Transcript for the Piece Audio version of Non Profit Mergers

Economy Pressures Some Non-Profits to Merge
11/30/09
Blake Farmer

Non-profit organizations can be found in just about every corner of the economy. They range from A to Z – arts organizations to the zoo. Not counting schools and churches, the Nashville area has an estimated 1,000 active non-profits, and that may be too many. With less cash to go around in the current economy, organizations are taking a second look at merging. Others are linking up out of sheer necessity. WPLN’s Blake Farmer reports.

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INTERVIEWS:
Patty Harman, CEO Monroe Harding
Lewis Lavine, CEO CNM
Marianne Schroer, board chair of Franklin’s Trust

People are still giving to charities through the economic recession, but not like they use to.

HARMAN: “Those would work if we were in a pinch, so…”

Patty Harman signs off on the tea-light candles for her agency’s annual gala. It starts in eight hours.

Harman is CEO and chief fundraiser for Monroe Harding, which started as a children’s home. This year she has a little extra work to do to offset the expense of taking on an adoption and foster care service called RSI.

HARMAN: “They were kind of in a difficult place in the last year or so. They were a small agency. The referrals aren’t what they used to be.”

RSI had given up on fundraising altogether. Monroe Harding was much larger and healthier. It serves primarily teens, but Harman says it wanted to get into adoption.

HARMAN: “We haven’t done it ourselves because it’s very costly for start up costs. There’s already a lot of people doing it, so we didn’t want to duplicate services.”

Mergers look good on paper as a way for non-profits to avoid competing for money. But they’re not nearly as common as in the for-profit world. The Bridgespan Group completed a survey this year showing businesses merge 10-times more often than large non-profits. There’s no profit motive to make deals happen.

However, the economic downturn has created a survival motive, says Lewis Lavine. He’s CEO of Nashville’s Center for Non-Profit Management.

LAVINE: “We’ve seen instances where an agency is no longer viable and someone takes it over. In the corporate world we would call that an acquisition, not a merger…But what we like even more than that is when two strong agencies with a solid mission, where the missions overlap, actually come together with a merger.”

Lavine’s group has asked that agencies consider mergers before they run into trouble, which can be a tough sell.

LAVINE: “The tension often involves egos, as it always does. Board members and staff believe they can perform the service better than anyone else can.”

GUIDE: “That was the dead center of the fighting.”

The Center for Non Profit Management has played matchmaker with two non-profits related to the Civil War Battle of Franklin – Carter House and Carnton Plantation.

GUIDE: “The next morning you couldn’t walk anywhere around Carter House without treading on dead bodies.”

A dozen tourists sit in rocking chairs on the wide front porch of Carnton. The foyer served as an ER during the battle. Carter House was more like a bunker in the thick of the fighting. Bullet holes remain in the walls to this day.

Marianne Schroer is the new board chair for the combined organization.

SCHROER: “The bottom line, probably, is we’re better together than apart.”

As house museums all over the country struggle to attract visitors and donations, these two are doing relatively well. Still, Schroer says often they’re in competition for the same grants and donors.

SCHROER: “There are lot of different entities that are going after funding dollars, and what we need to do is kind of streamline that and go after that together.”

Not to say merging has been as easy as apple pie. Employees have feared losing their jobs. The former directors of both houses essentially took demotions to make way for a new CEO. Those factors keep non-profits in a state of inertia, leaving well enough alone. And inaction is even more critical for aid groups, says Lewis Lavine of Center for Non Profit Management.

LAVINE: “There are about 30 agencies that provide some kind of service to the homeless community in Nashville.”

Lavine says they need to have a come-to-Jesus moment and team up, which hasn’t happened. Nonetheless, he says there’s more merger talk these days as non-profits batten down the hatches to ride out the economic downturn.

REPORTER: “So the center for non profit management, a non-profit itself, any potential mergers out there?”

LAVINE: “We actually did a merger three years ago. There was an organization called the Association for Non-Profit Executives which was a small organization and we actually did merge with them.”

It took nearly a year to complete that deal. And six months in, Lavine says there were some major adjustments needed. But in the end, it helped the mission of supporting other non-profits. And that, Lavine says, is the payoff.

For Nashville Public Radio, I’m Blake Farmer.

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