Editors' Note: Guest blogger Dixon Osburn was the Executive Director of Service Members Legal Defense Network for 13 years.
Kevin Naff, editor of The Washington Blade, and Joan Garry, former Executive Director of the Gay and Lesbian Alliance Against Defamation, have both written compelling columns in The Blade calling on LGBT organizations to explore merger. They both cite the recession as a driving factor, noting as Kerry Eleveld did in The Advocate, that a number of LGBT groups have laid off staff, frozen hiring, experienced significant reductions in event attendance, and are now facing serious projected revenue shortfalls in the year ahead.
I suggest that the call for merger conflates three principles: sound business reasons for merger, taking sensible steps to ride the recession wave, and re-imagining the equality strategy for our movement. Is the call for mergers putting the cart before the horse, or a bold step in realigning our national movement? In this column, let me outline some guiding principles for merger. I will write two other columns to follow - one outlining steps boards and staff can take to manage the economic crisis and the other offering some insights into how the community might re-imagine our movement.
There are at least five reasons why one or more organizations might consider merger advantageous: growth, synergy, diversification, economies of scale, or eliminating competition.
Corporations often merge to increase bottom line revenue. The same is true for nonprofit organizations. According to the Movement Advancement Project (MAP), of fifty-two leading LGBT organizations, there are 303,000 donors giving $35 or more per year and 18,400 who give $1,000 or more per year. MAP also notes that there is a surprisingly small overlap among those donors. Organizations whose donors do not overlap extensively are good candidates for merger. Additionally, some organizations rely more heavily on foundation (or government) grants than individual donors which may help diversify the funding base for the merged organization.
Organizations might also consider merger if there is synergy between the two organizations, meaning that when the organizations combine, the merger increases program effectiveness and reduces cost. Some LGBT organizations have competing programs addressing youth, faith and religion, or workplace discrimination / corporate equality. Other LGBT organizations pursue equality through the same strategy. Multiple organizations engage in impact litigation, or legislative lobbying, or public education, or research, or electing fair-minded candidates to office. There may exist synergy among some groups with similar programs or functional strategies if merged.
The third reason to merge is to diversify operations. Organizations here look to add functional expertise to improve their overall strategy, not eliminate duplicative actions as above. Legislative and litigation organizations may join. Grassroots and media watchdog organizations may combine. Strong single office organizations may merge with an organization with multiple offices nationwide. Diversification lets the whole become stronger than the sum of its parts.
A fourth reason that drives mergers is economies of scale. Merged organizations may free up resources by eliminating functions that could be carried out just as, or more, effectively by fewer people or resources. Some organizations could eliminate positions in finance, administration, development, communications or program. Some could eliminate duplicative equipment leases or combine offices.
Finally, organizations may take over other groups simply to eliminate competition. The stronger political / legal / electoral group may overtake the weaker one to consolidate support behind its strategy from donors and decision makers.
Just as there are reasons to merge, there are reasons not to merge. The actual financial costs of combining on ore more groups may exceed the benefits of merger. The political and philosophical differences between the two groups may make merger impractical. The multi-issue group with stronger finances may have a record of producing poor results compared to the smaller single-issue group. The missions may not fit well together: combining an impact litigation group with a legal aid group; merging a family support organization with a federal lobbying group; or merging a media watch dog with a professional association for journalists. Lastly, saving an organization that is about to go under by merger may make no sense if the other organization is gaining all of the other organization's problems and none of its benefits.
The bottom line is that the recession is not the reason to merge. A recession, though, may provide an opportunity for leaders to consider whether there are sound business or movement reasons to merge. In my next column, I will address what organizations leaders should consider to survive the recession.