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Desperate times call for proactive measures. Nonprofits are navigating an immensely challenging economic and political context. Many find themselves thinking about the once-unthinkable: mergers, acquisitions, and sunsets.
Consider the global development sector. It faces immense uncertainty given the dissolution of USAID, reduction in bilateral funding, and broader political headwinds. One recent survey suggested that 60 percent of development organizations could close within six months. Matchmaking efforts are underway that create databases of organizations ready to consider recombination.
While there is particular urgency among global development organizations, the conversations around restructuring are spreading across the sector. This presents an opportunity for the field. Recombination offers a chance for creativity. Closure can be compost for what comes next.
The moment is undoubtedly dark. But if we act quickly, we could leave this crisis stronger than we went in—with robust organizations refocused on the most important aspects of their work, squeezing more good out of each dollar, and prepared to face the inevitable challenges to come.
Structural Change Is Possible
I have seen firsthand the power and the challenges of nonprofit structural change. As the CEO of GuideStar, I oversaw its 2019 merger with the Foundation Center to form Candid. This brought together the world’s two largest databases of information about nonprofits and philanthropy into a single entity. Fast Company called it an effort to build “the definitive nonprofit transparency platform.” Years later, Candid is in strong financial health, serving millions, and continuing to build out stronger information infrastructure for social change.
It was an immensely complex undertaking that brought together 200 employees across eight different offices. We distilled 70 products down to a handful of tools while maintaining the core value offered by each parent organization. Undoubtedly, we were blessed to act from a position of immense privilege. A coalition of foundations stepped in to provide $44 million in funding. We had years of runway to plan the merger, supportive boards, and a very clear value proposition.
Even with those advantages, I do not minimize the challenges of such an organizational restructuring. I bear scars and always will. But no one said the work of social change was easy. It is the job of leaders to do the hard things necessary to build better organizations that can help build a better world.
Social change can happen through many different structures; and those structures can evolve. In my own research, I’ve identified 37 models that social change organizations can undertake. Given time, social change leaders can and should step back and consider a full range of alternatives. But in this urgent moment, there is a justifiable focus on three radical options: mergers, acquisitions, and sunsets.
Barriers to Structural Change
Any organizational change can be challenging. Structural change is particularly tricky in the social sector for reasons that reflect the unique characteristics of the sector. Three barriers stand out:
- Money. The nonprofit capital markets do not encourage organizational dynamism. Standard fundraising practices tend to cultivate a competitive, isolated mindset. Funders may complain there are too many nonprofits, but will rarely invest in the costs of consolidation. Moreover, nonprofit budgeting practices are often based on an assumption of perpetuity.
- Ego. Organizations are made up of people. Those people have their own material and emotional interests. In the social sector, individuals often associate their sense of professional identity with their organizations. This confusion between self and institution can be present for any member of a team. Individual staff may feel a close personal connection to particular programs, locations, and projects. Identity conflict can be especially knotty for leaders who are publicly associated with their organization.
- Mental models. We develop patterns, behaviors, and frameworks that reinforce past ways of doing things. The social sector too often defaults to an implicit frame we might call “the heroic nonprofit”—the story that social change happens through individual, permanent, charitable organizations acting alone. There is indeed heroism in the social sector. But thoughtful practitioners know they operate in context, as part of an ecosystem of organizations working to address a given social or environmental problem.
Each of these hurdles makes structural change more difficult. We should not minimize them. Yet each can be overcome with the right dose of the essential currencies of social change: altruism, creativity, and leadership.
Principles for Successful Transformation
Let us consider a set of principles or lessons which may help to grease the wheels of organizational consolidation, transformation, and renewal:
1. Start with purpose
Social sector organizations exist in order to do good for the world. The day-to-day struggles of nonprofits can easily pull our attention from purpose. Leaders must periodically recommit themselves and their organizations to the mission. That simple act can be strategically and ethically clarifying.
Crisis periods tend to bring suffering; the current one surely does. That can and should be a stark reminder of why we do the work we do. We do not do our work for the sake of an organization; we do it for a kinder, cleaner, fairer, more beautiful planet. Focus on purpose raises our eyes up from the tactical to consider the strategic. And that offers a foundation for all the decisions and challenges to come.
2. The end of an organization is not the end of the work.
In any of these three models—mergers, acquisitions, sunsets—at least one organizational identity is lost. For those individuals who have tied their own sense of self with their organization’s, this can feel like a betrayal of self or mission. But it is neither of these. Organizations are temporary vessels for human passion. The work continues, even when the organization does not. Consider Integrity for America (IfA), which was formed in response to neo-Nazi riots in Charlottesville in 2017. IfA’s strategy was to demonstrate a new legal strategy for fighting hate crimes. In 2021, it won a historic court case, thus proving its model. Then it sunset its operations and left space for others to continue the work at scale.
