Two figures pushing puzzle pieces together to represent a merger. (Photo by iStock/AndreyPopov)

In the early days of the COVID-19 pandemic, we expected to see a wave of nonprofit mergers and acquisitions (M&A). Like many others, we thought that the pandemic’s challenges would likely combine with an economic recession and force many nonprofits to consider them as an alternative to bankruptcy. Since then, nonprofit staff and constituents in the United States have faced many other stressors, including a crisis in childcare; a national, racial justice awakening and accompanying white nationalist violence; and foundational challenges to democracy, manifesting in armed insurrection and attempts to claw back voting rights.

While we don’t yet know the full extent of M&A activity over the past year and a half, we do know that many nonprofits will continue to grapple with existential questions about their strategy and structure moving forward. Many have already had to remake themselves multiple times—and will need to do so again. As Anna Galland, former executive director of MoveOn Civic Action, told us, “Organizations will be in a state of acute decision-making and rapid adaptation, in one form or another, for years to come. The long-term effects of the COVID-19 pandemic will keep rippling out across our politics, economy, and culture, including affecting the funding landscape for nonprofits.”

Given that the external demands on organizations have changed so much so quickly, this is a natural moment to consider how bringing two complementary nonprofits together might add up to more than the sum of their parts. In our work at New Media Ventures, which funds organizations that develop technology that supports democracy, we invest in both for-profits and nonprofits, and the attitude toward M&A could not be more different between the two. While for-profit startups usually seek acquisition at their highest point of value and consider it a victory all around, nonprofit leaders commonly consider M&A only when they’ve exhausted all other options for sustainability. Yet when executed well, nonprofit M&A can bring together complementary programs, reduce redundancies, and retain critical talent and movement infrastructure.

What Nonprofit Mergers Really Look Like

Because these kinds of organizational transitions are typically confidential, it can be difficult to know what to expect. Over the last decade, our organization, New Media Ventures, has talked to thousands of activists and entrepreneurs about how to build and evolve their startups, and helped support mergers in our own portfolio, including mergers between Flippable and Swing Left, Pantsuit Nation and Supermajority, and DailyAction and MoveOn. Our hope is that by sharing our experiences, we can reframe M&A in the nonprofit sector as a viable and celebrated option, not as an option of last resort.

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As a first step, it’s worth defining what we mean by M&A. For the purposes of this article, we use the term loosely, and our suggestions are relevant to a variety of organizational transitions, including moves to more distributed models. As Romy Avila, CEO of Tides Advocacy, told us, mission alignment, trust, and openness to the possibility that entities are better together are important components of any joining of organizations. Also, acknowledging that M&A has a fraught history, we’re neither suggesting that the solution to complicated structural problems is for nonprofits to act more like businesses, nor trying to glorify practices that have a history and legacy of trauma (such as hostile takeovers). Rather, our suggestions are intended to help prepare leaders for what to expect in a time of unexpectedness.

With that in mind, and based on our own experience, as well as conversations with executive directors, funders, and board members who went through both successful and unsuccessful mergers, we’ve learned that the most common challenges leaders face during the M&A process typically fall into two categories: 1) planning and resource allocation, and 2) merging organizational cultures and visions. 

Planning and Resource Allocation

M&A takes way more resources—time, money, and emotional energy—than participants expect. It’s important to set aside funds specifically for the M&A process and dedicate significant staff time to ensuring a smooth transition, and it’s never too early to start planning. Waiting until you are certain that a merger will better serve the organization’s mission (such as when your bank accounts are nearing empty) will likely lead to hasty and suboptimal decisions. As Michael Anderson, a strategist who specializes in nonprofit M&A explains, "Universally, folks underestimate the amount of time, energy, and effort to explore, negotiate, implement, and integrate ... even when warned.” M&A requires the total commitment of boards, staff, and leadership, and achieving this takes time. 

Take the merger between Guidestar and The Foundation Center to form Candid. The organizations first explored the prospect of a merger in 2012 but determined the timing wasn't right. They reopened negotiations in 2017. Both teams and their funders raised $45 million for an integration campaign that encompassed hard costs, general support, and dedicated funds for sustainability and innovation. Chris Cardona, program officer for philanthropy at the Ford Foundation, who has participated in M&A as both a board member and a funder, and who was involved in the Candid transition, told us, "Make sure you have the full commitment and bandwidth from a key set of board members who are ready … [to work through the] process alongside each other, examining various options.” Obviously, this level of time and money isn’t feasible for most organizations, but it gives a sense of the involvement M&A can take. 

Consider: What if some members of the boards turn out to have surprise objections to what they perceive as giving up power? What if negotiations about how to reconcile different benefits packages and salary scales turn messy, resulting in staff threatening to quit? What if one of the organizations suffers an unexpected financial blow (or windfall!) halfway through the M&A process? What if someone on the merger team gets sick or has sudden caregiving responsibilities, and is out for a month?

Thinking through questions like these even before the process begins can help immensely with planning. So can finding advisors to guide leaders toward realistic outcomes, and away from emotional and procedural minefields. This is particularly true for organizations that lack experience with nonprofit M&A, as was the case when the politically driven organizations Flippable and Swing Left merged in 2020.

