Mergers and acquisitions (M&A) have been common in corporate America for decades. According to Statista Research, there were nearly 15,000 transactions in 2024 alone.1 By combining products, services, and distribution, companies hope to reduce costs and increase market share.
As nonprofits explore ways to help boost their impact and reduce duplication, collaborations and mergers are becoming more common.
Why Should Nonprofits Consider a Merger?
Two important trends emerged in the 2025 State of the Nonprofit Sector Report by Forvis Mazars. First, the demand for nonprofit programs and services continues to rise. Second, the resources needed to meet those demands are not keeping pace.
Mergers offer a wide range of potential benefits to organizations looking to be sustainable and remain effective:
- Increased Impact – By combining resources, knowledge, and contacts, merged organizations can expand their reach and deepen their impact.
- Operational Efficiency – Mergers can significantly reduce administrative overhead, streamline operations, and eliminate redundancies within a region.
- Financial Stability – Pooling financial assets can help organizations diversify revenue streams and increase operating reserves to weather economic downturns.
- Stronger Talent Pool – Mergers can bring together complementary leadership and staff skills, enhancing organizational capacity.
- Improved Fundraising – A unified brand and mission can appeal to donors seeking high-impact, scalable solutions.
- Stronger Advocacy – Larger organizations can have a more powerful voice for advocacy, speaking with a unified voice.
Five Types of Nonprofit Collaborations
There are five main levels of nonprofit collaborations, three of which are considered mergers.
| 1. Acquisition | 2. Consolidation | 3. Parent-subsidiary | 4. Joint Venture or Strategic Alliance | 5. Shared Support |
|---|---|---|---|---|
| One organization fully absorbs another, including all assets and liabilities. The absorbed entity ceases to exist as a separate legal entity. | Two or more organizations dissolve and form one new entity. This is typically pursued when both parties are of equal size and strength. | One organization becomes the parent of another, allowing for shared governance and strategic alignment while maintaining a level of independence. | Not technically a merger, this occurs when two or more organizations collaborate on specific programs or services. | Organizations retain their individual identities, but share administrative functions (such as HR, IT, and accounting) and other back-office functions. |
Despite an increasing expectation from funders that organizations should form collaborations and avoid duplication, nonprofits have lagged behind the for-profit sector in this area.
One of the key reasons is cost. While long-term savings may be realized in time, there are significant upfront costs to a merger. Another major issue is loss of identity. Employees, board members, and long-time donors may have a heartfelt connection to the organization’s mission and struggle with the idea of it vanishing or morphing into something different.
A report from Bridgespan identified three additional barriers that frequently prevent successful nonprofit mergers.2
- A lack of knowledge about when and how to think about M&A.
- A lack of matchmakers to create an efficient “organizational marketplace” through which nonprofits could explore potential merger options.
- A tendency to look at mergers reactively, as a route out of financial distress or leadership vacuums instead of proactively as an effective growth strategy.
Considerations Before a Merger
There are several important factors that will help decide if a merger is right for your organization.
- Mission Alignment – The organizations should have similar missions, values, and culture.
- Program Enhancement – A merger should enhance your ability to serve beneficiaries more effectively and efficiently.
- Commitment & Engagement – Leadership, board, and funders from all organizations are engaged and fully committed to the process.
- Due Diligence – The process should include a thorough review of each organization’s financial position (including liabilities) and legal standing.
- Strategy – All involved parties will develop a detailed strategy with a timeline to address each major step of the process with purpose and intentionality.
- Regulatory – Filings and approvals will be provided to the Secretary of State, the IRS, and other entities.
Nonprofits typically have a wide range of stakeholders. Engaging them early and often in the merger process is essential. Frequent updates and involvement with funders and community partners can help your organization form new memorandums of understanding (MOUs) and partnership agreements once the merger is complete.
Mergers and strategic partnerships can help organizations adapt to changing environments and better serve their communities. However, they must be guided by careful analysis and commitment to the mission.
If your organization could use help with the merger process, contact our team of nonprofit professionals at Forvis Mazars.