Last month, a group of Chicago area institutions led by Mission + Strategy Consulting released a new study on nonprofit merger strategies focusing on the Chicago Metropolitan area and assessing how mergers can be an integral part of planning for nonprofits and funders alike. This first-ever study in Chicago comes a full decade after my very first experience with a merger — one that involved an organization that I led called Lakefront Supportive Housing. Over the past year of our research, as we sought to learn more about what produces successful mergers, I have thought many times about Lakefront, an organization that I loved very much.
During the early and mid-2000s, my board and I were eager to serve more people with our award-winning housing and services for homeless adults and families. The question was how. We had exhausted our fundraising strategies, and knew that with each new unit of housing our already-steep back office and case management costs climbed upward. And yet we did not want to compromise on quality by cutting staff.
One day, I was approached about possibly merging with another nonprofit. Although we chose not to accept the offer, our discussions illustrated how efficiencies — and growth of our programs and services — could be achieved by combining with a larger nonprofit. My board of directors agreed to seek another merger partner, and 18 months later, we closed on a merger with Mercy Housing, based in Denver, CO. (You can read the article I wrote about our merger experience for BoardSource back in 2007 here.)
Over the past decade, I’ve had a lot of time to think more about the lessons learned from our decision to merge. Was it the right thing to do ? My answer is always yes! When we closed on our merger, Lakefront had 1,000 units of housing spread across ten properties located in Chicago. Ten years later, Mercy Housing Lakefront (the new name given our organization) has grown to 2,870 units of housing and 28 properties, with a geographic reach from Milwaukee to Danville, IL. Mercy Housing Lakefront (MHL) has almost tripled the size of Lakefront’s original portfolio and enabled the consolidated organization to serve thousands more clients. In addition to this, it has renovated several of Lakefront’s older buildings that needed reinvestment. And the new, larger organization came through the worst recession since the Great Depression intact — which I’m not sure Lakefront would have been able to do.
Not surprisingly, MHL has had to make some tough choices along the way, like any other nonprofit watching the bottom line. But there are so many times I have been happy that we merged Lakefront with Mercy Housing. In our merger, we understood many of the “Ten Keys to Merger Success” identified in our newly released study, including the following:
- Focus on the mission.
- Be clear about your goals.
- Board chairs must be advocates.
- The CEO is critical in prompting merger discussions.
Today, as a decade ago, it’s clear that nonprofit organizations are adeptly using mergers both as a means for creatively addressing financial distress, as well as a long-term strategy to achieve mission goals. I encourage you to download and read the study to learn more.
Jean Butzen founded Mission + Strategy in 2006 to help nonprofits accelerate their impact through strategy. She lead Mission + Strategy’s strategic restructuring practice and contributes her expertise and time to the strategic planning practice as well. Jean brings more than 35 years of nonprofit management experience to her consulting work, including 18 years as president/CEO of Lakefront Supportive Housing in Chicago. Today, she is the foremost authority on nonprofit strategic restructuring in Illinois and Wisconsin. Jean holds a bachelor of arts degree in political science from Antioch College and completed the Kellogg Management Institute Program at Northwestern University’s Kellogg School of Management.