Giving Compass' Take:

• Aneri Pradhan explores what nonprofit organizations should consider when thinking about mergers and acquisitions for growth purposes. 

• How do mergers and acquisitions increase a nonprofit's impact? 

• Here is how nonprofit boards can start the merger conversation. 

Nonprofit mergers and acquisitions (M&A) are not quite as glamorous as for-profit exits. Without shareholders, no individual gets a penny to their name when nonprofits merge. What does happen, though, is the opportunity for replication, scale, strengthened systems and increased impact. Those are all laudable and exciting goals to strive for.

Nonprofits should merge and acquire far more frequently than they currently do. Typically, nonprofits undergo M&A under two conditions: financial duress or growth. Given that duplication and competition for the same resources are extremely common, merging is exactly what nonprofits should strive for. For example, if nonprofit A serves 10,000 people with free contraception in Malawi and nonprofit B serves 15,000 people with contraception education in Malawi, there’s a great case for a merger.

Here is what nonprofits should consider when thinking about M&A:

  1. SWOT: What are the strengths of the organization? And what are the weaknesses? Ideally, the partner in the merger should map their strengths and weaknesses oppositely, adding value and capacity where there are gaps.
  2. Mission Alignment: What is the overarching mission and vision for both organizations? Are they similar enough that nothing is being changed to this regard?
  3. Founder Transitions: Founding and running a nonprofit is incredibly hard work. Merging gives the acquired founder a graceful exit and an opportunity to start fresh and prevent burnout.
  4. Culture: What are the cultures of both entities? Hierarchical or flat? Startup environment or established? Centralized or distributed?
  5. Technology And Policy: What technology platforms are each of the organizations using? How big of a lift will it be to onboard the acquired entity to the new organization?
  6. Stakeholders: There are a lot of stakeholders involved with nonprofits. This includes the board of directors, donors, partners, beneficiaries and the staff themselves.

Read the full article about nonprofit mergers and acquisitions by Aneri Pradhan at Forbes.