In my experience, there are nonprofit mergers but not acquisitions. Yet with the economy in a tailspin, everyone, from local law firms and CPA firms to national consultancies, is suddenly interested in nonprofit mergers, or as they uniformly, and erroneously, refer to this phenomenon: Nonprofit M&A.

Granted, there may be some appeal to this term. It is easily recognizable and being borrowed from the corporate sector, it may convey some false sense of legitimacy or soothe the nonprofit sector’s inferiority complex.

It’s been nearly 10 years since I wrote the first Nonprofit Mergers Workbook, and in working with hundreds of nonprofit organizations, we’ve found there are two key conceptual problems with the term “Nonprofit M&A.”

First, nonprofits have no “ownership,” instead, they are held in trust for the public by a volunteer board. The board is a steward, not a group of owners. This suggests you cannot buy or “acquire” a nonprofit organization. You can buy some of its assets, but not the organization itself.

Which leads to the second problem with the term: it scares the heck out of the leaders of nonprofits who might enter into merger negotiations thinking they are “acquisition targets.” We constantly reassure concerned clients that there are no “hostile takeovers” in the nonprofit sector.

We need to push forward with exploring our sector’s options for collaboration, but we should not adopt a potentially loaded corporate term that doesn’t reflect the true nature of nonprofit partnerships.

Tags: nonprofit

This entry was posted on Wednesday, June 3rd, 2009 at 4:57 pm and is filed under Assorted Musings, Mergers, Nonprofit Sector, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.