Some years back, Chicago’s Boys Club and Girls Club combined their resources to form the Chicago Boys and Girls Club by working together as a way to better provide for the city’s young people. In an article “Nonprofit Mergers that Work” in the Stanford Social Innovation Review, Donald Haider, director of the Center for Nonprofit Management at Kellogg School of Management at Northwestern University, described how organizations devoted to literacy merged in Chicago to benefit more public school children. These are a few examples of the many combinations in the nonprofit sector occurring across the country.

“In recent years, there has been an increase in mergers, asset transfers, and affiliations involving nonprofit organizations,” Willard L. Boyd III wrote in a publication of the American Bar Association. These “business combinations” have been necessary in an environment that has become more challenging for nonprofits to obtain financial support in the form of public and private funding and contributions.” Boyd pointed out that the considerations to be taken before such a step are similar to those of profit-making mergers, “including synergies, cost savings and other efficiencies to be obtained through the combination, work force issues and board composition.”

Haider’s article points out how the same principle, to combine and streamline operations, can provide better outcomes for clients. While many nonprofits have worked together informally, there are important differences to be addressed when considering a permanent combination.

The Fedcap Group is a parent company of 19 companies. In 2010, as part of our Strategic Plan, we made the decision to grow through the organic expansion of existing services and through combinations with other mission driven nonprofits. The Fedcap Group offers a growth platform for its companies to expand within our four major areas of practice: Education, Occupational Health, Economic Development and Workforce Development.

Through our nearly decade of experience in mergers and acquisitions, we have learned that there are many considerations when considering a combination—here are just a few to explore:

• • • Are the missions of the two entities closely aligned?
    • Does the combination advance the goals of each entity?
    • How well will the cultures of the companies integrate?
    • When combined, do the programs of each company amply the work of the other?
    • Is there talent to be leveraged across the combined entities? If so, how
    • Will combining corporate services (IT, Finance, HR) result in better efficiency and cost savings across the combined entities?
    • What are the facility/long term lease considerations?
    • Will there be staff layoffs? Because there is a legitimate condition called “merger fear”, leaders must consider if there will be staff cuts and, if so, how this will be addressed.

Brand Management is also of significant importance in the combination process. At The Fedcap Group we are committed to increasing the brand profile of every company with which we combine. By working collectively to raise the profile of each company of The Fedcap Group, we believe we enhance the sustainability, relevance and impact of each company.

Combining organizations with aligned missions advances the goals of each organization. At the Fedcap Group we really do believe we are better together.