Posted on September 13, 2008

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Rhode Island Nonprofits Turn to Mergers to Stay Afloat

Mergers and acquisitions, daily events in the for-profit world, are becoming more prevalent among Rhode Island nonprofits trying to cut costs and attract contributions in a sagging economy, the Providence Journal reports.

During the economic expansion earlier this decade, the number of nonprofits in the state grew to more than 1,700 — many of which provide duplicate services and tap the same donors. With Rhode Island in a recession, many of these nonprofits are having trouble paying for services, especially with money tighter among contributors and less government support.

Responding to the pressure, some organizations have decided to consolidate — an option the United Way of Rhode Island has encouraged by creating two mergers-and-acquisition funds to help pay for professional services for nonprofits looking to combine operations. With M&A grants, Greater Elmwood Neighborhood Services merged with the Elmwood Foundation while Family Services of Rhode Island consolidated the back-office functions of many of its agencies.

Perhaps the most prominent example of nonprofit consolidation in the state involves Planned Parenthood of Rhode Island, a seventy-seven-year-old organization, which recently voted to turn over management to Planned Parenthood of Connecticut with the intent of merging the two groups. A merger would enable Planned Parenthood to cut costs by sharing resources and expenses, while using its combined staff and funding to better serve clients.

"Partnering between affiliates and sharing administrative costs is becoming essential in this economy; few Planned Parenthood affiliates of our size have survived without this kind of linkage," said Planned Parenthood R.I. board chair John R. Morton. "We are extremely optimistic about the potential for this alliance, and are confident that Planned Parenthood's presence in Rhode Island will continue for many years to come."

Kostrzewa, John. “Nonprofit Groups Turn to Survival Strategies.” Providence Journal 9/07/08.

Primary Subject: Philanthropy and Voluntarism
Secondary Subject(s): Economic Crisis
Location(s): Providence, Rhode Island

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