When it comes to mergers, don’t be blinded by the light of your great history

There are more than 600,000 NFPs in Australia, each with its own precious DNA. There is room for many. But what if collaboration is not working, or the mission is faltering?

Merger or takeover?

Whether driven by economic shifts, generational change or sheer fatigue, the time comes when boards face a hard choice: to merge or be absorbed. It is never just about logistics: the most painful aspect of the change is about identity. Merging means blending missions, cultures, assumptions, assets, boards and communities. It means asking what are we willing to share, and what are we prepared to let go? Sometimes the result looks like a partnership of equals. Other times, it’s more a parent-child handover. Perceptions of financial strength, brand legacy and future reach shape the story that is told.

The good years

When I was a teenager, I began supporting a charity in my Melbourne suburb. It was a relationships that would continue for many years. The charity had a rich history, local volunteers and local networks, and I connected with its cause.

When it started, the charity’s founder worked with one student in one school on one problem: acquiring sufficient clothing, health care and school equipment in order to satisfy the bottom of Maslow’s hierarchy of needs and thereby attend school.

Its model of helping students in need had proved effective, and it filled a gap no one else seemed to have recognised. The organisation was so successful that it partnered with funders to expand to other areas, eventually operating in four states. I loved the organisation’s leadership, ingenuity and guts.

Before Breakfast Clubs were funded by state governments, the charity was already coordinating volunteers to run them. When Foodbank was a Depression-era idea, not a national operation, families would come to the charity’s front door to collect pantry staples, donated clothing and school supplies. The charity delivered thousands of school packs to prep children well before such initiatives became standard practice delivered by the government. And when many schools lacked the volunteer base to support early literacy, this charity trained and placed reading helpers by the dozen.

At each point, the charity recognised a gap in the cycle of educational disadvantage and developed an intervention, securing funding to support it. It remained a visionary organisation, leading society creatively and courageously, and other organisations and governments took note and started to normalise these interventions.

At any time in that journey, the organisation could have said: that intervention has been taken on by the government or by a specialist organisation. Our job is done. Yet for 35 years, it did not. The inspiring, gutsy, creative staff looked to the horizon, looked at policy, looked at problems and identified what was coming next. They led from the front and knew that imitation is the greatest compliment. They were trying to change Australia, as well as the life of each individual child or school they worked with.

All the while, funding was thinning, and specialist organisations were growing. The organisation’s board and executive leadership considered merging with a number of organisations of similar size and budget. The lure of continued success – or perhaps it was the mist of nostalgia – clouded people’s imaginations. Whatever the case, the organisation decided not to merge.

Timing is everything

Fast-forward two years, and the world around the charity had changed, but the organisation had not identified new gaps or new ways to fill them in the post-lockdown environment. New program staff had not adapted their delivery methods; new fundraisers and the CEO had not managed to bring in new cash. They were no longer in the position of financial strength that would have allowed them the time and strong branding needed to find a suitable merger partner.

The board made a quick decision to close rather than merge.

Blinded by the light of our history

Sometimes, a deep love for an organisation’s history can become a liability. Holding onto legacy – be it a language, a founding mission or a unique cultural model – can offer a powerful sense of belonging and continuity. But when numbers drop, communities shift, and the landscape evolves, nostalgia can cloud judgment.

Leaders may resist change not out of arrogance, but out of loyalty to a story they helped write. In doing so, they risk shrinking into irrelevance rather than evolving with purpose.

A refusal to collaborate, merge or reimagine can feel like a stand for values, when in fact it signals a slow retreat into obscurity. There’s no shame in letting go when the letting go is done with grace, and with the next generation in mind.

Can you, as a board, best protect some of the organisation’s mission by merging, rather than slowly letting the organisation’s whole mission dissipate over time?

Better one than none

Back to the charity I loved. The board and CEO carved the organisation into pieces and and handed them to different competitors. The processes, relationships, volunteers, staff and funders were all divided up. The board and CEO said if there is no longer a purpose for us in the world, if we are simply taking funders’ money and providing staff with employment, we cannot justify our existence.

The board noted that it’s better for one strong organisation to deliver to vulnerable beneficiaries than two struggling ones. This was a brave and responsible decision. Continuing an organisation after it has fulfilled its purpose is like continuing to eat after you’re full, for the sake of not wasting food. It’s not contributing to the mission; rather, it’s an exercise in employment and nostalgia.

A good ending isn’t a failure

Closing down can be the final act of mission-driven leadership. In a sector built on care, creativity and courage, knowing when to step aside is its own kind of service. When an organisation has done its job so well that its ideas are now mainstream, or when others are better positioned to carry the torch, stepping back is an expression of growing up.

In our culture we tend not to celebrate endings, but perhaps that needs to change. Not everything that is precious needs to last forever. Great organisations are at their best when they know how and when to bow out, so their legacy does not weigh down the future but instead enriches it.

More information

ICDA’s merger resources | Mergers primer for the NFP sector

Ten questions directors should ask about change management