You are here

How should I deal with merger proposal?

Your Legal Questions Answered

How should I deal with merger proposal?

I am on the board of a nonprofit organization that is in good shape financially and has very good programs. Another organization that is much bigger than ours wishes us to merge with them. From 14 board members presently, we will be able to have only two board members on the acquiring organization's board.  I understand that there has to be a vote of 2/3 of our board for the merger to happen.  I am not in favor of this merger since we give families a choice of a smaller organization as opposed to a very large organization. What should I do?

This is a political question, not a legal one.  If you can round up more than one-third of the board to say no, you can stop the merger.  If two-thirds want to proceed, they can do so.  So if you really oppose it, you need to lobby your friends on the board to see if you can find enough to agree with you and stop the process.

Mergers in the nonprofit world usually take a long time to negotiate in order to make enough people on all boards (and other stakeholders) feel comfortable with the proposal and understand how it will result in better, more efficient and effective services for the community.  It doesn’t sound as though the organizations have invested enough time in this proposal to reach that point, at least not with you.  There can be real advantages in combining resources and you may just want to slow the process down in order to negotiate better protections for your programs.  There are no absolutes, for example, on how many (or few) of your directors could serve on the surviving board.  You may be able to structure the affiliation to keep the small organization feel of your services.  If you see any potential merit in the proposal, it may be worth continuing the discussion to reach a better result.  If you don’t, you just have to count the votes.

Tuesday, June 13, 2017

Add new comment

Sign-up for our weekly Q&A; get a free report on electioneering