Nonprofit mergers are rising. Here’s how to protect donor trust through the transition
Tight budgets and rising demand are pushing more nonprofits to consider mergers, acquisitions, and service-sharing agreements.
But mergers succeed only when organizations understand the benefits, risks, and how to bring donors along. Even well-structured transactions can falter if donor confidence is not actively managed, particularly when financial and operational changes are unclear.
Combining nonprofits can mean full integration, collaboration, or resource sharing. Each option has advantages and drawbacks, and all require due diligence before contracts are signed. Misaligned cultures, unexpected liabilities, or stakeholder resistance can quickly undermine the goal of finding strength in numbers.
Nonprofits face limited funding, overlapping missions, and constant pressure to demonstrate impact. Organizations with similar missions can dilute their reach when competing for the same donors, grants, and community attention. Combining forces can help them survive and thrive.
From a fundraising perspective, a merger can give donors a positive story by strengthening services, reducing duplication, and expanding the mission through the strengths of both organizations.
Types of nonprofit mergers and acquisitions
Organizations typically choose from a few structures based on their goals, finances, and governance needs:
- Legal Merger: One organization incorporates into another, creating a single surviving entity. This streamlines operations but means a complete change of control for the organization being absorbed.
- Member Substitution: Common for membership organizations, this approach allows one entity to become a member of another. The organization remains in place while controlling members change, often reducing disruption to contracts and employees.
- Asset Transfer: For nonprofits with financial concerns, transferring assets to another nonprofit may lead to dissolution. It can be complicated, requiring asset-by-asset transfers and close attention to restricted gifts and endowments.
- Shared Services: Some nonprofits reduce costs by sharing back-office functions such as HR, IT, or finance without pursuing a full merger.
Legal and regulatory considerations
The regulatory process often drives the structure chosen and varies by state. In Pennsylvania, any change of control requires notification to, and a no-objection letter from, the state Attorney General’s office.
Additional requirements may apply, including permits for food service or other specialized activities. Filings with the Department of State are also needed to finalize mergers, member substitutions, or asset purchases. Organizations must also address restricted gifts and endowments to ensure funds can be transferred or properly managed after the merger.
Due diligence is where financial and operational risks often surface. Beyond financial statements, organizations should evaluate contingent liabilities, funding stability, employment matters, and signs of donor attrition.
Keeping fundraising on track
Nonprofits considering a merger can protect donor confidence by clearly sharing what is happening and why. Donors want assurance that their contributions will continue to support the causes and communities they care about.
If a merger involves different geographic areas, donors need to know whether their money will stay local and, if not, why.
Restricted gifts and endowments require special care. Organizations must account for these funds properly and ensure they continue to align with donor intent after the transaction.
5 best practices for communicating a merger to your donors
- Bring donors along early: Don’t wait until the merger is finalized. Keep donors informed throughout the process.
- Clarify the impact: Explain how the merger will affect services, programs, and donor-funded use. If needed, seek donor approval for changes.
- Maintain relationships: Development staff should remain involved so donor expectations and funding relationships are represented.
- Address cultural and branding challenges: Mergers often blend different cultures and brands. Local affiliates of national nonprofits may also need separate systems for compliance, websites, logo use, and fundraising.
- Learn from successes and mistakes: Successful mergers build on what worked elsewhere and avoid missteps that damaged trust or momentum.
Measuring success after a merger
Saved programs, expanded services, new networks, diversified funding, and a unified board and staff are strong indicators of a successful merger.
From a fundraising perspective, success means sustained donor confidence, a clear mission, and increased giving tied to revitalized services. Community communication should include volunteers, staff, and donors, while equipping board members with talking points that keep everyone aligned.
Bottom line
Mergers and acquisitions are no longer only a last resort for struggling nonprofits. They can be a strategic way for like-minded organizations to strengthen their missions, expand impact, and support long-term sustainability.
Boyer & Ritter’s Nonprofit Services Group supports organizations through the financial and operational complexities of mergers, including due diligence, reporting considerations, donor-related impacts, and post-merger alignment.
This article is based on a presentation delivered at Boyer & Ritter’s December 2025 Annual Nonprofit Seminar, featuring Mark Duncan of The Fund Coach; Nicole Stezar Kaylor, attorney with McNees Wallace & Nurick LLC; and Mary Quinn of YWCA Greater Harrisburg, moderated by David J. Manbeck, CPA.
