Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Thursday, June 21, 2007

To partner or to merge...

If you've been working in nonprofit management for any amount of time, you should already be fairly adept at recognizing good partnership opportunities. Whether it's working with a local office supplies retailer to put together back-to-school packages for the low-income children you serve, or joining with other social service agencies that provide complimentary, but different, services in a public outreach campaign, there are a million reasons to work in partnership with other nonprofit agencies and businesses.

But when does the partnership get to the point where you should consider a merger?

A quick checklist might include:
  • The existence of ongoing partnerships (or potential for ongoing arrangements) that cover multiple program areas,
  • Essentially aligned missions (ie: desire to serve the same population or cause),
  • Similar organizations in adjacent regions,
  • There's the potential to strengthen organizational capacity (ie: instead of two Executive Directors trying to do it all, one ED and one Development Director),
  • When you have few funders in common, or your common funder(s) would view you as stronger for having joined forces,
  • When the new agency will lead to economies of scale, not a bloated bureaucracy,
  • When your clients will view the merger in a positive light,
  • When the merger will result in expanded services to your clients,
  • When one of the organizations is facing a change in leadership (ie: a longtime Executive Director retiring),
  • When a merger is the best way to achieve the goals in your Strategic Plan,
  • When the merger can be accomplished without leaving any constituencies behind, and
  • When the new organization will be stronger and more sustainable than either of the predecessor organizations.
I am not one who regularly pushes merging for the sake of merging. Nor am I one who talks about there being "too many nonprofits." And I certainly am not a proponent of having huge, bureaucratic behemoths attempting community work.

But, the reality is that it is increasingly difficult for small organizations (budgets under $750,000) to operate successfully, and create sustainable funding. As much as I love small, grassroots organizations, sometimes they can better serve their communities as part of a mid-sized agency.

The list above is just a place to start your discussions and soul searching within your nonprofit. You may not meet all of the conditions, and you may have other conditions of your own that lead you to decide to pursue a merger. A merger is the ultimate partnership. It's not to be entered into lightly or without great thought and purpose. But it's not to be feared either.

1 comment:

  1. This blog is the only site I could find that actually attempted to describe the reasons why one should merge or partner. I have questions and I'm hopefull you can help with.
    I have a small business consulting firm and I take on one maybe two projects a year in the educational sector. I am currently on contract with a fairly new large company and they have offefred to merge. I am undecided if I want to merge or partner. If I merge my comany would not be desolved but would take on the roll of a divison within the larger company.
    Depending on the structure of the deal this could increase in profits, National exposure and a share in the parent companies profits. On the other hand my concer is "how would this affect my growth and expansion?" "what type of structure can I use in a partnership deal rather than a merger deal?"

    Bottom line is I need some advise on the pro's and con's associated with merger v.s partnership and how to possibly structure them.

    Can you help?