It is hard to imagine Mergers and Acquisitions in the nonprofit sector--especially acquisitions. How much is a nonprofit worth? What would one nonprofit pay another one for its resources? Would there be hostile takeovers or poison pill structures? Probably not. Mergers, on the other hand, might be a good idea. I saw two articles referencing this on Monday of this week, in fact.

Harvard Business School's Centennial website has a section called "The Conversation." The current conversation is The Future of Social Enterprise by professor Rangan. In this discussion Rangan presents three scenarios about how the nonprofit sector may evolve. One of them is consolidation. He argues that efficient organizations can quickly gain scale by consolidating or merging with others. Interesting to think of two nonprofits just merging and then implementing best practices across their organization and getting economies of scale. A very nice way to stretch their donor funding.

On Monday, in the Boston Globe, Mayor Menino calls for black charities to focus more on education. In this article Menino calls for charities to "combine administrative staffs to save money and put more funding into neighborhoods." That sounds like a recommendation for a merger in the nonprofit sector as well.

We have seen the Balanced Scorecard be an excellent tool for mergers in the private sector, and I imagine it would work equally well in the nonprofit sector. Mobil, Cigna, GTE, Saatchi and Saatchi, and McCord Travel have all been organizations that had scorecards and were involved in mergers in the last 10 years. The beauty of the scorecard is that is allows an organization to put their strategy on one page and put measures in place to focus the organization on delivering results. The BSC framework is a great way to identify well-run organizations. Finding similarities in strategy and approach would allow nonprofits to consolidate in a thoughtful manner. With good measures, it would also allow merging nonprofits to know what they were getting involved with early in the process. Also, merging similar organizations would consolidate the impact being reported, and a bigger impact could attract more donor money. Thus a newly merged nonprofit may be able to save overhead as Menino suggests, but they may also be able to attract more funds.

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