Building Nonprofit Resilience through M&A
By Tracy MacMillan, CEO and Managing Partner
Leadership in the nonprofit sector demands an acute ability to navigate uncertainty while staying true to a vision and mission. For many organizations, that means making bold decisions that offer long-term sustainability, increase impact, and strengthen community trust. One such option? Exploring the potential to merge with or acquire another nonprofit organization.
Mergers and acquisitions (M&A) in the nonprofit world aren’t about empire-building; they’re about mission alignment, operational strength, and resilience.
At a time when future Federal funding for many NPOs remains in flux, this approach — while intimidating — can be a pathway to sustainability. Moreover, when thoughtfully executed, M&A can be a strategic move to expand reach, reduce duplication, and bring bold visions to life.
Four key opportunities
Efficiency gains. Bringing two organizations together creates opportunities to reduce administrative overhead, streamline operations, and better allocate resources. From shared technology platforms to consolidated office space, efficiency frees up capacity for what matters most: delivering on your mission.
Financial stability. Mergers can help diversify funding streams, reduce over-reliance on any single donor or grant source, and present a stronger case for investment. Funders often view combined organizations as more strategic, scalable, and capable of long-term impact.
Programmatic strength. By combining expertise, staff talent, and services, a merger can create deeper, more holistic programming. The result? Expanded geographic reach, improved service delivery, and an organization better positioned to meet complex community needs.
Mission amplification. When two organizations share complementary missions, a merger can be a powerful way to scale what works. Together, organizations can build broader coalitions, sharpen their advocacy, and deliver lasting outcomes.
Careful assessment required
M&A isn’t a quick fix; it’s a strategic move.
The best mergers start with due diligence as well as careful evaluation and cultural alignment.
Here are the key areas nonprofit leaders must assess and question when considering M&A:
Mission Alignment. A merger must begin with purpose. Are your missions and values aligned? Will the new entity be stronger, more focused, and more impactful? Mergers should clarify your vision, not compromise it.
Complementary Strengths. Each organization brings something to the table — whether it’s leadership, programs, funding relationships, systems, process, or operational infrastructure. Look for synergy, not similarity.
Financial Health. M&A isn’t about rescuing failing organizations. Both parties need a realistic view of financial assets, liabilities, and sustainability. Merging two struggling entities rarely creates strength; it's the alignment of goals and transparent communication that builds a stronger foundation.
Risk and Compliance. From legal obligations to reputational risk, every merger brings complexity. Engage legal and financial advisors early. Conduct thorough due diligence. Make no assumptions.
Governance, Leadership, and Culture. Who will be the controlling organization? How will Board seats be allocated? Who will lead the new, merged or combined organization? How compatible are your cultures, decision-making processes, and staff expectations? Cultural fit is often more important than structural fit. Leadership alignment ensures a smoother transition and healthier organizational climate post-merger.
Stakeholder Support. The people part is always the most challenging. Stakeholders tend to be passionate about their organization’s mission, community and culture. Therefore, funders, staff, and community partners need to understand the "why" behind a merger. Transparent, proactive communication builds trust and creates buy-in — before, during, and after integration.
Maximum care must be taken to ensure not only mission alignment, but cultural cohesion, so everyone that remains feels valued.
Strategic Fit. Is this merger part of a long-term vision or a short-term fix? What does success look like two, five, or ten years down the line? Set clear goals and measurable outcomes. Legal Considerations. Merging nonprofits must navigate a range of legal and regulatory requirements, including:
- Board approval from both entities
- Compliance with state-specific laws and filings
- Careful transfer of assets to honor donor restrictions
- Preservation of tax-exempt status under IRS guidelines
Leadership counts
Exhausted already? Gear up, because once an agreement is signed, the real work begins. Integration requires intentional leadership, change management, and communication. A strong integration plan should address: financial and HR systems; program and service alignment; branding and communications; facility planning; and governance and board structure. Perhaps most importantly, leaders must remain focused on culture.
Bringing people along, honoring legacy, and building trust in the new organization are key to long-term success.
The Bottom Line
The strongest leaders are those who see change not as a threat, but as an opportunity. A well-executed nonprofit merger or acquisition isn’t about letting go. It’s about leveling up. If your organization is exploring growth or impact strategies, consider whether M&A might be a viable, and sensible pathway to greater good. Ask the hard questions. Engage your board and partners. And always lead with clarity, courage, and community in mind.