I can only think of one time you promise for richer or poorer, in sickness and in health. And it’s never applied to a nonprofit organization, let alone a business. If your nonprofit has sickly or feeble programs and is in a poor financial state, is it worth saving unconditionally? Should nonprofits rise above our treatment of failing businesses simply because they have a worthy mission?
This week’s article by Raylene Decatur, called “Should we strive for sustainable organizations?” is a must read. She and I recently discussed the occasionally misguided goal of sustainability, and I’m delighted she put pen to paper for a larger discussion. Raylene addresses the issue we as nonprofit leaders continue to orbit but rarely touch. Decatur says,
“Rather than investing so much energy in discussing and developing sustainable nonprofits, we should instead have a more animated dialogue about the best way for nonprofits to go out of business. Why should there be an aura of perpetuity around nonprofit endeavors? In 2010, 824,920 nonprofit organizations filed reports with the Internal Revenue Service. What percentage of these organizations is making documentable progress on their missions? Some may have made a real and permanent difference, and their mission can now be retired. Why is it acceptable to open a restaurant that might fail, but not acknowledge that a new nonprofit may not succeed?”
I would suspect that you agree with this statement but are you willing to accept the reality? Perhaps the collective conscience of our nonprofit sector is already tracking this logic as we watch the stage of mergers grow to a cast of thousands. There are a lot of different reasons mergers and alliances have grown as a popular alternative.
Two in particular are the fall of the subprime market in 2008 and the explosion of nonprofits in the last 10 years. In fact, The End of Fundraising author, Jason Saul, claims there are approximately 1,000 nonprofits for every type of cause. These systemic events have exposed feeble nonprofits and prompted them to look at integrating service delivery or tapping into peer organization’s strengths, says Tom McLaughlin, author of Nonprofit Mergers & Alliances.
Perhaps mergers or alliances at their worst are the palatable alternative to failure in our sector. Furthermore, self preservation could be more insidious than we think because it’s veiled as doing the greater good.
In contrast, Tom McLaughlin says the best time to consider an alliance or a merger is before it’s necessary. For the healthy organizations truly investigating mergers for the exchange of mutually beneficial gains, I give you McLaughlin’s Life Cycles of Nonprofit Organizations. Examine the stages below to discover your readiness for collaboration:
Formless: In this stage, there are not enough comparable nonprofits to constitute a recognizable type. Different groups respond to similar social needs and economic realities in similar ways without necessarily understanding why or even communicating with each other. Affiliations of any kind are virtually out of the question.
Growing: There is at least a general recognition that the particular nonprofit service is needed but most energies are devoted to building capacity and solving operational problems.
Consolidating: At this stage, the general type of organization is recognized and accepted by society and the nonprofit sector itself. Some organizations take on a leadership role while others struggle to come into being in order to cover geographic gaps left by the early types. The groups create formal associations and other support entities, and a recognizable national identity begins to emerge.
Peaking: As a field and as individuals, these nonprofits enjoy newfound acceptance and growing influences. The pace of new entrants slows, but those already in existence experience previously unimagined success in areas such as operations, public relations, financial and political. Mergers occur for strategic purposes when strong players take over the few weak ones, which falter.
Maturing: Maturing nonprofits have long ago hit their peak and are beginning to lose some of the strategic momentum they had earlier. The services they offer are now being offered at least in part by others or are no longer perceived as necessary. No one can doubt their collective influence, but some are beginning to doubt their future.
Refocusing: Once past maturity, some nonprofits find they must reinvent themselves in order to survive. Some do; others fade gradually away or merge what is left of their services with compatible groups at an earlier stage of development.
Is your cause worth sustaining in perpetuity? If you say, “Sure it is,” I would add, “But to what end?” What measurable and incremental results are you accomplishing? Are your efforts truly addressing the upstream systemic causes? And finally, ask yourself if your nonprofit would be saved by a merger or would it be strengthened by a merger. The ideal union is when both parties share their compatible strengths. If your nonprofit is looking for a savior in its merger, perhaps you should call off the wedding.