Both organizations were founded on a wave of political resistance energy in the wake of the 2016 US presidential election. Swing Left bundled grassroots donations and engaged volunteers for Democratic campaigns with a goal of taking back the House of Representatives in 2018. It had a strong brand and, by making it simple to take political action, got hundreds of thousands of people involved in politics, often for the first time. Flippable meanwhile used a data-driven approach to identify winnable but under-resourced elections at the state level, and to generate support for Democratic candidates. After the 2018 election, Swing Left’s strategy began to expand from its laser focus on the House of Representatives to races at the state level, and so the two organizations’ missions began to more substantially overlap. It became clear that Swing Left should use Flippable’s rigorous data on identifying winnable state house races, rather than trying to replicate the time-consuming analysis. Meanwhile, Swing Left brought their efforts a much larger base of volunteers and donors.

As the 2020 elections approached, it became harder to justify having so much duplicate infrastructure when the organizations shared such similar goals and brought such complementary strengths. So the founders decided to merge. Flippable’s co-founder Catherine Vaughan initially transitioned to serve as Swing Left’s chief strategy officer and later became its co-executive director. "If you don't have experience with mergers, you need to have someone to make sure you are asking good questions,” she told us. “My really good advisors helped me anticipate the bumps and asked the right questions: What are your worries around retention? What does it actually feel like to work together?"

This is also where funders can play a useful role. “Part of the challenge in the sector,” Avila told us, “is that the financial, operational, and mission pressures on leaders are so strong that little time is left to think of long-term planning in the first place. Funders can and should support the internal work of leadership development, succession planning, and organizational health, rather than simply funding from campaign to campaign."

Merging Organizational Cultures and Visions

“There are (generally) no mergers, only acquisitions.” We’ve heard something like this from almost everyone we’ve spoken with. Nonprofits often feel compelled to label all transitions as mergers, because it implies equality and symmetry. But true symmetry is rare. In the end, one of the leadership teams, one of the boards, and one of the cultures is likely to guide the new organization.

Asymmetry makes worse the problems of credit and identity. Trying to navigate false equality is really challenging. "We need to turn acquisitions into a victory for the acquired organization," Jacob Harold, now executive vice president of Candid and formerly president and CEO of Guidestar, told us. It’s important for leaders to be ruthlessly realistic and explicit up front—with boards, with teams, and with potential M&A partners—about the asymmetries and power dynamics that exist between the two organizations. Some leaders told us they got halfway through the merger process before they realized that success depended on them leaving the job and allowing the other organization’s leader to take over and that by that time the process was sufficiently far along—including expectation setting with external stakeholders—that withdrawing from it did not feel like a viable option. 

Leaders must also be extremely conscious of how privilege affects the transition dynamic. M&A often results in the rise in leadership of white men from one organization at the expense of leaders of color and/or white women from another. On the other hand, white women and people of color often experience the phenomenon of the glass cliff: The M&A process moves them into leadership positions at organizations in crisis and, in essence, sets them up to fail. It’s important to reflect on how conscious or unconscious racism, sexism, ableism, and classism influence which leadership qualities and assets the new organization values or prioritizes, so that the future leaders can succeed.

Finally, putting mission ahead of ego and giving up power for the benefit of the organization can be an act of leadership, and it’s important to celebrate, reward, and appreciate this. An example of this is in the acquisition of Berim, an organization that supported peace and diplomacy with Iran, by Win Without War, which focuses on creating a more progressive US foreign policy. In 2015, Berim founder Sara Haghdoosti came to the realization that the organizational model she had been experimenting with was not sustainable. At the time, Berim’s most valuable, concrete asset was a sizeable email list of Americans interested in peace with Iran. Meanwhile, Win Without War had a policy and advocacy team and was in the early phases of launching a digital organizing program. Haghdoosti decided that the best way to serve Berim’s mission was for Win Without War to acquire the email list, with her staying on for a few months to train their team on how to leverage and cultivate it. She then stepped into the role of campaign director for the Mozilla Foundation, and two years ago, in a happy reunion, returned to serve as Win Without War’s deputy director and senior strategist.

Haghdoosti told us, "So much of what goes wrong is the emotional part. People don't let things go, they get in fights, and most of that is connected to feelings of failure or guilt.” These kinds of organizational transitions have huge emotional costs often underestimated by participants at the start. So making time and space to talk through the emotional implications of the transition on all participants is an investment worth making.

Many nonprofit leaders are deeply exhausted right now and still facing important organizational decisions about the future. They don’t need to make those decisions alone. Some of the many resources for those considering embarking on the M&A process include:

As Haghdoosti explained, "M&A isn't a sign of failure. It's usually a sign of progress and doing what's next.” Nonprofit leaders can serve their organization's mission in a time of constant change by planning ahead, making sure they have the right advisors supporting them, and putting mission, not organization or ego, at the center of the planning process.

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Read more stories by Christie George & Taren Stinebrickner-Kauffman.