While nonprofit and for-profit organizations differ in that nonprofits are mission-driven and for-profits are profit-driven, both seek to provide value to their constituents or customers, so it's critical to maximize efficiencies to increase capacity, value, and impact. Consolidation or mergers are an important way to maximize efficiencies —  an area where nonprofits could learn valuable lessons from for-profits. 

Although mergers occasionally occur in the nonprofit space, particularly among larger organizations, the tendency is toward proliferation, which is almost always driven by the best of motives. Individuals personally affected by a disease or cause are moved to action and often set up a nonprofit to do work that is already being done by other organizations. This can dilute available resources, create inefficiencies, and confuse donors. Consolidation, by contrast, creates opportunities for existing nonprofits to expand mission and achieve results that simply aren't possible when resources are fragmented.

Lessons from a successful merger

As CEO of the Parkinson's Foundation, I've seen what's possible through consolidation. The foundation was created in 2016 through the merger of two legacy organizations with similar missions but limited resources — the National Parkinson Foundation and the Parkinson's Disease Foundation — that recognized the opportunity to do more together than either could do alone. And five years later, that merger is an unqualified success. Each year following the merger, the foundation's revenue has increased by nearly 15 percent — additional resources that we've been able to dedicate to mission-focused programs. During our most recent fiscal year, we set a new high in fundraising mission spend, committing nearly 87 cents of every dollar to programs. This has enabled the foundation to expand existing programming and research funding and to broaden its thinking and launch new initiatives that would not have been possible by either organization alone.

Of course, there are issues that must be considered before embarking on a merger, but in our case, those issues were secondary to a larger question: Is the merger good for the Parkinson's community? When both organizations answered yes to that question, there was an obligation to move forward and work through any challenges. Here are some of the lessons we learned through the process:

Lean on your board. A well-informed board is essential in determining whether a potential merger will benefit the community. Given vested interests, it can be difficult for executive leadership to evaluate merger opportunities objectively, even when that is what they are trying to do. No leader wants to feel like he or she is sacrificing what they've helped build. That can create internal resistance to the idea of a merger. By keeping the focus on the big picture — the benefits to the community — the board plays an important role in propelling merger talks forward. In the end, it may not be the right time or fit, but the board can ensure that full consideration is given.

Engage stakeholders. In general, donors, volunteers, stakeholders, and those being served prefer collaboration and communication among nonprofits in the same field over competition and adversity. As a result, it's likely they'll welcome a merger with an organization with a similar mission. At the same time, it's also important to involve them wherever possible so they feel a part of the process. We planned and implemented the Parkinson's Foundation merger very deliberately so the community was informed every step of the way.

Establish a strong identity. A merger can create opportunities to crystallize, refine, and communicate your mission. It can also provide opportunities for a brand update or refresh. Before the merger that established the Parkinson's Foundation, the two legacy organizations had similar names and acronyms that were confusing to many constituents. By simplifying our name, updating our brand and clarifying our messaging, the Parkinson's Foundation eliminated that problem. Five years later, our brand is now well known across the country and the earlier confusion is no more.

Prioritize the mission. Mergers can be disruptive, causing fear and uncertainty among staff, stakeholders, and constituents. Therefore, having a plan to minimize disruptions to operations and mission programs is critical. The thing to remember — and communicate consistently — is that mergers create opportunity. The foundation communicated to the staff in both organizations that there would be a place for everyone in the new organization, which greatly helped minimize departures during the transition. This continuity of staff allowed us to maintain operations and programs as before. Today, the continuity of our staff, most of whom pre-date the merger, is one of the strengths of our organization.

Re-imagining what's possible

There are always issues that arise during any merger, but if everyone involved places the greater good of community first, every issue can be overcome. The organization will reap many benefits, notably, reinvigorating the team and exploring new possibilities.

An example of this is the foundation's PD GENEration initiative, which we launched in 2019. The first nationwide program of its kind, PD GENEration provides genetic testing for clinically relevant, Parkinson's-related genes for people with the disease. Identifying people with specific genetic mutations for prospective clinical trials is vitally important in advancing new and better therapies for Parkinson's disease. The combination of greater resources, combined expertise and programs from the legacy organizations, and expanded scope helped make this initiative possible.

I don't want to suggest that every nonprofit should be looking for merger opportunities. Mergers can take a lot of time and resources, and sometimes it's just not the right time or best fit. But I believe that the proliferation of nonprofits in already crowded fields can limit the resources needed for direct impact. In the nonprofit world, imagination attracts resources and resources fuels imagination. Mergers are a proven path for bringing both to a nonprofit organization.

John L. Lehr is CEO of the Parkinson's Foundation, which makes life better for people with Parkinson's disease by improving care and advancing research toward a cure.