Keen interest and early inquiries about a new fund to support collaboration and consolidation among field-building nonprofits in the impact investing market suggest many organizations are at least considering mergers and other combinations as a path to growth and financial stability.
“We’ve had dozens of letters per day and tons of interest,” said Robert Munson of the Sorenson Impact Institute, which is managing the $1 million Collaboration Fund, backed by the Ford and MacArthur Foundations. The institute is hosting an online information session to answer questions about the Collaboration Fund on Friday, April 24, at 11 ET.
The vast majority of the questions so far, Munson said, are variations on, “Do I qualify?” His usual answer: “Probably. Make the case in the letter of intent.” Those initial letters are due by June 11. Within 30 days, the institute intends to invite those selected to submit full proposals by August 22, with funding expected to be disbursed by the end of September.
He said, for example, that “field building” need not be the sole focus of an organization’s work, though some resources should be open and publicly available. Likewise, the funders added the broad term “inclusive capitalism” to welcome proposals from organizations that don’t use the term “impact investing.” International organizations with equivalent status as US nonprofits are also eligible.
“It’s a really simple approach. We just want to remove barriers for organizations that want to merge,” Munson said. “People don’t budget for the mergers and acquisitions discussion, much less the legal. When an opportunity does arise, you want to be able to take advantage of that.”
The Collaboration Fund is intended to help defray costs for feasibility studies, due diligence and legal costs, as well as integration planning, staff transitions and even communications. Munson said that, depending on the response, additional funding could be made available.
“We don’t have funding to keep all of these organizations going,” Ford Foundation’s Margot Brandenburg told ImpactAlpha. “For those feeling the anxiety of wanting to grow and not finding find the grant capital, mergers are a pathway that can be explored” (see, “Impact funders should bet on consolidation, not competition”).
Amit Bouri of the Global Impact Investing Network, perhaps the biggest nonprofit effort to build the field of impact investing with 400 members across dozens of countries, said the current environment of funding cutbacks and political headwinds makes even more important “this conversation around how do we set ourselves up for outsized impact.”
“I think it’s really healthy for nonprofits to be thinking about the best way to organize themselves and how they can collaborate, particularly as fields evolve,” Bouri told ImpactAlpha. The impact investing network has held talks with more than a half-dozen organizations about tie-ups in its 16 years.
This topic comes up fairly often” at the GIIN, he said. “Those types of conversations are welcome. I think they’re healthy.”
No thank you
Some of the organizations that have helped build the field of impact investing are sitting out the current merger conversations. Backers of the Collaboration Fund said the request for proposals was intended to cast a wide net and was not targeted to any particular organizations.
“We’re currently focused on our own evolution work with members and are excited about where it’s heading,” said Dara Parker of Toniic, non-profit community for high-net-worth individuals, family offices, and foundations dedicated to impact investing (Toniic was originally named to complement the GIIN – get it?).
Confluence Philanthropy, a membership network of foundations, family offices and investment advisors, recently launched a subsidiary, Overview Effect, as the new home for Confluence’s advisors, outsourced chief investment officers, asset managers and consultants.
Confluence’s Dana Lanza emphasized that Confluence has no plans, nor has it ever had plans, to merge with another network. She told ImpactAlpha the new public benefit LLC was incorporated to adapt to the shifting funding environment and that the organization is looking forward to expanding its platform to deepen its benefits for Confluence members.
Nonprofit mergers
Mergers are fairly rare in the nonprofit world, but there have been some notable examples in the impact investing ecosystem. Last year, the Capitals Coalition merged with the International Foundation for Valuing Impacts to consolidate and accelerate impact accounting efforts.
“After a decade of significant growth and proliferation of impact-focused organizations and frameworks, the sector now needs to prioritize collaboration, standardization, and consolidation to achieve lasting results,” the organizations said at the time. “This merger is a direct response to that need.”.
In a 2022 merger, Oakland-based Common Future absorbed the assets and employees of Uncharted, a nonprofit social impact accelerator. Both organizations focused on bringing resources and capital to entrepreneurs and community leaders overlooked by more mainstream funders.
Also in 2022, the GIIN took over the role of hosting the Operating Principles for Impact Management from the International Finance Corp. “It makes great strategic sense for us,” said Bouri.
In 2009, shortly after the GIIN was launched, the network took in the Iris impact measurement framework, developed by the Rockefeller Foundation, Acumen and B Lab.
Getting a merger right is tricky. The missions, strategies and cultures of the organizations have to be compatible, as do the business models, said Bouri. Stakeholders also need to be on board.
“Figuring that out, and then actually going through the logistics of some type of a merger or acquisition is a lot of work. It takes a lot of resources. There’s a million details to figure out,” Bouri said. “So the notion of having some funding to support organizations exploring this is really wonderful.”
