Chapter One

The best time to consider a merger or an alliance is before it is necessary, when coming together with another organization will mean combining strength with strength, and when the collective energies and creativity of the two or more entities can be used proactively instead of being sapped by the demands of crisis management. Without an external market mechanism to prod and enforce these kinds of strategic decisions, many nonprofits wait until the time comes when an alliance is not viable and they must choose between merging or going out of business. At that point, it is too late. An alliance will be a waste of time, and a rescue merger will be far more difficult and probably less effective than a merger made in less desperate circumstances. One of the primary objectives of this book is to make the case for nonprofit mergers and alliances as a preferred strategic option, not as a last-minute decision made in despair.

The single most compelling reason to merge nonprofits or to consider developing an alliance is to tap into complementary strengths. Many times, two different organizations come together and in the process discover unexpected sources of strength in the other: the ballet company with excellent administrative systems merges with a dance troupe with high public recognition; a small clinic that owns its own building merges with a larger set of clinics that needs to diversify its asset base; a chief executive with good "outside" skills brings her organization together with another whose chief executive officer is excellent a