Article: The Simple Math of Nonprofit Merger Integration

The Nonprofit sector is gearing up for a significant increase in mergers, acquisitions, and strategic partnerships as organizations face funding cuts and look to consolidate programs and services for more concentrated impact. But nothing will succeed without careful and well-planned integration based on robust Organization Design principles. This article discusses the math problem of nonprofit merger integration and how to harmonize organizations well. 

Starting Out

There is a wide swath of supporters for the up-front portion of merger making. There are small shops like Tenner Consulting and big players like La Piana (who wrote the book(s) on the topic) and SeaChange Capital Partners, who bring the expertise of investment banking to the social sector. All will agree that it is advantageous to investigate whether a merger, acquisition, or strategic partnership is right for your organization from a place of strength and stability. But many nonprofits are struggling mightily right now. Therefore, the Japanese proverb, “The best time to plant a tree was 20 years ago; the second-best time is now” applies well here.

The good news is that there is a record of funding for merger, acquisition, and strategic partnership investigation. This work includes everything from determining if your organization could increase its impact through an alliance, to negotiating with a potential partner about the legal structure by which you will do that. This is all work that we at 11A Collaborative believe is necessary but not sufficient for a successful merger, acquisition, or strategic partnership. What is missing is what comes after the papers are signed: integration.

The Four Types of Nonprofit Merger Integration

At 11A Collaborative, we look at integration as the key to a successful nonprofit merger, acquisition, or strategic partnership. To us it is a math problem where the question is the same, but answers, or outcomes, vary widely depending on the intention behind the collaboration and the work done to integrate the parties. There are four types, shown in Figure 1.

Figure 1. Four Types of Nonprofit Merger Integration. © 2025 11A Collaborative. All Rights Reserved.

Blending (1 + 1 = 3) is where two organizations come together to create something greater than the sum of its parts. This is usually a third organization, with a new name, bigger mission, and more impact. Our favorite example is Candid, the merger of the Foundation Center and GuideStar, into an organization with an elevated mission and a broader reach than the two individuals could do on their own.

Layering (1 + 1 = 2) happens when two organizations join in part but remain somewhat independent. Often, they will combine to serve a broader community but remain separate to in program and development to garner their individual funding streams. They may seek cost effectiveness by combining other functions like human resources and administration and operations. This happens most often in Direct Service organizations, such as when a mental health organization and a substance abuse organization join forces. Their populations may have overlap, but their services and funding streams are different.

Absorption (1 + 1 = 1) occurs when one organization takes on part or all of another organization. In this case two organizations meld into the one of the originals and provide expanded services under the original name. A great example of a successful absorption is the recent merger of VolunteerMatch and Idealist. In this case, VolunteerMatch’s tech platform and services got integrated into Idealist’s, along with some staff and board members to firm a greater organization under the original banner of Idealist.

Implosion (1 + 1 = 0.5) is a failed integration that drags both merging parties down. As one can see from the other three examples, merger integration requires collaboration, and collaboration must be designed. Failure to apply rigorous design principles to your merger will lead to poorer results than each organization had individually.

Designing for Collaboration

Most merger integration efforts—if they happen at all—focus on culture integration. However, culture is the result of significant organization design decisions that must be made first to properly harmonize the two organizations to the extent desired. Culture integration is an outcome of design, not an input.

Rather than looking to build culture first, it is necessary to align the merging organizations on Business Model and Strategy, Organization Structure, Processes and Governance, Metrics and Rewards, and Talent and People Practices. There are specific questions for each topic that apply to Blending, Layering and Absorption. Figure 2 is an adaptation of Jay Galbratih’s Star Model, an original Organization Design Tool used here for integrating nonprofit mergers, acquisitions and strategic partnerships.

Figure 2. Galbraith’s Star Model Adapted for Nonprofit Merger Integration. © 2025 11A Collaborative. All Rights Reserved.

The extent of the harmonization desired depends on the goals of the merger, acquisition, or strategic partnership. And how harmonization is done will inform the culture that is built.

Culture Building

Culture building comes from the right harmonization of the Star Model’s points based on your merger, acquisition, or strategic partnership’s unique needs and offerings. When we understand our field of play, our building blocks of the organization, how to play together, whether we’re doing a good job, and how to work with each other, then and only then, does culture form. Harmonious culture comes from a harmonized Organization Design.

Funding And The Need for A Third Party

How that harmonization is done will have a serious and lasting impact on the culture of the new organization. This is why it is important to have an objective third party lead this work. Many foundations have become adept at funding mergers, acquisitions, and strategic partnerships from exploration until formalization – when the papers are signed. Few know the importance of investing in the “back end” work of integration through harmonization. This is often left to the remaining Executive Director, a Chief of Staff, or a Director of Operations. None of those positions can speak objectively about the new organization that results from the combination of two, the 1 + 1. This is why it’s equally important to have a third party consultant lead integration efforts as it is to have one lead the “up front” negotiations.

Conclusion

The work of a nonprofit merger, acquisition, or strategic partnership does not end when the papers are signed. In fact, that is when the hard work of integration through harmonization begins. Ignoring this means leaving months of work and the future of two beloved organizations up to chance. Instead, one must take an Organization Design approach to conscious integration of the two entities to the extent set out in the partnership agreement.