Nonprofit mergers are gaining in popularity and many donors are supporting the transition process and the re-building of the new organization. Examples of successful mergers have been documented but this is the first case study that highlights the experiences of two Asian American nonprofits in the San Francisco Bay Area, Oakland Asian Educational Services (OASES) and East Bay Asian Youth Center (EBAYC).
In January 2012, Oakland Asian Students Educational Services (OASES) and East Bay Asian Youth Center (EBAYC) entered into formal merger discussions. They completed their merger after six months of planning and negotiations. Together, these two nonprofits represent a collective 70 years of experience serving low-income Oakland youth.
The post-merger entity retains the EBAYC organizational name but utilizes the OASES brand for its programs in Oakland Chinatown, where OASES has enjoyed 20 years of positive brand recognition.
The impetus for merging was the continued decrease in both private and public funding sources brought on by the economic recession in 2008. As the merger assessment and negotiations progressed, staff and board from both organizations realized that merging could position both organizations not only to react to the current funding landscape but also to plan proactively for long-term impact and sustainability.
The purpose of this case study is to highlight an example of a successful nonprofit merger; inform the field (nonprofits, funders, and other stakeholders) about issues, outcomes, and lessons learned in EBAYC’s first full year of post-merger operations; and reflect on EBAYC’s next steps to leverage its post-merger momentum so that it can achieve maximum impact and sustainability.
The key factors behind the successful merger included:
1. Compatible missions and programs. Compatible missions and programs helped ensure agreement on some key negotiating points, contributed to smooth and consistent program delivery, and better coordination of services across different neighborhoods.
2. Strong working relationship prior to merger. EBAYC and OASES had an established history of working together in the past. The two Executive Directors also had a strong working relationship based on mutual respect. Their prior working history helped create trust early in the process and a negotiating environment that was conducive to addressing challenges in a timely and honest manner. This in turn helped facilitate buy-in from their boards, staff, funders, and other stakeholders because they could see that both sides were operating in good faith.
3. Naming and discussing concerns early in the process. Surfacing concerns about differences in their respective boards helped both organizations to mentally reframe their differences as strengths. This early reframing of differences laid the groundwork for the boards to blend together and realize concrete, tangible successes.
4. Strong merger champions within each organization. The OASES/EBAYC merger was unusual in that, unlike many nonprofit mergers, the decision originated within the organizations themselves rather than in response to funders’ suggestions. The two Executive Directors invested substantial time and effort to outline a merger process that involved both governing boards, as well as taking on a lot of the work themselves and reaching out to external consultants.
5. Strong board involvement. Board members from both organizations participated in the Joint Negotiation and Management Transition Teams and provided technical assistance related to legal issues, due diligence, and financial sustainability planning.