Is a Merger or Acquisition Worth Exploring for Your Organization?

A Guide for Leaders

By Jacquelyn Davis , Managing Partner, and Jessica Sutter, Ph.D. , Advisor

In today’s challenging funding environment, many nonprofits and charter schools face a sobering reality: resources are tight and needs are growing. Many organizations are seeking new ways to sustain their missions, expand reach, and protect long-term impact. 

Nonprofits are typically launched by passionate founders who are inspired to drive impact for a particular cause, and many organizations differ only slightly in mission or theory of action. Sometimes, they are even duplicative.

One potential path forward in these difficult times? Considering mergers and acquisitions (M&A) as a strategic tool to strengthen mission and impact, reduce overhead costs, and ensure sustainability while sustaining - and even strengthening - their impact

For many nonprofit organizations, M&A represents a smart, strategic path forward.

Here, we break down what M&A means for nonprofits, including public charter schools, key considerations before taking the leap, and how to determine if your organization is a good fit.

What Do Mergers and Acquisitions Mean in the Nonprofit Context?

Many people are familiar with the concept of mergers & acquisitions in the corporate context and regularly hear about high-profile purchases of for profit businesses or start-ups. These transactions have parallels in the nonprofit world, but without profits for shareholders, the motivations and rationale for pursuing M&A are quite different.

For nonprofits and charter schools, the goal isn’t financial gain—it’s stronger mission impact, more efficient use of resources, and greater resilience in uncertain times. A merger or acquisition is a bold, courageous choice to hopefully increase impact and sustainability. The focus for the leadership and board must be on how to best deliver on mission rather than how to keep their own organization afloat.

• Merger: When two or more organizations join together to form a single entity. In the nonprofit world, this often means combining boards, leadership, staff, and assets under one mission and legal 501(c)3 structure.

  
  

• Acquisition: When one organization absorbs another—usually the smaller or less resourced entity—into its existing structure. The acquired organization dissolves as a separate legal entity, but its programs and mission can live on under the acquiring organization.

Why M&A Matters Now

Nonprofits and charter schools face significant uncertainty and challenges in a changing economic and political reality. 

• Uncertain funding: Grants, donations, and public funds are unknown and increasingly constricting, making it difficult to plan and feel secure in the future sustainability of the organization.

• Increased accountability: Funders and policymakers want evidence of impact, efficiency, and scale, and often being part of a larger organization or moving to create one enables more success in these areas.

• Leadership turnover: There was tremendous growth in the nonprofit sector during the 2000s and with more organizations comes more need for strong nonprofit leadership. As founders and longtime leaders seek to move on from organizations after long tenures, there is a dearth of new leaders available to succeed them.

M&A can provide nonprofit organizations with a pathway to:

• Pool resources and talent, and offer another option for organizations planning for leadership succession

• Reduce duplicative overhead for organizations with aligned missions (e.g., multiple finance departments, back offices, or facilities).

• Strengthen bargaining power with funders, vendors, and policymakers.

• Sustain organizational impact in this uncertain time.

• Expand the reach of powerful social impact work by unifying smaller organizations with similar missions

Key Considerations Before a Merger or Acquisition

Mission Alignment: Do both organizations have a similar or complementary mission, vision, and values? Will a combined entity strengthen each organization's mission—or dilute it?

Financial Health: Are both organizations transparent about their finances? Does either organization have hidden debt, unfunded liabilities, or unstable revenue streams? If so, how will these liabilities be addressed?

Culture and Leadership: Will boards and leadership teams be able to work collaboratively on a transaction? How will each organization navigate the changes to staff culture and preserve stakeholder trust throughout the transaction?

Community Needs: Will the merger better serve the community of organizational stakeholders? Will any stakeholders (students, families, clients) lose access or support? If so, how will the organizations address this?

Legal and Regulatory Compliance: What are the legal requirements for nonprofit mergers within your state? Are there special approvals required from charter school authorizers? Are there other legal filings or tax compliance rules organizations must consider in your state?

Is Your Organization a Good Fit for M&A?

Your organization might be ready to explore M&A if:

• You’re consistently struggling to secure stable funding.

• Your administrative overhead feels disproportionately high compared to the actual program impact.

• You’re duplicating services provided by another local nonprofit or school with a similar mission.

• You’re in the process of leadership transition without a clear internal successor.

• You see opportunities to expand reach or scale impact, but can’t do it alone.

• Funders, community leaders, or policymakers have suggested or encouraged collaboration.

Final Thoughts

Mergers and acquisitions can feel daunting—especially in the mission-driven nonprofit and charter school world where identity, culture, and history matter deeply. But in today’s uncertain funding climate, M&A can be a powerful tool to preserve missions, reduce duplicative costs, and ensure that scarce resources go directly toward the work that matters most: serving communities, students, and families.

Instead of viewing M&A as a “loss of independence,” leaders can reframe it as an act of courage and collaboration—choosing sustainability and collective impact over fragmentation and competition.