The urge to merge

In a tight economy, there has been increasing chatter about the potential for mergers in the nonprofit world. The social service sector has seen a slew of them. But the arts have seemed more talk than action. While not specifically promoting merger, the Lodestar Foundation recently encouraged collaboration more broadly through their Collaboration Prize (winners announced in March). Says the web site:

Recognizing
the efficiencies gained from working together, the Prize shines a
spotlight on collaborations among two or more nonprofit organizations
that each would otherwise provide the same or similar programs or
services and compete for clients, financial resources, or staff.

As it turned out, the two winners of the prize were both mergers. One was the merger of three museums into one: The Dallas Children’s Museum, The Science Place, and Dallas Museum of Natural History to become the Museum of Nature and Science. The other was a merger of a Jewish Community Center and YMCA in Greater Toledo. Both announcements hailed the savings generated by the combination, and the reduction in duplicated services.

Yet the urge to merge, especially among arts and culture organizations, can be more costly and less effective than alternative collaborative strategies (such as shared services, joint ventures, and the like). So said both the Nonprofit Finance Fund’s Clara Miller and the Kennedy Center’s Michael Kaiser at the Wallace Foundation convening I attended back in April (an audio clip on their merger conversation is available online). Said Miller:

[Organizational] culture eats strategy for breakfast. To the outside eye, it may look perfect to have X and Y merge, but in fact internally there are huge cultural differences that will make it hard. At arts organizations, in particular, we celebrate our individual artistic visions, and that’s manifest in many, many organizations. I think working together, thinking about the platform differently, pulling out all the unnecessary expense from your platform…those are the things to be looking for, those expense savings, not necessarily the mash-up of two very strong artistic personalities.

Kaiser concurred, stating:

The amount of time, energy, and focus it takes, it takes energy away from the kinds of activities that I think really help to create health for an organizations. I’m more interested in joint venturing and sharing certain costs than I am about merging corporate entities.

Mergers should certainly be part of the full palette of options when boards and funders and professional staff consider how to advance their mission most effectively…so should dissolution, for that matter. But there is a world of opportunity between isolation and consolidation that seems worthy of nuanced exploration.

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Comments

  1. says

    First of all thanks for this wonderful and thought provoking article. As a performance artist and program consulting specialist for various culture venues in Los Angeles and New York, I believe that looking into various collaborations/partnerships with cultural institution/non-profits is the best way to go during this economic crisis and in the future. They work best when a professional outside source person like my self who keeps a balanced approach for all parities. (I have worked within two major institutions in LA and NY and I beleive that various institutions are beginning to see the value and worth of joint ventures/partnerships etc). I would hope that more collaborations might be a happier middleground prior to any type of merger. (There’s a lot that can happen economically for the institutions and their cities/states). In addition, I also believe that cultural arts institutions need to re-invent and re-tool their current staffs and re-assign areas of work so that folk aren’t so over worked and under appreciated. I would love to really provide cultural institutions with workshops on learning how to create effortive programs to promote audience development and awareness while keeping the mission of the institution in tact. Finally, I beleive that we have to start look at our non-profit arts organizations as a viable economic force within our communities and beyond. At the end of the day, CULTURE REALLY COUNTS!
    Always,
    Charles Reese
    Special Program Consultant for Art & Culture
    Principal/Founder, Teeth & Eyes Communciations
    The James Baldwin Project
    http://www.seanohalloran.com/baldwinpage.html

  2. Maggi Kirk says

    In defense of the Collaboration Prize, if you drill a little bit deeper into the motives for the Lodestar Foundation and its partner, Arizona State University, you will see that it was created, to help identify the many “nuanced” organizational models of successful collaboration happening in the nonprofit sector (including the arts) over the past eight years.
    In the Prize’s inaugural year, Lodestar received 644 nominations. Of the 644, 173 organizations were selected as contenders for the prize. Of 173, 44 organizations received top nominations as organizations that pursued successful collaborations that achieved creative excellence, programming impact and the elimination of the duplication of services/programs. (Hager & Curry) The 44 organizations are presented in the Lodestar Foundation white paper, “Models of Collaboration: Nonprofit Organizations Working Together”, by Mark Hager and Tyler Curry.
    The researchers have determined that the successful collaborations represent a diverse array of hybrid models of restructuring that do not fit into “simple categories of merger or joint programming”. (Hager & Curry 1) In this report, the authors have identified eight successful collaboration models. These collaborations include, “Fully-integrated mergers, Partially integrated mergers, Joint Program Office, Joint Partnership with Affiliated Programming, Joint Partnership for Issue Advocacy, Joint Partnership with the Birth of a New Formal Organization, Joint Administrative Office and Back-Office Operations and Confederation”. (Hager & Curry)
    Case studies of the 173 nominated organizations collaboration activities will form the basis for a database of successful organizational collaboration models, which could be used as a resource for “best practices” for restructuring options available to the nonprofit sector by funders and nonprofit organizations. (The database will be available for public consumption in June 2009).
    As a longtime member of the arts community and, as a grad student working on a thesis on the impact of mergers and collaborations on the arts sector, I am gratified by this spike in fresh research, which demonstrates a response to the realities of our new economy.
    Maggi Kirk
    Drexel University
    Arts Administration ’09

  3. Tom Freudenheim says

    Neither Miller nor Kaiser makes a convincing case against mergers. (Nevertheless, I have high regard for Kaiser’s accomplishments.) And the issue ought not to be about this moment of fiscal crisis. Organizations that ask for contributions from donors in a very competitive environment (and it’s always competitive, even in a good economic environment!) have an obligation to assure those donors that the funds are being responsibly used. That might mean mergers or collaborations, etc. – but arguing that corporate culture differences make this difficult is no better an excuse in art organizations than it is in for-profit organizations.

  4. Kate says

    Didn’t the Kennedy Center merge with the National Symphony Orchestra under Michael Kaiser’s leadership? He made a very compelling argument at that time about the benefits of mergers…

  5. George Brown says

    I would agree that various forms of joint ventures may, in cases, be part of an effective new strategy for arts organizations in their attempts to hash out a new business model for the 21st century. The keyword here is ‘strategy.’
    In the case of the Utah Symphony and Opera merger, it is notable that, at its inception, this merger was not a ‘strategy’ (an overall campaign plan towards an objective), but rather a ‘tactic’ (individual means used to gain a larger objective).
    In our case, the strategy to save the Symphony was, quite simply, to hire our former CEO, hand her the keys to the car and tell her to ‘work her magic.’ The merger was thus a tactic, a carrot if you will, to lure her by making the job BIG enough to attract her here. One of the Board members who originally crafted the merger idea even said as much, on the record, to the Deseret News.
    Which is why, when trying to sell the players on the idea of the merger, this same Board member was completely befuddled when asked the question of whether there was an exit strategy if the merger went sour. Of course they had no exit strategy from the merger as the merger was a never a strategy to begin with. Hiring the prospective CEO was THE STRATEGY.
    However, it certainly was spun to the players and to the community as a strategy. Much like the Government’s decision to go to war with Iraq, the decision to merge was made 1st and the spin to sell the idea came later — in the form of the usual yada yada of the potential savings and benefits of combined resources and elimination of overlap. We’ve heard it all before.
    So, before other arts organizations simply jump on the old “urge to merge” bandwagon, it behooves those Managers and Board members to first simply ask themselves precisely WHY they feel said urge, plus how such a venture fits into their longer range objectives. Had our Board at the time taken the time to consider this route, we might not be so entangled in our current gnarly situation.
    george brown
    utah symphony/principal timpanist & ICSOM rep

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