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Nonprofit mergers are becoming a common trend in many countries and are now a topic of discussion among nonprofit leaders, board and funders. Mergers provide an avenue to preserve and strengthen needed service provided by nonprofits to diverse communities.
The Part F of the Companies and Allied Matters Act recognizes mergers; paving the way for nonprofits with similar objects and aims to merge under terms and conditions prescribed by the Corporate Affairs Commission. Lessons from studies and research have shown that mergers; improve image, reputation and public support for nonprofits, increases financial stability and efficiency of operations.
Merging might also help address issues of duplication of efforts and avoiding solvency especially with the difficult economic climate and the fact that the funding terrain for nonprofits is adversely affected.
With the passing of the amended Part F of CAMA, we anticipate an increase in the consideration for mergers by nonprofits to develop greater organizational efficiencies relating to programming, administrative capacity and financial sustainability.
Nonprofit considering mergers should ensure that they fuse with organisations that have similar mission and vision as them, make use of experts in the merger process and seek specialized knowledge on what the structure or emerging organisation, function and legal aspect of the merger would look like.
Nonprofits should also ensure that funders involved in the merger are given the opportunity to give input into the planning; the merging process should be seen as a collaborative one by identifying potential mutual gains that could be realized in the merger.
This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned.
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