This year could be poised for an unprecedented wave of mergers and acquisitions, driven by strategic alignments among nonprofits and a significant shift within fundraising agencies as their founders approach retirement age. This trend is reshaping the structural fabric of the sector, prompting organizations to reevaluate their strategies and consider the potential benefits and implications of merging.
Table of Contents
- How Should Your Nonprofit Navigate 2024 If You’re Looking to Merge with Another Nonprofit?
- What Should Your Nonprofit Do If Your Fundraising Agency is a Part of a Merger?
In this article, we explore the factors contributing to this surge in mergers and acquisitions. For nonprofits, merging with another organization can be a strategic move to amplify impact, share resources, and enhance service delivery. A 2012 study of 41 nonprofit mergers found that organizations merge to increase service delivery (93%), strategic vision for mergers (66%), or to improve financial stability (61%).[i] However, it also involves complex considerations regarding mission alignment, organizational culture, and operational integration.
In January 2024, Childhaven and Children’s Home Society of Washington (CHSW) merged to form Akin, a new entity aimed at innovating and enhancing social services for lifelong family well-being in Washington state. Akin CEO Dave Newell said, “This merger allows us to grow and evolve as one organization, not for the sake of size but for the scope of direct impact in how Akin can partner with parents, caregivers, children and communities, together, to strengthen families.”[ii]
Simultaneously, the fundraising agency landscape is experiencing its own transformation. As agency founders retire, the resulting acquisitions and mergers are leading to a reshuffling of partnerships and services. Nonprofits must navigate these changes carefully, assessing how a different or newly merged agency might affect their fundraising strategies, relationships, and overall success.
Just in the past two years, we’ve seen:
- Allegiance Group and Pursuant Group merged
- One & All Agency acquired by TrueSense Marketing
- Nonprofit Operating System acquired by iWave
- Classy acquired by GoFundMe
- Mission + Strategy Consulting acquired by Keystone Alliance
Throughout this trend, we’ll provide insights into the decision-making process for nonprofits contemplating a merger, and offer guidance on managing the transition of fundraising agency partnerships. Understanding the landscape of consolidation in 2024 is crucial for nonprofits to make informed decisions, adapt to the evolving sector, and continue to thrive in their mission-driven endeavors.
How Should Your Nonprofit Navigate 2024 If You’re Looking to Merge with Another Nonprofit?
Before exploring a merger, it’s crucial to conduct thorough due diligence. This involves a comprehensive assessment of the potential partner organization’s financial health, operational efficiency, legal obligations, and cultural fit. Understanding these aspects in detail helps in identifying any potential risks or challenges that could arise post-merger. It’s also important to evaluate how the merger aligns with your nonprofit’s strategic goals and mission, ensuring that the partnership will strengthen, rather than dilute, your organization’s impact.
Evaluating Mission and Cultural Alignment
A successful merger goes beyond financial and operational alignment; it requires a deep synergy between the missions and cultures of the merging organizations. Assess the core values, work cultures, and operational philosophies of both entities. The goal is to ensure that the merged organization can function as a cohesive unit, with a shared vision and a harmonious work environment. Engaging in open discussions about organizational cultures, expectations, and future goals is key to establishing a solid foundation for the merger.
Communicating Transparently with Stakeholders
Open and transparent communication with all stakeholders, including employees, donors, beneficiaries, and board members, is vital throughout the merger process. Keeping stakeholders informed about the intentions, potential benefits, and expected outcomes of the merger helps in building trust and ensuring a smooth transition. It’s also important to provide a platform for stakeholders to voice their concerns, questions, and suggestions. This two-way communication can provide valuable insights and help in addressing any issues proactively.
Planning and Managing the Integration Process
Merging two organizations involves integrating various aspects of operations, including staff, systems, processes, and programs. Developing a detailed integration plan is crucial for a successful merger. This plan should outline the steps for combining operations, harmonizing policies, and unifying teams. It’s also important to assign clear roles and responsibilities for managing the integration process and to establish timelines and milestones for tracking progress.
Seeking Expert Guidance and Support
Navigating a merger is a complex process that often requires specialized knowledge and expertise. Seeking guidance from legal advisors, financial consultants, and merger and acquisition experts can provide valuable support in making informed decisions and managing the technical aspects of the process. These professionals can offer insights into legal compliance, financial structuring, and change management, ensuring that the merger is executed smoothly and successfully.
Navigating a potential merger in 2024 requires careful planning, thorough due diligence, alignment in mission and culture, transparent communication with stakeholders, meticulous management of the integration process, and seeking expert advice. By addressing these key areas, your nonprofit can navigate the consolidation wave effectively, making strategic decisions that enhance your impact and ensure long-term sustainability.
What Should Your Nonprofit Do If Your Fundraising Agency is a Part of a Merger?
When your fundraising agency is involved in a merger, the first step is to assess how this change might impact your nonprofit. Understand the motives behind the merger, the new structure of the agency, and any potential shifts in services or strategies. Analyze whether the merger could lead to enhanced services, broader expertise, or access to more extensive networks that could benefit your fundraising efforts. Conversely, consider any possible disruptions or shifts in focus that may not align with your nonprofit’s needs.
Evaluating Service Continuity and Quality
Post-merger, it’s essential to evaluate whether the quality and continuity of the services provided by the agency will be maintained. Pay close attention to any changes in the agency’s staff, particularly those who directly manage your account or projects. A change in key personnel could affect the quality of service or the understanding of your organization’s unique needs. Openly communicate your expectations and requirements to ensure that the service level and quality you expect are consistently met.
Reviewing Contractual Agreements and Terms
A merger can lead to changes in contractual agreements and terms of service. Review your current contract with the agency to understand your rights and any clauses that may be affected by the merger. It’s advisable to consult with legal experts to navigate these changes and to discuss any necessary adjustments or renegotiations of terms. Ensure that your organization’s interests are protected and that the terms of the partnership remain favorable.
Engaging in Open Dialogue with the Merged Entity
Establishing open lines of communication with the newly merged entity is crucial. Engage in discussions to understand their vision, the anticipated changes, and how they plan to serve your nonprofit moving forward. Express any concerns or questions you may have and seek clarity on aspects such as strategic direction, service offerings, and pricing. A transparent and open dialogue can help in building a strong partnership with the merged agency.
Monitoring Performance and Considering Alternatives
After the merger, closely monitor the performance and outcomes of your collaboration with the agency. Evaluate if the partnership continues to meet your nonprofit’s fundraising goals and expectations. If you observe a decline in performance or a misalignment with your organization’s needs, it may be prudent to consider alternative options. Conducting a market review to understand other available services and agencies can provide insights into potential partnerships that may better align with your strategic objectives.
If your fundraising agency is part of a merger, it’s important to assess the implications, evaluate service continuity, review contractual terms, engage in open communication, and monitor performance. Being proactive, informed, and adaptable will help your nonprofit navigate this change effectively, ensuring that your fundraising efforts remain robust and successful.
[i]https://propelnonprofits.org/wp-content/uploads/2017/10/SuccessFactorsFullReport.pdf
[ii]https://akinfamily.org/wp-content/uploads/2023/12/Akin_Merger_Release_FINAL_121523.pdf