Such courage is not always easy. Organizations can be like families; they can have cultures, traditions, languages, and histories that make them feel alive. In times of transformation, some of that may be lost. Just as families and communities change with time, it is right to pause and acknowledge that loss.
Indeed, organizations in transition have an opportunity to turn change into a kind of sacrament. Rituals help humans make sense of loss. Well-designed, they can turn mourning into celebration, like a funeral that rejoices in a life well-lived.
3. Negotiate with generativity
Organizational restructuring offers an opportunity to rethink our institutions. There are many variables that get stuck in an organizational status quo. Negotiations open these to reconsideration. We can see that multiplicity of variables as a challenge, and it is. With many levers comes many options.
You can start by mapping stakeholder interests. Perhaps organizational leaders are at different points in their career lifecycle or tenure with a given organization. Maybe one leader is ready to give up managerial responsibilities but wants to stay on as an advisor. Perhaps one board is attached to a particular program or brand. These differences open space to find agreement across interests while staying within mission.
4. Confront asymmetry
In some cases, recognizing and accepting power differences can lead to more straightforward and successful transformations. Negotiation is easier when parties acknowledge the facts on the ground.
Even when one organization has more power, there can still be room to find a win for each participant. Leaders can take the first step by humbly and honestly stating their hopes and concerns. This is especially important in moments of shared stress, as it can free players to act more quickly and to clarify what really matters.
Moreover, asymmetry is not just about power. Strong partnerships can emerge across legal forms, strategies, or geographies. The key is finding mission alignment, like when the North Texas public media nonprofit KERA acquired the local for-profit newspaper, the Denton Record-Chronicle.
5. Consider the field
We are not alone in this work, as individuals or as organizations. There is always a context, a “field” we operate within. Consider how your organization’s transformation might serve the broader field. Perhaps a sunset offers a chance for you to highlight the work of other organizations or to share hard-won lessons. Or maybe it will allow an organization to finally put its intellectual property under a Creative Commons license.
Business model and identity questions can unconsciously limit our ability to act collaboratively. Restructuring offers a moment to let go of those factors and proactively support an organizational ecosystem.
Moreover, the field can help. The mere act of sharing an openness for new structures may invite unexpected support from existing partners in a given ecosystem. At a broader level, organizations like The Wind Down, LaPiana, and The Lodestar Foundation offer resources to support structural transformation.
6. Acknowledge human needs
Nonprofits are under no legal obligation to provide employment to anyone—the mission comes first—but they do face a moral obligation to treat people with dignity. The right offering of severance, job training, transition services, new title structures, or other changes can make a transition work for people.
Indeed, effective structural change involves explicitly acknowledging the self-interest of staff, volunteers, board members and other stakeholders. But remember that self-interest is not always about money or power. There are many dimensions of human need that can be considered in an organizational transformation. For example, if one organizational leader is giving up power in an acquisition, consider other ways to give them recognition, prestige, or space to work on a dream project. Some staff might happily reduce hours; others might be ready to add more. A board member may have been looking for a chance for a graceful exit for years. We can only find these opportunities if we ask about them.
7. Act quickly
Most organizations have a set of financial assets that could offer some runway for designing an elegant transition. That runway offers leverage in negotiations with a potential M&A partner, resources for a smooth sunset, or assets to ensure lasting legacy. But it is all too easy to dither for months, if not years, and spend down these resources, leaving leaders to negotiate from a position of weakness and fear.
There can be a profound human cost to delay. Organizations that close suddenly too often leave a wake of chaos. From its founding in 2005, the Benefits Data Trust helped citizens access more than $10 billion in government benefits like food assistance and health care. In June 2024, it suddenly announced its closure. Within two months, it laid off 300 employees and closed its call center—leaving thousands of people without critical support in navigating government systems. Better endings are possible.
For those organizations facing looming financial stress, there is no better time than now to begin creatively imagining other futures.
Leading by Example
Over the coming months, we may see a wave of organizational transformation. Much of it may rise from desperation. Some organizations will not have time for deep discernment and careful planning. But they can still be intentional as they explore new structures. In that intention, these leaders can set an example for the field as a whole: we are more than our organizations, we are people bound by common purpose.
Such an example will have its own ripples. As the world changes, so must the social sector. Humanity faces new, planetary-scale phenomena like climate change and artificial intelligence. These challenges extend beyond the borders of nation-states and operate on unfamiliar scales of time. They demand new ways of thinking about organizational structure and a willingness to embrace fluidity. The institutions seeking a better world must evolve to match the nature of a changing world.
The social sector can be greater than the sum of our parts. As we look at the changing chessboard, we must move the pieces, including ourselves.
Read more stories by Jacob Harold.