What’s your return on effort?

When considering a nonprofit merger or alliance, we tend to agonize over identifying all of the joint possibilities, which is a task in of itself. While it’s important to consider what you bring to the table as well as what your potential collaborator can offer, Nonprofit Mergers & Alliances author, Thomas McLaughlin, would add that sometimes it’s helpful to draw upon a laundry list of benefits and take the ones that fit.
See McLaughlin’s list below:
  • Acquire intangible assets (e.g., a prized board member or brand name)
  • Acquire tangible assets (e.g., a building)
  • Add breadth and depth of services to meet consumer need.
  • Assist in repairing a damaged brand.
  • Capitalize on a chief executive’s departure.
  • Change the organization’s name.
  • Change staff compensation patterns.
  • Create more varied career options for employees.
  • Create operational efficiencies.
  • Ease the transition from a founder-led organization.
  • Expand the programming continuum.
  • Gain cost savings in order to add program resources.
  • Gain greater visibility in the community.
  • Gain market share.
  • Gain more clout with the national office (federated organizations only).
  • Improve fundraising.
  • Improve prospects for a new service.
  • Increase political clout.
  • Rejuvenate the organization.
  • Make it easier to satisfy lender requirements.

Having just read this list, you’re saying, “You’ve forgotten the most important benefit!” If you haven’t guessed already, “saving money” was left off of McLaughlin’s list. McLaughlin cautions readers who contemplate this savings logic. Here’s why: The first blush response to the 2008 recession among nonprofit leaders was to seek out administrative collaborations where two or more charities could find savings in the least painful way, which usually meant administrative spending cuts. He notes that the problem with this strategy is “that it is guaranteed to fall short of the desired outcome” because of the mathematics behind administrative budgeting.

When two or more organizations find ways to cut expenses in an administrative line, it’s likely to be modest—let’s use a respectable 10 percent savings, for example. “A 10 percent savings on a line item that itself is likely to be no more than 10 percent of the total administrative spending amounts to a fraction of a fraction, says the author. While every amount of savings helps, this is a small win for a big effort. McLaughlin reminds us that collaboration is a powerful tool, but the return should match the effort.

Email us at Mail@CausePlanet.org for a free article by author Thomas McLaughlin, “The Cost of A Merger.”

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