Nonprofit Mergers Can Be Just as Sticky as Corporate Link-Ups
We’re in an era of consolidation. Thanks to the faltering economy, plenty of nonprofits are exploring mergers, in the hopes that combining services can reduce overhead and allow for a greater return on donor investment.
It’s certainly worth considering. But, as Scott Russell pointed out in MinnPost earlier this week, a good result is nowhere near guaranteed. Even when the merging organizations have identical missions, as when the Minneapolis and St. Paul chapters of the American Red Cross joined forces two years ago, it can still be tough getting everyone on the same page.
… [M]erging two very different administrative systems — human resources, accounting and donations tracking — was a nightmare. … More challenging yet was merging organizational cultures. The St. Paul chapter was smaller and had a family feel, a place where volunteers and staff mingled. The Minneapolis chapter had a more corporate structure.
The St. Paul chapter had been more financially challenged of the two, but the merger was supposed to be a merger of equals. It didn’t work that way. …
Just like mergers of for-profit operations, Red Cross leaders had a difficult time managing when staff didn’t know if they would have jobs. Out of the two chapters’ 130 combined staff, approximately 30 jobs were cut initially. The total staff reduction now is roughly 50.
The Red Cross also lost volunteers during the merger, including key disaster response leaders … .
And these aren’t merely nonprofits that do the same thing, they are chapters of the same larger organization! The lesson, according to the Red Cross folks who lived through the mess, is to communicate out the wazoo. Which, come to think of it, is a great lesson for all nonprofits, mergers or not. | 501(c)
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