Although nonprofit mergers are great tools for sustainability and financial efficiency, some fail and are unable to sustain an organization. Serving high-risk communities throughout the COVID pandemic and facing increases in outpatient care over the last several years, Mercy Hospital, as well as three other South Side Chicago medical centers, have faced financial struggles. Their solution was to merge into a single healthcare network in order to create a more efficient system of hospitals. This system would create outpatient centers that allow the hospitals to continue serving their communities in the ways they need. Unfortunately, mergers are never a sure solution and present serious challenges and costs to those involved. With insufficient resources and too little time, this merger failed, leaving Mercy Hospital in peril.
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Why should that fact be of particular interest? Even the idea of two nonprofits merging still seems alien—or worse—to many people in the field. Nonprofit organizations can and should consider using mergers as an effective tool to achieve their goals, advance their mission, and increase their impact. In doing so, we tried to build on earlier research, including the one existing large-scale study of nonprofit mergers, conducted in by the Minneapolis-based Map for Nonprofits.
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In order to support a thriving, agile, and collaborative Illinois social impact sector, the MSI is creating case studies based on its work to provide insight on the challenges and opportunities of nonprofit strategic partnerships and collaboration. The Chicago region has a deep bench of advisors willing to offer pro bono support. Two resources that may be of particular interest to those exploring or implementing strategic partnerships include:. Please note that Forefront is providing the list as a resource; we have not vetted the entities on the list as we have with our MSI qualified consultants.
This post specifically examines a merger between two California nonprofit corporations. Assuming, after careful consideration of these factors, the parties are still interested in moving forward, the following steps offer a general framework for the merger process. The primary goal of due diligence is to help assure a merger is in the best interests of a corporation, considering its mission, values, and key stakeholders. While there is no fixed list of materials which must be reviewed in all cases, each board should be aware of the relative benefits, detriments, opportunities, and threats with the merger, including any liabilities the other party may bring to the transaction.