A recent research report conducted by Bridgespan, a subsidiary of Bain Consulting, “Nonprofit M&A: More Than a Tool for Tough Times,” concluded that “There are far more potential for M&A to create value in the nonprofit sector than most people realize…Now is the time for the strongest, most effective organizations to use it as a strategic tool to further their impact.” Once a $4.5 million organization in Tuscan, the Arizona’s Children Association (AzCA) emerged from a ten year strategic expansion campaign as a 40-million state-wide nonprofit; which CEO Fred Chaffee attributes to “using M&A to gain footholds in new services, geographies and beneficiary populations.”
While typically M&A opportunities and transactions are the headlines of today’s for profit world, it’s equally important to investigate its potential within the nonprofit sector. Typical strategic benefits that can arise from M&A activity include:
- Improvements in the quality and efficiency of existing programs
- Increased funding opportunities
- Development of new skills and cooperation of a diverse backgrounds
- Breaking barriers of entry into new geographies
M&A may not be an universal solution to the financial setbacks of every organization, but it can and should be seen as a viable alternative that can create synergy and opportunities to affect a greater number of communities.
