NFP Mergers: Questions to Ask During Funding Cuts

As many not-for-profit (NFP) organizations face reduced federal funding, some are beginning to explore mergers as a potential path forward. Mergers aren’t just about cost savings—they can also be a strategic tool to strengthen mission delivery, increase sustainability, and better serve communities.

While merging isn't the right move for every organization, it’s a conversation worth having, especially during periods of financial uncertainty. If your NFP is beginning to consider a merger, here are the key areas to evaluate before moving ahead.

When funding becomes uncertain, NFPs often respond by cutting programs, reducing staff, or scaling back services. But in some cases, a merger can provide a way to grow stronger together. Joining forces with a like-minded organization may create opportunities to reduce overhead, expand reach, improve service coordination, and offer a more stable foundation for the future.

That said, mergers are complex and should be entered into with clear goals, strong alignment, and a thoughtful process.

One of the strongest indicators of a successful merger is whether the missions align. Do the organizations have similar or complementary goals? Can they define a shared vision that leadership, staff, and stakeholders can fully support?

Mergers require time, transparency, and trust. It's essential that board members and executive leadership are open to the idea—not just as a last resort, but as a proactive strategy—and are prepared to engage in meaningful exploration and due diligence.

Even with similar missions, a merger can falter if the organizational cultures are misaligned. Differences in communication style, leadership approach, or internal processes can create friction. Early discussions about culture can help determine compatibility and surface any red flags.

It’s important that both organizations share a clear picture of their financial health, including liabilities, dependencies, and long-term obligations. A successful merger doesn’t require perfect financials, but it does require full transparency to ensure informed decision-making.

NFP mergers can take different forms, from full integration to shared services arrangements. Key questions include: Will one entity be absorbed by the other, or will a new organization be formed? What will governance, leadership, and staffing look like post-merger?

The potential impact on service recipients should remain central to all merger discussions. Will the merger improve access to programs? Could any populations experience disruption or loss of services? Anticipating these impacts helps NFPs stay mission-focused.

Transparent, consistent communication is critical, both internally and externally. Stakeholders, including funders, partners, clients, and staff, should understand the rationale for the merger and what to expect throughout the transition.

NFPs exploring a potential merger don’t need to have all the answers at the outset. Starting with the right questions and engaging a trusted expert like CSH can help clarify whether a merger makes sense and how to approach it responsibly.

If your organization is considering a merger or partnership, now may be the right time to initiate early conversations with a CSH advisor.