When representatives from some 75 nonprofits convene in Boston
Tuesday, they'll tackle a subject that was seldom discussed 10 years
ago because it smacked too much of corporate America.
The notion of mergers among nonprofit organizations "used to be
an 'm-word' I didn't dare say in public," says Thomas McLaughlin, a
management consultant to nonprofits at Grant Thornton in Boston.
But now consultants say mergers are shedding their stigma and
becoming downright alluring for nonprofits across the country.
Having seen internal consolidations succeed for such recognizable
groups as the Girl Scouts and the American Lung Association,
nonprofits of various shapes and sizes are testing the waters for
possible mergers and are often taking the plunge.
"We have noticed a marked increase in both interest and activity"
related to strategic mergers, says Bob Harrington, senior manager at
La Piana Associates, in Emeryville, Calif., a management consulting
firm with a nonprofit specialty. He says the number of inquiries
from nonprofits eyeing a merger has increased 50 percent over the
past two years.
Accelerating merger activity is tough to quantify since the
Internal Revenue Service doesn't track mergers per se, according to
Linda Lampkin, director of the Urban Institute's National Center for
Charitable Statistics. But in tracking this universe of 1.3 million
nonprofits, including some 80,000 to 90,000 new ones created each
year, she concludes that mergers and collaborations are "much more
common" than they were a decade ago.
Mergers are increasingly happening among regional organizations
that stand to gain from new strategic positioning, Mr. Harrington
says. In April, for instance, the debt-saddled Ulster Performing
Arts Center (UPAC) in Kingston, N.Y., merged with Poughkeepsie's
Bardavon Opera House, which needed the extra space afforded by the
1,500-seat UPAC facility.
Another example: In November, two of California's oldest child-
welfare organizations - Hathaway Children and Family Services and
The Sycamores - stopped competing for funding and merged to become
the largest private mental-health and welfare agency in Los Angeles
Funders seem to be playing a key role in the merger mania. In a
time of shrinking federal funding for human services and intense
competition for grants of all types, Ms. Lampkin says, private and
public benefactors alike are encouraging efficiencies and economies
But, she notes, bigger isn't always better or more efficient.
"Sometimes it's a forced collaboration [to appease benefactors]
that causes more expenditure of funds," Lampkin explains. "Sometimes
nonprofits feel it's more costly to collaborate because it takes
more time to have meetings, and figure out who's going to do what,
and to get over the rough spots when you don't have exactly the same
ideas about how to do things. So it can be costly, the whole
collaboration thing. …