As I introduce people to the concept of nonprofit mergers and strategic collaborations, it’s hard to remember that for some people, these concepts have been around for a long time. Take Debbie Hinde and Vital Bridges in Chicago, Illinois, as an example. I recently was re-introduced to Debbie when she was part of a group of HIV/AIDS social service agencies meeting to hear a presentation from me at the AIDS Foundation of Chicago about strategic re-structuring. Debbie could have given the talk and in fact, I asked her at one point in the training to tell her story.
It was 2002, and the AIDS service sector in Chicago was greatly fragmented with over 200 nonprofit agencies, a great many of whom were providing one or two services to a small clientele who were then forced to go from organization to organization to get all their needs met. Many of these small nonprofits, each with their own overhead operations, were financially unstable and inefficient. At the same time, the funding environment for AIDS services had changed dramatically due to the downturn in the economy at that time, and shrinking private dollars due to the public perception that the disease was now a manageable problem.
Due to these conditions, three HIV/AIDS service organizations decided to merge together: Open Hand Chicago (the organization Debbie was leading at the time), Community Response, Inc., and The HIV Coalition, Inc, or HIVCO. The goals of the merger were twofold: to expand and enhance client services and to build an effective organization that could constrain administrative costs and build financial strength and stability. The result became Vital Bridges, the combined entity, serving a clientele of 2,400 people in metro Chicago living with HIV and AIDS with a budget of $4.6M.
Vital Bridges has gone on to improve services to their clients including expanding the availability of fresh fruit and meat throughout their distribution area, launching 32 units of permanent and transitional housing, and adding mental health therapy to their portfolio of programs. Case Managers are now available to clients in a one-stop-shop format in their grocery center sites when people pick up food. And there is now one lean, efficient, financially strong administration running what was once three separate nonprofits.
The Bridgespan study on nonprofit mergers, “M&A: Not Just A Tool for Tough Times” makes the point that the rate of nonprofit mergers is roughly the same (1.5%) as it is for the for-profit sector (1.7%). People are shocked to learn the nonprofit rate is as high as the for-profit sector. That’s because a lot of small to medium-size nonprofit organizations are very quietly merging without a lot of fanfare, but with great effect. Vital Bridges is one example of the quiet leaders in the nonprofit sector using strategic re-structuring tools to expand mission for their clients.
Jean Butzen, Mission Plus Strategy consulting, specializes in mergers and alliances in the Chicago area.