can succeed3:
- Engage the sector in conversations about mergers as one way to support
collaboration, efficiency, and innovative ways of working together.
- Create space for those engaged in merging or other strategic restructuring
to share and learn from their experiences.
- Embrace flexible funding approaches that match the complexity of the
partnership, such as developmental grants, multi-year initiatives, and covering
costs critical to the success of the collaborative.
- Know the terrain. Make sure decision-makers understand the complexities
involved with mergers. Don't underestimate the costs and time involved.
- Think outside the box: provide support for new and emerging partnerships,
such as alternative governance platforms.
We hope this article will inspire other funders and NFPs to share experiences
and learn from one another. This will grow our collective knowledge around
mergers and structural changes that will contribute to a stronger and healthier
nonprofit sector. We invite you to be in touch,
post a comment on our blog and
share this article with others in the field to continue the conversation.
Creating an Environment for Success:
Mergers And Other Partnership Structures For Environmental Nonprofits, Institute
for Conservation Leadership, 2010
2 Strengthening Collaboration in
Ontario's Not-for-profit Sector, Ontario Trillium Foundation,