Better Together?

There’s a topic getting a lot of attention in the nonprofit sector these days. Once only associated with the corporate space, mergers and acquisitions are now gaining traction in social impact organizations. Rather than being viewed as a last resort for an organization in distress, mergers are being considered to increase impact, leverage resources, eliminate redundancies and grow program and service offerings.

“Mergers and acquisitions should be normalized as a strategic tool for mission-driven organizations.”

Stanford Social Innovation Review

In the context of nonprofits, the term mergers and acquisitions can mean many things:

• A full merger is when two (or more) nonprofits combine to form a new entity. That is, both organizations dissolve and a new legal organization is formed. The new nonprofit has one board, one CEO/ED and a single budget.  
• An acquisition occurs when one nonprofit is absorbed into another. The acquired organization is legally dissolved (also called a merger with dissolution) and its assets become part of the acquiring organization. In this case, there is also one board (though some members of the absorbed organization may have an opportunity to join the board of the acquiring nonprofit), one CEO/ED and a shared budget.
• In a holding company or parent-subsidiary model, one nonprofit becomes the parent entity of another. While the organizations remain legally separate, each with their own board, the parent board has ultimate authority.
• An affiliation between organizations signifies a formal relationship between entities that remain legally separate. Nonprofits in an affiliation may choose to share services, programs or other assets.
• In an asset transfer, one nonprofit shifts part of its work – usually a program or service – to another. While the entities remain separate, this may also involve the transfer of personnel, contracts, or other assets related to the program or service.
• In a shared services model, nonprofits share back-office (most often HR, finance, and/or IT) functions and, in some cases, leadership. Involved entities maintain their independence with separate boards. Shared services arrangements are often a good test of collaboration prior to moving into a more permanent relationship.

Now that we have  a common vocabulary, it’s especially important to understand when,  and why, a merger or acquisition might be an ideal decision. Answers vary by situation, but some common motivators include:

• Mission alignment between organizations, especially when serving a similar client base
• Desire to expand programmatically or geographically
• Community need exceeds capacity and the potential for one organization to grow to meet the need is limited
• Duplication or gaps in programs and services
• Opportunities for alignment presented during a leadership transition
• Financial constraints such as operating deficits, rising costs, inadequate reserves or over-reliance on a few funders cause ongoing concern

In response to these drivers, a merger of like-minded organizations can result in greater impact, operational efficiencies, a deeper bench of talent, improved governance practices, enhanced credibility amongst partners and funders and financial sustainability.

Is a merger something your organization should consider? As NeighborUp CEO André Anthony says in the podcast What Every Nonprofit Leader Needs to Know About Mergers, “A merger is not a last resort. A merger of two organizations coming from a place of strength; that is the best time for people to merge.”  

If you are interested in discussing whether a merger is right for your nonprofit, reach out to me at staci@armstrongmcguire.com.

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Recently, PMA Nonprofit Leadership merged with Armstrong McGuire. Our goal, put simply, is to strengthen and utilize our collective assets to benefit the nonprofit and philanthropic sectors in a coordinated and comprehensive manner. Read more about our merger at https://www.armstrongmcguire.com/merge-2026.

For additional resources about mergers, check out:

• Mergers and Acquisitions as a Strategic Tool for Nonprofit Growth, Stanford Social Innovation Review
• ‍Nonprofit mergers aren’t a last resort—but a strategic first choice, Candid. ‍
• Report: Nonprofits Eyeing Mergers, Associations Now ‍
• Arise Collective and Mothers And Their Children Merger Facilitation (supported by AM Senior Director of Consulting Excellence Staci Barfield) ‍
• Givens, Aldersgate senior centers complete affiliation (supported by AM Senior Advisor David Middleton)

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Staci Barfield is the Senior Director of Consulting Excellence atArmstrong McGuire, bringing more than 25 years of experience supporting nonprofit organizations through strategic planning, organizational design, and performance improvement. Learn more about Staci and check out her other musings in her bio.