Reflections on 2014 Board Leadership Forum, submitted by Carrie Minnich. This is the third in a series of several reviews by Carrie.
Nonprofit Collaboration: Is it Right for You? (Thomas McLaughlin)
The demand for nonprofit services continues to increase while funding decreases and competition for what funding there is increases.
In addition, baby boomers in executive director positions are retiring. These conditions are causing more nonprofits to consider merging or developing other types of collaborations.
Both mergers (legally merging two nonprofits together) and alliances (nonprofits sharing joint programming or administrative services) were discussed.
- Mergers require an actual corporate change requiring strategy and resulting in one board of directors.
- Alliances do not include a corporate change and are only operational. Each nonprofit still exists with its own board of directors.
The organization’s circumstances dictate the best type of relationship, if any, would be best for that organization.
Mr. McLaughlin described the stages of collaboration in four steps:
1. Partner identification and recruitment
2. Feasibility determination
3. Integration planning
The organization needs to determine what its goal is and then determine the structure that works.
It is not uncommon for nonprofits providing similar services to merge, especially smaller organizations or those that do not have a succession plan in place for a retiring executive director.
Instead of hiring a new director, the organization may instead merge with another organization. It is also common for nonprofit organizations to share administrative services (accounting, payroll, etc.) in order to reduce costs. Before deciding on whether a merger or collaboration is right for your organization, your board should intentionally take time to think about and reflect on the pros and cons.