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Mar 15, 2013

New Programs Support Nonprofit Restructuring

Nonprofits are facing sudden and severe changes in their finances.  State reductions in contract terms have been sizable and at times abrupt.  The recent Federal sequester has merely added another disruption to existing contractual terms.  When faced with abrupt declines in revenues, any organization will look for matching declines in expenses:  cutting costs, dropping services, or, in the extreme, going out of business.  These “scaling down” strategies are not always the best approach.

An alternative response is to seek lower costs or greater financial resiliency by “scaling up” through collaborations or mergers with similar organizations.

Funds to support the pursuit and consummation of mergers and collaborations are multiplying.  The SeaChange-Lodestar Fund for Nonprofit Collaboration supports a national program that has reviewed 130 possible mergers over the past three years and has made 34 grants totaling $1.2 million to move the efforts forward.  With this success, SeaChange focused locally in 2012 and formed the New York Merger, Acquisitions, and Collaborations Fund, Nymac.

The move to funds for local merger and collaboration support is occurring in Boston, Cleveland, Detroit, and Columbus.  The Columbus Foundation is taking an even broader approach to supporting nonprofit restructuring.  Its new Fund for Financial Innovation will support mergers and collaborations, but it is also open to projects that address reorganization, new business models, and social enterprise.