Joining Forces: The Governance of NFP Mergers (with Elizabeth Wighton, Partner, Gilbert + Tobin and Victoria Adams, Partner, For Purpose Investment Partners)

Mergers are becoming an increasingly important consideration for not-for-profit organisations facing financial pressure, changing funding environments and the need to grow their impact. But as Elizabeth Wighton and Victoria Adams explain, merging for the sake of scale – or as a last-minute rescue strategy – can create more problems than it solves. Boards need to understand why they are merging, ensure their organisation is merger-ready and undertake rigorous financial, legal and strategic due diligence before committing.

In this episode of Boards with Purpose, Phil Butler explores the governance challenges of NFP mergers, from navigating tax and regulatory requirements to managing culture, leadership and future board structures. Elizabeth and Victoria also discuss the importance of measuring impact, establishing a clear business case and maintaining commercial rigour while staying true to purpose. As federated organisations increasingly consider coming together, the conversation highlights what boards should consider before taking the next step.

Key takeaways from this episode:

• Don't merge simply because you can: A merger needs a clear strategic rationale, whether that is diversifying revenue, expanding geographically, improving systems or creating efficiencies. Scale alone isn't a sufficient reason to merge.
• Get your own house in order first: Organisations need to be merger-ready, with their financial, legal and governance information in order. Boards should understand their own risks and liabilities before assessing those of a potential partner.
• Culture and governance can make or break a merger: Bringing together different organisational cultures, boards and management teams can be challenging. Future governance arrangements, leadership roles and potential points of disagreement need to be addressed early.
• Purpose and commercial rigour need to work together: Successful NFP mergers need to balance financial sustainability with the organisation's purpose and desired impact. Measuring what matters can help boards determine whether the merger is actually improving outcomes for clients, members and communities.
• Measure success against the business case – early and often: Boards should establish what they expect the merger to achieve and track progress against those objectives. If anticipated synergies or efficiencies aren't materialising, directors need to understand why and take action.

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