Mergers between well-established nonprofits are uncommon. But the surprising merger just announced between the Nature Conservancy, the largest conservation organization in the country, and Rare, a fast-growing conservation innovator, may have the most important ingredient of all: the potential to increase the impact of each organization, leading to more effective conservation of the planet’s precious resources.
During the financial crisis of 2008 and 2009, there was a great deal of talk about mergers and alliances (M&A) in the nonprofit sector. Much of that talk was fueled by desperation—organizations feared they might have to merge to survive the economic fallout. Even then, we warned that merging under duress was usually a bad idea: funding to support implementation of hasty mergers is often insufficient; cost-cutting savings may not be realized; and programmatic, leadership, and cultural integration rarely goes happily where finances are the driving force behind the merger. In the wake of the economic recovery, talk about nonprofit M&A has largely disappeared. So why would Rare and the Nature Conservancy, two successful and well-established organizations, choose to come together now?
Unlike for-profit mergers, there are no stockholders who stand to benefit financially when two nonprofits merge. And big nonprofit organizations often have big institutional egos that get in the way of mergers. In this case, both organizations have plenty of resources, so it is hard to see why they would take on the headaches and risks inherent in a merger solely for the sake of potential cost savings. Moreover, it may be difficult to convince conservation donors who are already supporting both organizations to augment significantly what they are providing to the two. In fact, current donors to both organizations might reduce what they give to the combined entity. Perhaps most importantly, merging is hard work. Bringing together two cultures, two ways of doing business, and two sets of systems and processes is simply a huge challenge.
So, why do it? Given the strengths of both of these organizations, I am left with the prospect that they are merging for the right reason—because they believe they can significantly augment their conservation impact by coming together. Rare is a relatively small, fast-growing organization that has developed a proven model for engaging communities in the developing world in conservation. The Nature Conservancy has a global reach and a 62-year history of preserving some of the most important natural systems in the country and around the world. For Rare, the merger will provide a platform and reach that would otherwise take decades to develop, as well as the opportunity to apply its community engagement strategy more broadly, both internationally and in the United States. For the Nature Conservancy, the merger adds a vitally important tool to its chest: the potential to more effectively engage communities in its conservation work.
The road to organizational happiness following this merger will be long and winding, and littered with potholes. Specific challenges include retaining the organizational autonomy and entrepreneurial spirit of Rare. The Conservancy’s tradition of operating relatively autonomous state and country programs may offer a structural solution and keep Rare from simply disappearing into the Conservancy’s hierarchy. Another challenge is making sure that important donors do not discount their support as the organizations move under one umbrella. The real test of the merger will be the extent to which the organizations can leverage their respective strengths so that the whole is truly greater than the sum of the parts.
But the aspiration that seems to be driving the merger is the right one—the opportunity to significantly augment the impact the combined organization can have in preserving our planet’s rich biodiversity. If the merger works, it could provide a model for others in the nonprofit sector working toward shared impact goals. I will be paying close attention.
Bruce Boyd is principal and managing director at Arabella Advisors (@arabellaadvisor), where he leads a range of engagements for Arabella’s foundation, individual and family, and corporate clients focused on strategic planning, due diligence, program implementation, and evaluation of impact across a range of issue areas. Prior to joining Arabella, Bruce was a senior manager at the Nature Conservancy for 13 years (1994-2007). He currently serves as a board member of two foundations that support Rare, and has worked closely with clients of Arabella that are strong supporters of both organizations.
This post originally appeared on the Stanford Social Innovation Review.