Charity mergers and what they mean for social enterprise start-ups
This past weekend, the New York Times published a useful article on mergers between charities. Â That charities are merging isn't exactly news--if you're an exempt orgs lawyer, it's one of the more common ways you can earn money--but it does raise important an important issue that folks in the field should not ignore, especially if they're starting new ventures:
Should you start a new group at all?
This is one of the key questions we discuss at the outset in my nonprofit law class, and in a nutshell here's the advice I give. Â
When people are starting a do-gooder organization, whether nonprofit or for-profit, you can look at what they're doing in one of two ways. Â One is essentially reductionistic and focuses on the venture's practical aspects:
- Does your venture offer value-added beyond what other groups are already providing? Â For example, is it solving an unsolved problem, offering a better solution, working in a different geographical area or helping people yet unserved?Â
- Is there an existing organization you can join and perhaps improve?
- Are there identifiable funders likely to support your effort over the long term? Â Or, if you're selling goods or services, is there truly a sufficient market to support an organization that is financially self-sustaining organization or financed through a blend of earned revenue and grants?
Depending on how you answer that question, you may avoid the organizational tensions created by a merger simply by not starting a new but unnecessary group.
Yet economic efficiency is not the only factor in play when a person is thinking about starting a new group. Â A venture is also an expression of a person's identity--as Marshall McLuhan would say, the enterprise, as an organizational medium, is "an extension of ourselves." Â A group you found might not be different or better or faster or more stable, but it will be yours, and the value of this may go beyond than any of the practical issues raised above.
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