I collect lots of stories from the web about nonprofits that have successfully completed mergers, but only rarely do I find stories about two nonprofits that fail so miserably at a merger attempt that it makes the news. One such case came to my attention this week and makes for a great opportunity to talk about all the reasons people leave their merger partner.
The story is this: Two California coastal public radio stations, KUSP and KAZU, made a decision to enter into a merger process. Their reasons for seeking a merger were much like those of other nonprofits. The two stations were providing many of the same services in the same community and they wanted to eliminate duplicate programming and overhead expenses “to free up resources for other projects, such as more local news reports on the stations,” according to KUSP station manager Terry Green.
For a year, the two nonprofits worked on the merger details. They hired a public radio consultant to work with them to create a new nonprofit entity to house the single radio station post-merger, and last September, they completed a six-month study on the future of public radio in the Monterey Bay area, where the two stations are based.
All their work was done, and now it was time for the boards to vote for the merger; and then it happened. In a closed-door session, the board of KAZU, the CSU Monterey Bay Foundation, unanimously voted against merging with KUSP. The board members did not explain how they arrived at their decision, but many possible reasons come to mind.
Many nonprofit mergers go down due to staff and board leadership decisions that have to do with the following issues:
- Mission impact: worries over how the mission may change and the loss of focus to the mission, particularly when a small nonprofit is merging with a larger institution
- Loss of Identity: an inability to let go of the nonprofit brand and its organizational history, including stories people cherish and don’t want to lose
- Program Cuts: fears that specific services which the nonprofit has created for its clients will be changed or lost if the nonprofit is no longer there
In his excellent book The Nonprofit Mergers Workbook, Part I, David LaPiana discusses other barriers including the loss of autonomy and self-interest:
Merger threatens autonomy, which is the lifeblood of most nonprofit organizations. In a sector offering low compensation, long hours, and the stress and uncertainty of continual fundraising, independence is one of the very few rewards available to nonprofit leaders…Whether it is board members fearing loss of attachment to a beloved organization or cause, or staff fearing loss of status or even loss of employment, self-interest is a legitimate and major issue that can lead to many breakdowns in merger negotiations.
In all of these cases, a good facilitator can help the merger boards and staff work through the roadblocks, both emotional and otherwise, as they go through the merger process. A good merger facilitator will flush out all the issues early in the process and work with both parties to determine if the problems can be overcome or not.
Better to know the merger partner has no intention of merging sooner, rather than later. Unfortunately for KUSP and KAZU, they went all the way to the altar before discovering that they probably never really had a commitment to begin with.
Jean Butzen, a consultant with Mission Plus Strategy, specializes in mergers and alliances in the Chicago area.