Is a Merger or Acquisition Right for Your Nonprofit?

My first in-house nonprofit role was on the executive team of two national nonprofits that were in the process of merging.

The decision to explore and follow through with a merger is a big one. In this case:

• It was the right thing to do for our community.

• It was the right thing to do for organizational health.

• AND it was very difficult across many different dimensions of work.

Having worked on other mergers, acquisitions, and spinoffs throughout my career, I was glad to see Independent Sector include the session “When Mergers and Acquisitions Make Sense” as part of their National Summit programming this year.

Bringing together executives and team members from merged organizations, a funder who is providing financial support for nonprofits to explore merger opportunities, and consultants who support merger negotiations and integrations, this panel hit on some key considerations that nonprofit board members and executives should understand if they’re considering a merger.

Why don’t more nonprofit organizations consider mergers?

Despite many benefits that mergers and acquisitions can bring for communities and causes, the reality is that mergers and acquisitions in the nonprofit world don’t carry the same incentives for founders or executive leaders that they do in the for-profit world.

Ami Dar, executive director of Idealist, noted that in the for-profit startup sector, oftentimes a founder’s goal is to quickly build their company and optimize their product or services in order to sell it. Selling the company outright or being acquired and integrated into a larger organization comes with significant financial benefits to the founder and often other key executives.

The same built-in reward is not currently true for the nonprofit sector. In fact, there’s a major disincentive to merge or be acquired because it often means job loss – for at least one of the organization’s CEOs, for several members of the executive team, and for team members throughout the organization – as the scope and scale of the newly merged organization is clarified and roles are defined.

One way to address this, Dar pointed out, is for funders who believe in the importance of mergers and acquisitions as a strategy to drive more impact to incentivize these processes by funding several years of severance for executives who would likely lose their jobs in the process.

When is the right time to pursue a merger?

Across the board, panelists agreed that it is easier and more effective to pursue mergers or acquisitions during times of organizational stability – not during times of distress or to save a sinking ship. The most successful mergers are rooted in the belief that coming together as one organization will create greater impact for the cause and, ultimately, greater financial opportunity and sustainability to power that impact.

The panelists also acknowledged the realities of this moment in the nonprofit sector and the disruptions caused by funding upheaval in the realm of government grants in 2025.

Onuka Ibe, managing partner at La Piana Consulting, noted that nonprofit organizations do not have the same “churn rate” that for-profit companies do, which means they don’t tend to close down operations or pursue mergers and acquisitions at the same rate.

According to Philanthropy Roundtable and data from the IRS, the number of nonprofit organizations in the U.S. has grown by 36 percent since 2000. Nearly 60 percent of the growth in 501(c)(3) organizations from 2002 to 2022 was due to an increase in human services and public and social benefit organizations.

With more organizations looking to serve the same communities, causes, or needs; previously reliable funding streams disrupted; and funders seeking more systemwide solutions and collaborations, there’s a compelling case for considering mergers or acquisitions as an impact and sustainability strategy.

Who should you merge with?

Successful mergers require a significant amount of trust. They involve uncomfortable and honest conversations at every stage of the process, including sharing information about staff, organizational health, finances, assets, processes, etc. – and they require decisions to be made about how those realities will come together in the new organization.

Building that trust takes time. Ami Dar and Jennifer Bennett, speaking about the joining together of Idealist and VolunteerMatch earlier this year, noted that the organizations respected each other’s work and ultimately decided to join forces after decades of working in similar spaces and being open to collaboration with one another.

Ann Mei Chang, CEO of Candid, noted the value of “testing the waters” by finding ways to collaborate and partner with other organizations before entering into merger conversations. Working with a partner organization on a more complex project can shed light on the shared strengths and potential challenges that could come from a merger.

Several panelists noted the value of seeking out partners who serve the same community or cause as your organization and whose work seems like a natural extension, expansion, or fortification of your own.

In this way, mergers can also be considered as part of succession planning. Boards and executive teams can begin to build connections now with organizations that could effectively take over programs and integrate team members when a visionary leader retires.

How can we get started with a merger or acquisition?

There are many ways to do mergers and acquisitions effectively. Panelists emphasized the importance of good communication and thoughtful planning along the way – and to not just jump into merging with the first organization that feels like a potential fit.

Tonia Wellons, president and CEO of Greater Washington Community Foundation, recognized that while it may feel scary to do so, it’s important to bring funders into the process early. GWCF has been funding merger exploration work for grantees to help make it easier for organizations to explore this route. Organizations like the Sustained Collaboration Network – a network of sustained collaboration funders – can also provide funding, technical support, and consulting recommendations to support nonprofits through these processes.

Julian Chender, founder + principal consultant of 11A Collaborative, emphasized the importance of a participatory, transparent process, ensuring staff are engaged from the beginning and throughout the process. Staff are key to organizational stability and are the drivers of impact, so ensuring they’re engaged, connected, and have an opportunity to contribute to what the future looks like is important both for the initial success of the merger or acquisition and for long-term success of the new, joined entity.

We see this in our change leadership work at LaFemina & Co., as well. By supporting leaders with high-quality professional development about how humans in organizations change from one way of working to another, and helping them discover what is needed to facilitate the conditions for change success, we can bring staff members into productive processes that enable trust, collaboration, and solution-oriented thinking.

As the session closed out, panelists reminded the audience that building trust takes time and that it’s essential to leave your ego at the door. Many organizations believe they’re doing the work better than others in their space, but that mindset – or a mindset focused only on a specific structure – can stymie the process and lead to a less successful integration of organizations.

Panelists encouraged nonprofit leaders to focus on the outcomes – what you want to accomplish for your community – and to co-create a path forward with a partner organization that keeps those outcomes and your community at the center.