Mergers have long occupied a complicated place within the not-for-profit sector. On one hand, not-for-profit organizations may pursue them to increase impact and improve service while increasing efficiencies over the long term. On the other hand, mergers have often been perceived as funder driven and emblematic of a loss of identity and autonomy — even a sense of failure.
In the face of increased competition for resources, however, and particularly since the recession, more nonprofits are seeing mergers as necessary and even valuable.
Through the Ontario Trillium Foundation‘s (OTF) Challenging Times research, community roundtables, collaboration symposium, and research project, we’ve engaged the sector in a dialogue around its response to the economic downturn and the future of the sector.
We?ve heard that collaboration is increasing and the sector is experimenting with different forms of strategic restructuring, such as shared services or spaces.
Yet while there seems to be a great deal of excitement around collaboration, there is little information and dialogue around actual mergers in Ontario, despite the increase of mergers and acquisitions in the province.
Between April 1, 2004 and June 30, 2010, OTF alone approved 15 grants worth close to $1.3M into Ontario communities for projects related to mergers and amalgamations. Through these grants, we learned that merging is complex and a long-term commitment that requires time and careful consideration by those involved.
We have also learned that the effects can be very powerful.
The following five stories demonstrate why some organizations consider merging, some of the conditions that led to their success, and the effect merging has had on these organizations and the communities they serve. They illustrate how mergers can be a powerful tool in advancing an organization’s mission when they are pursued from a place of strength as opposed to desperation.
- Big Brothers Big Sisters of Windsor & Essex County: Small changes drive big dreams
- Club Action Hearst: When less is more
- Centre Wellington Minor Hockey Association: From competition to collaboration
- East Scarborough Storefront and Tide Canada Initiatives: An uncommon partnership for a common problem
- North York Central Meals on Wheels: A lesson in “if at first you don’t succeed, try, try again”
Big Brothers Big Sisters of Windsor & Essex County: Small changes drive big dreams
When he started the Big Brothers organization of Windsor & Essex County in 1966, Pierre Phillippe wanted to give young boys an opportunity to connect with positive male role models. In 1972, an organization with a very similar mission but serving a different population group was founded: the Big Sisters Association of Greater Windsor.
The two organizations worked separately, but closely, for over 30 years on joint fundraising initiatives. In the late 90s, the two agencies agreed to build and share a new building. After that, the executive directors of the two organizations walked in the same door to their offices and exchanged “hello’s” every single day. Yet initially, merging was not an obvious choice for the two executives.
It was not until March 2003 that the board of Big Brothers passed the motion that would set the wheels rolling for a formal merger. That September, the Big Brothers Big Sisters collaborative applied to OTF for a grant to explore how operations of the two organizations could be improved. It took nine months for staff and boards of both groups to reach consensus. The single biggest barrier appeared to be the one-time costs associated with the merger. OTF approved another grant to support these implementation costs.
The merger was a lengthy process because Big Brothers Big Sisters made a concerted effort to ensure the process was engaging, consultative, and representative. Focus groups with clients were organized to engage with members and to maintain open communication with staff and volunteers. Engagement and consultation exercises helped identify expectations of staff and stakeholders.
The union between the two organizations helped Big Brothers Big Sisters of Windsor & Essex to weather the economic storm of 2008. Shared costs and efficiency gains enabled them to pool resources to compete for scarce funds. The decrease in back-office costs that came with sharing the space allowed the organization to flow more funds to front-line staff, where it was most needed. The organization was able to realign its priorities rather than reduce programming.
The time it took to build consensus around the idea, prepare staff, members and volunteers for the transition, and to actually make the change, was well invested. Calvin Little, the former executive director of Big Brothers Windsor Essex puts it, “You would not jump into a marriage hastily. And in the same way, the two organizations wanted to make sure they were making the right choice before committing to a lifelong partnership with each other.”
Club Action Hearst: When less is more
Located in the heart of Northern Ontario, Hearst has a largely francophone community of 5,000 inhabitants. The town is also a hub for facilities, programs and serves a wider region of some 10,000 people. Two clubs provided services to Francophone seniors, the Club Soleil des Aînés and the Atelier des pionniers et pionniéres de Hearst. Both were membership-based, volunteer-run organizations that offered programs and activities like bingo, bridge, euchre, cross-stitching, and community sports. For many years they offered seniors almost identical types of activities.
