With funding cuts and rising demand for services, nonprofits are in a bind. One reaction – which sometimes makes sense, but often doesn’t – is to consider merging with another organization. After all, if the combined organizations paid only one CEO instead of two, and one CFO instead of two, and if they merged their back shop operations, there would presumably be efficiencies.
Funders love encouraging mergers, partly to improve these efficiencies, partly to avoid confusion in the community about who is providing which service, partly to cull the weaker nonprofits, and partly, I assume, so they have fewer potential grantees to choose between. And grantees, at the very least, have to pay lip service to what their funders are saying. But do nonprofit mergers really make sense? It depends. Continue reading