March 27, 2014

How to Check Your Ego and Three Other Keys to a Successful Nonprofit Merger

There's no room for egos in nonprofit mergers, says AIDS Action Committee's Rebecca Haag. Instead of thinking "How does the merger affect me?" nonprofits should ask "How does this enhance our nonprofits ability to meet its mission?"

By: Rebecca Haag

In 1985, legendary music producer Quincy Jones pulled off a triumph that no one thought possible: he convinced the mega music stars of the day to give their time and talent gratis to record the song “We Are the World.” Sales of the single eventually raised millions of dollars to fight famine in Ethiopia. When asked how he successfully corralled dozens of superstars ranging from Michael Jackson and Bruce Springsteen to Bob Dylan and Diana Ross, Jones said he taped a sign to the door of the recording studio that read: "Check your ego at the door."

Checking egos at the door was the key to our successful merger with Fenway Health in 2013. And it was the key to our mergers with The Strongest Link in 2011 and with Cambridge Cares About AIDS in 2010.

There is just no place for egos in nonprofit mergers. Instead of thinking "How does this merger affect me?" board members and senior staff must evaluate every merger-related decision by asking, "How does this enhance our organization’s ability to meet its mission?" At AIDS Action Committee, we developed a set of criteria that required us to document how a merger would improve client quality of care, ensure organizational sustainability, and allow us to continue to tackle the root causes of HIV/AIDS. It was paramount that our mission was preserved; organizational integrity or the future role of board members or senior staff was secondary.

But there are other important factors to achieving a successful merger. The process must be based in a strong strategic vision and plan. In our case, it started with the board and senior management recognizing that despite success in reducing new infections in Massachusetts by 52 percent over the last 15 years, which will save the state more than $2.4 billion in HIV-related health care costs—public attention to the issue and public and private funding were waning.

In Massachusetts over the same 15 years, funding for HIV/AIDS-related services was cut by nearly 40 percent, and the number of people living with HIV/AIDS increased 44 percent. This confluence of events put a greater burden on already strained providers and services. In 2012, after conducting a detailed strategic planning process, we realized that AIDS Action needed to partner with an organization that could either horizontally or vertically broaden the delivery of HIV-related community support services.

The strategic plan included goals and objectives for any potential alliance and a set of criteria by which to evaluate alternatives. We reached out to many organizations and engaged in conversations with several. Fenway Health best met our needs: it already served those living with HIV/AIDS; it had extensive knowledge of the health system and its reimbursement structure; and it had research capacity to demonstrate the value of our services to improving health outcomes and reducing health care costs. Leaders at AIDS Action and Fenway Health were interested in creating a model of care that integrated medical and community support services applicable to all chronic and behavioral diseases. AIDS Action would preserve its mission and create a health care platform that could enable ongoing funding streams, even as public funding of individual diseases like HIV/AIDS disappears.

Another key factor for a successful merger: Leadership roles must be resolved early in the process. If the CEOs of the two organizations are competing for one top position, the process ultimately will break down. Difficult conversations, such as what the roles, responsibilities, and reporting arrangements will be of the two existing executives after the merger, must be had early on in the discussion as critical issues are identified. The natural temptation will be to delay these discussions and decisions. But if leadership issues are left unresolved, they can derail final discussions. If necessary, hire an outside consultant to ensure that these discussions—and other difficult strategic decisions—are made in a timely fashion.

Finally: Make organizational culture a part of your due diligence process. In many ways, this is the great intangible of merging two organizations. But you must consider whether there is real potential for the two workplaces to eventually mesh together. Ideally, the process of business, operational, and programmatic exploration will give each organization a feel for whether the two workplace cultures are compatible. In most cases, you will not get a definitive answer to this question.

Merging a nonprofit is very much like deciding you have dated long enough and it is time to get married. You can never know everything about your fiancé or about another organization with which you are negotiating, but at some point you decide to trust your instincts. In the end, no one can tell you whether a merger is the right thing to do. It is a difficult and complex process. Do you have a shared vision for what life could be like together? Can you stay true to yourself and your mission but also be a part of a team? Can you have difficult conversations? Do your personalities and styles complement each other? At some point, you must ask whether mutual needs can be met. And if the answer is yes, you make that leap of faith and move forward.


Rebecca Haag has been CEO of AIDS Action Committee of Massachusetts for 11 years and will be stepping down this spring. Before coming to AIDS Action, she served on senior management teams in a variety of corporate and government settings including advertising, financial services, and consulting sectors. 

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