In 2007, the two clubs began to explore the possibility combining resources as a single organization, eventually to be called Club Action Hearst.
The goal of the merger was clear and the path to success relatively low risk. However, history told them many groups in the area had tried to merge but failed. The Centre’s current executive director, Pierre Brochu, believes that much of the success of a merger “depends on the personalities and how much you are willing to compromise and be a part of a larger process.” In short: “not easy but worth it.”
The clubs minimized risk by ensuring their members were on board and that there was buy-in from relevant stakeholders. A joint working group was struck with equal participation from both groups, charged with conducting research on the need for and process of the merger. For an organization run primarily by volunteers and accountable to members, this made a lot of sense.
Today, senior Francophones living in Hearst benefit from the improved programs and services offered by Club Action Hearst. Staff and volunteers have seen improvements in the way the organization is run and the results they are able to achieve in the community. Moreover, there are now 645 members in the organization. The growing success of the organization has had material benefits as well and the Club is opening a new $2.3 million multi-purpose facility in spring, 2011 — an achievement that would not have been possible prior to the merger.
Centre Wellington Minor Hockey Association: From competition to collaboration
The competition that existed between the Elora Lightning and the Fergus Highlanders hockey associations was intense. Even though the two communities, located just northwest of Guelph, were amalgamated in 1999 and separated only by five kilometres of highway, there was a deeply entrenched rivalry in their history — and that rivalry played itself out on the ice.
Following the 2007-08 hockey season, the two associations found themselves facing a stark reality — player retention was a major challenge for both clubs, especially in the older age groups. The sport was competing against a wide range of recreational choices, not the least of which were PlayStations and Xboxes. Spreading players across two neighboring associations was becoming unsustainable.
The two associations decided to explore the possibility of a merger. Initially there was resistance to the idea. Some board members were wary of giving up their independence. Families, especially those living in the smaller centre of Elora, worried about being swallowed by the larger club. However, with the support of the Ontario Hockey Association and both memberships, the two associations decided on a year-long trial merger. During this time the group operated as a single league — with both recreational and more competitive teams — without dissolving their legal associations.
This trial year went better than hoped. With a larger membership base, more kids from both communities were able to play in the more competitive division of the league, and the recreational league was able to offer better developmental programs. Enough flexibility was maintained so kids could still play at the arena closest to home. Most importantly, after a year of their children playing side-by-side on the same teams, people realized they had more in common than they thought.
At the end of the successful trial year, both association boards voted in favour of the formal amalgamation. Together they received a grant from OTF to fund hard costs. This created the Centre Wellington Minor Hockey Team Association, with the team name “Fusion”. Centre Wellington has since provided guidance to other groups thinking through their own mergers. The region’s lacrosse league followed a year or so later with their own merger.
East Scarborough Storefront and Tides Canada Initiatives: An uncommon partnership for a common problem
In the early 2000s, the area of east Toronto (known as Kingston-Galloway) just inside the Scarborough border became infamous for a stretch of motels along Kingston Road that were housing more than 800 immigrants and refugees due to overcrowding in the city’s shelter system. It also contained the highest concentration of social housing in the province.
To address the dearth of community supports and infrastructure, the idea of a one-stop community resource centre emerged. East Scarborough Storefront was the dream of a group of residents and community workers who recognized the need to assist people living in this community. The Storefront opened its doors at Morningside Mall in 2001 and became a vibrant hub of community resources, with over 30 community agencies under one roof and more than 50,000 visitors per year.
By the late 2000s, the time had come for the loosely-bound collection of agencies trusteed under the wing of a larger recreational organization to make a decision about its future, says Anne Gloger, the Storefront’s founder and director. Like many successful projects, the Storefront toyed with idea of incorporating as a nonprofit. It also explored finding another trustee that would be a better fit with the community hub model of the storefront.
Eventually, the group chose a different, somewhat uncommon direction, becoming a project of Tides Canada Initiatives, an arrangement that allowed the group to maintain its “hub of multiple services” model. Tides Canada is one of a collection of alternative governance structures that offers nonprofits an alternative to establishing a stand-alone identity.
While OTF did not provide direct funding support for the merger, as the Storefront was in the middle of an active grant while this opportunity arose, Gloger says that when funders came on board with the idea, they saw the possibilities — the emergence of an alternative governance platform represented a bigger opportunity for the sector than just the Storefront grant.
