Not-for-profits: To merge or not to merge?

  • A recent report has identified mergers as an alternative strategy for NFP to achieve organisational growthand efficiencies, and enhancing services for the sector.
  • NFPs can test the suitability of a merger by participating in collaboration, auspicing and strategic alliance.
  • This article outlines the critical legal issues that NFPs need to consider as part of the due diligence process.

Birds eye view of city with puzzle pieces interlocking

With over 600,000 entities in the Not-for-Profit sector (NFP) in Australia, including more than 55,000 registered charities, merging as a restructuring option is increasingly being considered by NFP boards across the country.

The need to merge in the NFP sector has been recently highlighted in a joint research paper published by RMIT University and CPA Australia, titled ‘Mergers, Amalgamation & Acquisitions in the Australian not-for-profit human services sector’.

The joint research paper supports mergers as an ‘alternative strategy for organisational growth, gaining scale efficiencies, wider revenue base and enhancing service choice within the NFP service sector’ (page 4).

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