Merging Nonprofits: Improve Efficiency by Reducing Overlap

During these tough economic times, nonprofit organizations have had to become increasingly flexible and many are operating on the leanest budgets they have had in years. Despite all this, it is also becoming increasingly common for nonprofit organizations to merge with others'"whether because they are similar or complimentary in the services they provide. When considering a nonprofit merger, look for ways to improve efficiency by reducing the overlap of services and missions.

Just as if two for profit businesses were coming together, it is important to look for ways to actually expand services during and after a merger. While the motivation for the merger may be to conserve costs and expenses, it is still important to stay mission-focused and look for ways to reduce any overlap during the expansion.

The most cost-effective place to reduce overlap is often with administrative functions. If possible, during a nonprofit merger, keep administrative functions lean and look for ways to expand services instead of overhead. There is seldom reason to make the human resources department twice as big, for example, when two nonprofit merge'"instead focus on programs and services that contribute to the organization's mission.

Consider the needs of the organization from the ground up (instead of from the administrative top down) and look at places where there will be redundancy with the merger. It is additionally important to make sure that there will be enough fund raising and development staff to take on the challenges of funding a new entity and keeping as many donors from both organizations as possible. Fund development is one area where an organization cannot afford to be frugal or let go of staffing. While reducing the overlap of staff functions, pay attention to the weaker areas during a nonprofit merger. A successful merger will make for a much quicker adjustment to the new way of providing services.