On Mergers and Acquisitions...Of Non-Profits

Right before an afternoon phone call, I pondered what the final post in our series this week on financial capacity and non-profits would be. Margo and I covered the problems, innovative ways to fundraise, and sustainable revenue sources within our blogs this week. Yet, once I was on my call, my former boss, a non-profit CEO, brought up what will be a growing trend in non-profits: consolidation.

Non-profits organizations that have a powerful impact and have been successful in the past can face the same fate as the host of for-profit organizations who are currently experiencing financial trouble. They may realize that staff needs to be cut, programs need to be scaled, or ultimately, that it is no longer possible to operate.

The old adage, "Strength in numbers," is applicable now more than ever. Instead of shutting your doors, these strategists advise that you consider two options: a merger or an acquisition. While navigating these legally may already seem to be an insurmountable obstacle (plug for Margo, Esq.), what may seem even worse is the perceived stigma that an organization feels comes along with such a decision.

Reality check. There are savvy ways to merge or be acquired. You could become a special project of a foundation. In youth politics, for example, you could join with a few other youth voter orgs. You could form a strategic, cross-issue alliance, like technology and humanity. You could even become the charitable arm of a for-profit. None of the above will cause you to lose face or admit defeat. They are smart moves.

What got us into this financial mess? No way am I going to answer that. That would take expertise I do not possess and would cause you to click away from the page. But part of the issue was ego, companies or individuals not admitting that certain financial decisions were not within their means.

Means are limited across the board, for everyone, and it is better to save some of the valuable work you perform and protect your organizational consumers (your "shareholders") than to feel that you are protecting your "street cred" or your "rep." Those things can be managed and much better preserved when you make strategic moves.

Consolidate now, and you could be the new powerhouse later. Youth voter orgs, who I know have been particularly affected in the post-2008 election era, 2010 and 2012 are around the corner. Join forces, you have the Millennials behind you.

Punchline: Don't give up.