Recently, a study by the Donors Forum of Chicago on the economic outlook for nonprofits in Illinois, among many different issues, confirmed what everyone is saying. In a survey involving 183 nonprofits and 55 donors, thirty percent of foundations suggested they would facilitate mergers, but only 14 percent of nonprofits were likely to use a merger strategy. Nonprofits are unlikely to seek a merger strategy to stabilize their nonprofit organization here in the Chicago metropolitan area.
But the survey failed to recognize that Strategic re-structuring is much more than mergers. There are lots of ways nonprofits can combine partially and still obtain program and corporate benefits without losing all of their autonomy. The problem here is that much of the nonprofit world has not learned about these other models: administrative and program partnerships, management service organizations, and parent corporations. Mergers should be a last a resort, or a resort for a very specific situation. But does your educational institution teach that there is more than one way to consolidate? Does your foundation make it clear that they will underwrite partial consolidations, as well? When you write a survey, do you distinguish between these models and ask about a variety of ways to restructure besides merger? Do nonprofit intermediaries understand the difference between a joint venture partnership and a merger?
When I lead a strategic re-structuring workshop, I always make participants repeat this line: Strategic re-structuring is more than mergers! Foundations, intermediaries, and educational institutions: make sure you are repeating this line, too!
