MERGERPHOBIA

Rocco Landesman, the controversy magnet sitting in the chairman's chair at the National Endowment for the Arts, gamely tried to address the issue of scarce funding for non-profit arts organizations in January. Mr. Landesman, himself in the cross-hairs of conservative Republicans who would like to obliterate the NEA, adds to a critical conversation that reaches beyond the arts world, given current economic conditions and the competition for scare dollars.

For years, foundations have been discussing the best use of their grant-making dollars in the economic downturn. Yet the same consideration of cost efficiencies in operating foundations could be considered by grantmakers themselves.

Only a few nonprofit organizations and smaller foundations seriously contemplate the possibilities mergers and acquisitions have for cost efficiency, as well as expanding reach, strengthening effectiveness, and in turn making the best use of scarce resources. A 2009 Bridgespan Group poll of nonprofit executives found “that 20 percent of 117 respondents stated that mergers could play a role in how they respond to the economic downturn. These leaders may consider mergers and acquisitions (M&A) reactively, as a way to shore up finances, to make their organizations appear more attractive to funders or to address a succession vacuum.” The time is right for savvy leaders in all sectors of the nonprofit world, whether financially stable or struggling, to face economic reality and consider the benefits from a potential merger or acquisition.