Call it a marriage of convenience, with lots of promise for children.
The garden ceremony under a sultry June sun went off without a hitch, presided over by none other than former Virginia First Lady Anne Holton.
The bride (with little to no dowry) was Richmond CASA, a nonprofit that provides advocacy for children in the midst of family crisis. The groom was Greater Richmond SCAN, another nonprofit dedicated to the welfare of children, this one able to provide a stable financial home.
Their decision to wed — or, in the parlance of corporate mergers, become a single legal entity — has become a strong trend among nonprofit organizations over the past five years. With the sour economy leaving many donors unable or unwilling to contribute, more and more nonprofit organizations manage to provide services for a growing clientele by working with partners willing to put a ring on it.
"Collaboration is … much like a marriage," says Lois Savage, president of the Arizona-based Lodestar Foundation, a nonprofit that helps other nonprofit organizations operate more efficiently. "To make it work, you need to develop trust. But if you get [two organizations] talking, trust can develop over time."
Along with CASA and SCAN, Family Lifeline and ElderFriends, both long-standing family resource agencies in the Richmond area, also linked up last year. Perhaps the most well-known collaboration has been between the Central Virginia Food Bank and Meals on Wheels of Greater Richmond.
The CASA-SCAN merger actually took place in November 2009, not June 2010, but it seemed more appropriate to hold the ceremony in the summer, a popular time for nuptials, says Jeanine Harper, SCAN's executive director and CASA's acting executive during the months leading up to the merger.
"The whole time [before the merger], I used the metaphor of marriage because it fits," Harper says. "We'd lived together … and we knew there would be things that popped up after the wedding."
Statistics on nonprofits are hard to come by, since there's no standardized reporting on them, with the exception of their 990 tax forms. But what is known is that there are more than 1.8 million registered, tax-exempt entities in the United States, according to GuideStar, a nationwide information clearinghouse focused on nonprofits. Many are small — surviving on less than $55,000 yearly — and share similar missions with other groups in their communities.
While the poor economy has led to a decline in donor dollars, it's also increased the number of people in need of services provided by nonprofits. About 85 percent of nonprofits reported that they expected an increase in their 2011 workload, according to a website survey conducted by the Non-Profit Finance Fund, a national lender to nonprofits. Almost half of the agencies surveyed reported an increase in the number of clients they served, while less than half expected to be able to meet the greater demand.
That unhappy news for nonprofits is heaped upon a 70 percent increase in demand for three consecutive years, according to previous surveys by the same group.
Mergers are sometimes nonprofits' only way out of an unmanageable financial situation, but Central Virginia Food Bank and Meals on Wheels had a different reason to enter one. Their merger came in July 2008, before the economic crash, says Fay Lohr, president and CEO of the organization that grew out of the merger, FeedMore.
Instead, the merger evolved from an idea — that the two groups could share kitchen space. Since the merger, FeedMore has benefited by selling its dual mission (collecting food donations and preparing and delivering meals to the needy) to donors. Pre-merger, the combined donor pool for both organizations was about 16,000. Post-merger, the organization draws from a 26,000-strong donor base.
"We've seen a lot of crossover where our donors are appreciative that we're doing this to be more efficient and effective and fiscally responsible with their dollars," says Kristen VanStory, FeedMore's spokeswoman. "We have so many ways we can show cost savings that have resulted from the merge."
For one, FeedMore's weekend backpack meal program allows it to feed 83 percent more school kids than when the Food Bank operated on its own. The number of elderly and homebound clients served by FeedMore is also up, by 31 percent over the solo efforts of Meals on Wheels. "We're seeing cost savings that are allowing us to put more money where our mission is," VanStory says. Without the merger, Lohr says, "I think we would have both struggled in the recession."
More for less is also a benefit of the merger between CASA and SCAN, says Harper. "It has increased SCAN staff's understanding of the courts process, because that's CASA's function," Harper says. Meanwhile, CASA has benefited by getting access to advocacy experts at the state level, where laws are made and policies are formulated.
The merger also may have improved the environment for donations, says Harper, noting that CASA's donors had begun falling away because "there was no doubt" that the group was in financial crisis. "When they saw the fix was righting the ship, and there was this capacity or possibility, they were willing to invest in that," she says.
Finances are not always the motive for mergers. Nonprofits get involved in "program collaboration," aimed at working together to offer a particular service. Others work together to strengthen their advocacy and outreach efforts. Or they may create a friends-with-benefits relationship, in which two or more organizations share administrative elements, such as office space or accounting and human resources personnel.
But usually it's about money — the case with the now joined-at-the-hip SCAN/CASA. The combined staffs are doing well, Harper says, because of "the psychology at CASA. Because they were in pretty difficult situations, they were like, ‘Gosh, you guys were helping us.' "
Had the teams begun on more equal footing, Harper says, there would have been more butting of heads and flaring of egos. "The challenge is now around how do we live happily ever after and be a marriage of equals, so to speak."
And do it before they enter into yet another merger.
Harper says they're exploring the possibility of joining forces with a third, at this point undisclosed, nonprofit organization. "We're going to start the due-diligence phase of it this year."
