The urge to merge - part 1

Mixed reactions were seen in the sector when CEO of the Community Council for Australia, David Crosbie, recently cautioned NFPs that too many are competing for a finite amount of funding, advising that organisations should merge or shut down altogether. 

Mergers won’t be the answer for every organisation, but we believe that more collaboration should be encouraged in the sector and that collaboration can be across a very broad spectrum. 

Crosbie said that the strong growth in the Australian NFP sector over the past decade will be difficult to maintain as less people are giving compared to before 2008, when the Global Financial Crisis hit. “We need less division in our sector, but there is still a long way to go if greater collaboration and mergers are going to become more widespread in our sector” Crosbie said. 

CEO of World Vision, Tim Costello, came out in support of Crosbie’s remarks “Unfortunately, passion and commitment do not always readily translate into good management and effective programs or services. I know first-hand how often in the international development area, the challenges faced in translating good intentions into good outcomes.” The former head of the Charities Regulator in the UK, Sam Younger, said in his farewell speech in 2014 that there was too much “duplication, inefficiency and, sadly, too many charities that are not managed well enough”. 

In our recent survey on what makes a NFP well-run, collaboration appeared to be a low priority overall. In a list of 21 elements that contribute to a well-run NFP, collaboration with other NFPs came in 18th place. However, when asked What is one change you would make for NFPs to be better-run, CEOs appeared to place collaboration much higher on their priority list.

More collaboration across the sector should bring about better efficiency and ultimately better outcomes for organisations and their beneficiaries. Social problems are complex, often interrelated, often global in nature and require scale - problems like this are often beyond the capacity of single NFPs to tackle effectively. At the same time though, organisations need to be able to respond to change quickly- that is they need to be flexible and agile, which can be more difficult in a big organization.
In light of the comments from Crosbie and with some major reforms underway across the sector,  NFPs should be thinking about collaboration at the moment. Mergers are not be the only solution to the inefficiencies that Crosbie is concerned about as there is certainly no ‘one size fits all’ approach to tackling these inefficiencies. Some alternatives to mergers include:

  • Coalitions & alliances, where organisations retain their own identities but work together in specific areas
  • Best practice sharing to not reinvent the wheel in non competitive areas
  • Formal partnerships 
  • Joint ventures
  • Sharing services, such as back of house

These alternatives can avoid giving up autonomy and the individual identity of the organisation. But more importantly, the purpose of your organisation’s existence should be at the forefront of your decision making process. Egos aside, it should be the welfare of the communities you serve which should inform whether or not your organisation should merge with another and whether you can better solve social problems in partnership with others as opposed to on your own. 

Of course, this is easier said than done. Weighing up the pros and cons of collaboration or especially a full merger can be a difficult, time consuming and costly task, and predicting the overall impact on your beneficiaries, and other stakeholders can also be a daunting challenge. 

Collaboration takes time, thought upfront and much consideration. In Part 2 of this blog series on mergers and collaboration, we’ll discuss why mergers could fail, and the factors to consider when deciding whether or not a merger is right for your organisation. We’ll also look at collaboration across the sector, and how your organisation could benefit from working with another. 

Good Foundations has seen first-hand the benefit of collaboration amongst organisations – if you would like to talk to us about our experience helping organisations collaborate, contact us at