No Risk No Reward: Mergers of Membership Associations and Nonprofits

Full citation: Dickmeyer, Louise. 2009. No Risk No Reward: Mergers of Membership Associations and Nonprofits. Sandston, Minnesota: Expert Publishing, Inc.

Friday, October 07, 2011

Contributed by Norman Olshansky

Over the past several years nonprofits have increasingly considered or implemented strategic restructuring,  new alliances, acquisitions or mergers in order to cope with declining revenues due to negative economic conditions, reductions in governmental funding, and increasing challenges related to fundraising.  In addition there has been pressure on nonprofits from major funders to become more efficient, provide a better return on investment, take advantage of economies of scale and to encourage collaborations and strategic alliances.

Dickmeyer’s book is timely for use in the nonprofit sector and is based upon a project she conducted for her Master of Nonprofit Management degree.  Her initial focus was a case study of a merger of two chambers of commerce.  While her personal experience was focused on one segment of the nonprofit sector, (business membership associations), her book provides significant insights into issues that any nonprofit would need to address when considering a merger, strategic alliance and/or acquisition.

The book addresses many issues such as creation of an exciting vision, building broad based board support, financial risk assessments, and negotiation of terms and transitions.

The book also identifies some of the typical obstacles faced by organizations going through a merger or acquisition process, such as:

1. Fear of Change

2. Merger of different operational and management cultures

3. Need for extensive communications and engagement at all levels

4. Planning for adequate transition

The book notes that there are many issues which often are not given sufficient early attention in the process of seeking mergers or acquisitions.  Among them are:

1. Selling the vision to all stakeholders who may be affected by the change

2. Engaging staffs as well as leadership; getting buy-in early from both.  Importance of providing full disclosures and engagement of all staff early in the discussions to establish trust.  Staff can be the greatest asset to the process or the biggest obstacle if not engaged, involved and given opportunities to provide input early on.

3. Determining early who will be the executive of the combined entity so that he/she can provide leadership with the staff to deal with natural concerns and the day to day issues faced during the transition.  The executive must be fully on board with the vision and direction of leadership.  The new executive plays the key role in the engagement of staff, overall communications and involvement of leadership.  If not someone already on staff, a strategic search process should be planned and initiated as soon as there is agreement on the creation of the new entity.

4. Need to have adequate funding for studies, consultants, retreats, special meetings etc.

5. Acknowledge that there will be a potential challenge and significant impact on annual operations.  A plan needs to be established to deal with the additional time, costs and diversion of staff and volunteer leadership from ongoing operations due to time and resources needed to plan for the acquisition.

6. Importance of having a transition team that communicates well with leadership and works closely with the new executive to ensure a smooth process with staff, leadership, donors and volunteers.

7. Operational issues need to be addressed early on such as merging of different accounting systems, computers, phones, databases, cross training, corporate identity, public relations, etc.

While issues are identified that need to be addressed as part of the planning and implementation of mergers and acquisitions, the book does not provide detail regarding timeline priorities or ways to address and/or resolve  those issues.   However, it is an excellent primer on the subject and can be utilized effectively by those who are considering or who have begun discussions about mergers or acquisitions.

Where to order this book online: http://www.amazon.com/gp/product/1931945926/ref=as_li_ss_tl?ie=UTF8&tag=cvfundraising-20&linkCode=as2&camp=217145&creative=399373&creativeASIN=1118004507
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Norm is the co-editor of YOU and Your Nonprofit: Practical Advice and Tips from the CharityChannel Professional Community.

Forty-three contributing authors at the top of their game share their hard-won expertise in this easy-to-read, down-to-earth book. In his foreword, Bob Carter, Chair-elect, Association of Fundraising Professionals (AFP), writes, “This is surely the book I wish I had decades ago.” The contributing authors cover a variety of subjects. You will learn about planning issues relating to governance, fundraising, administration and marketing. You will learn about leadership, and other topics as well. The editors’ goal is for you to enjoy reading about nonprofit management, leadership and fundraising and in the process learn ways to add value to your own work as someone who is, or will be, engaged in the nonprofit sector.