Broadening choice for the sector is an incredible opportunity at this juncture: finding new and creative ways to put cause and mission before existence is vital.
North York Central Meals on Wheels : A lesson in “if at first you don’t succeed, try, try again”
The integration with the Don Mills Foundation for Seniors (DMFS) was the second merger attempt for North York Central Meals on Wheels. Meals on Wheels (MOW) received a grant from OTF in 2000 to amalgamate with another organization doing related work in the same area of the city. Despite service and geographic alignment and initially quite a bit of openness to the idea from both organizations’ boards, ultimately the partnership was unsuccessful and the grant was rescinded.
According to Beth Stern, Meals on Wheels’ executive director (now a division of DMFS) there were a number of reasons for its failure but the main missing ingredient seemed to be a shared organizational culture.
For Meals on Wheels, a volunteer-reliant organization that provides nutritious meals to vulnerable and isolated adults, the need to pursue other partnerships was critical for its survival. “As a small agency, the writing was on the wall for us,” says Stern.
In recent years, it became increasingly difficult to meet demand, let alone seek opportunities to enhance support to clients. Fortunately, the organization was able to find a good fit with The Don Mills Foundation for Seniors. Both organizations shared the mission of supporting seniors living in North York and both wanted to maximize their resources and increase the reach and effectiveness of services.
Both also received funding from the Ministry of Health’s Central Local Health Integration Network (LHIN), which provided funding and guidance to support the merger. They also laid out expectations and timelines, which Stern said helped keep the two organizations focused and on track.
While only in the second year of the transition, Meals on Wheels cites a number of significant improvements, including the ability to serve clients in an even more holistic way, and the ability for the smaller MOW to tap into a larger administrative infrastructure.
Stern cautions organizations and funders against focusing primarily on the numbers (i.e. supplying more units of service or huge savings of money) as a motivation for a merger. The first and most important question has to be: will the merger result in good and even better service to the community? For both organizations, the answer to that question was yes.
What have we learned about mergers?
Our sector is changing. While this is not a new phenomenon, the current climate of decreased revenues and increased service demands is challenging nonprofit organizations to think more creatively about how they fulfill their missions.
Likewise, funders are being challenged to think about how best to support this work, particularly to drive innovation and greater impact in the sector. Pursuing partnerships and collaborations are effective ways to achieve these goals.
The case studies above show a merger can be transformative when the right conditions are in place¹:
Sound strategic and community benefit: The primary motivation to merge cannot be for the sake of survival — nor should it been seen as a rescue boat for failing organizations. There have to be positive outcomes for both organizations and their communities. The impetus to form Club Action Hearst, for example, was to enhance programs and services for Francophone seniors in Hearst and eliminate the duplication of effort by two separate organizations.
Full commitment of leaders of both organizations: Buy-in is important at the staff, volunteer and board levels. Moreover, both entities have to be committed to make the merger work. A successful merger is not possible if only one party is moving the ball forward. Big Brothers and Big Sisters formed a steering committee made up of the senior staff and members of the board to guide the merger along. This leadership trickled down and translated into full buy-in from all stakeholders.
Merger is well resourced: Mergers are complex endeavors that require both financial and non-financial resources. For Centre Wellington, OTF provided funding for volunteer training, legal fees, and equipment purchases associated with the amalgamated organization. This was critical to in order to continue to deliver hockey programs without passing on the amalgamation costs to families. In the case of Storefront, OTF allowed enough flexibility within the grant to allow the organization time and space to think through its options. The grantee was able to adapt its arrangements with the Foundation once it settled on a model.
Cultures are compatible: As Meals on Wheels learned during their first attempt at a merger, combining two very different organizational cultures is sometime more challenging than the administration and legalities associated with amalgamation. MOW was the much smaller of the two organizations and each had a different model for how they achieved their missions. In the end, fundamental differences in the way that organizations are run can drive a wedge into the merger process. On the other hand, compatible organizational cultures can be essential driving forces behind successful mergers.
We hope that this article will inspire other funders and not-for-profits to continue to share experiences and learn from one another. This will grow our collective knowledge around mergers and structural changes that will contribute to a stronger and healthier nonprofit sector. We invite you to be in touch, post a comment on our blog and share this article with others in the field to continue the conversation.
Viola Dessanti is the Senior Advisor, Knowledge Management and Jenn Miller is the Senior Policy and Research Analyst for the Ontario Trillium Foundation.
