(from Nonprofit Quarterly) Nonprofit organizations enter into mergers and acquisitions for a number of reasons, including broadening their reach, improving the quality of their services, benefiting from economies of scale and, in many cases, staving off financial duress. As an interim step, one way to mitigate risk for both parties involves a formal affiliation. A service agreement, in tandem with a formal affiliation, can allow nonprofits to combine some segments of their operations while keeping each other’s liabilities at arms’ length. The service agreement should specify what the target and acquirer nonprofits will and will not do for each other, including the terms of shared services and expenses.
Other recommendations for organizations considering potential mergers include building a network in advance to find the right partner, and securing the assistance of a consultant or advisor.
More at Nonprofit Quarterly
Related from Net Assets: Stronger Together: the Case for School Mergers
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