Should associations resist the urge to merge?

That's a question found in this research paper I found on the Web about mergers between nonprofit associations.



Here are some observations from the paper:


Mergers are a growing phenomenon in nonprofit organizations, yet little is known about the manner and motivation of such efforts. While some preliminary research of mergers in the health care and social services fields has emerged, mergers among associations have not been studied. Association executives contemplating such actions have little to guide their partnering efforts and anecdotal evidence suggests that many such efforts are never consummated or fail to fulfill their initial promise.



TK: With the exception of IFPA and UFFVA, mergers in the produce world are invisible.



The findings from the fieldwork led to explication of a theoretical framework that underlies the merger process in trade associations. Among the additional key findings from the study of these fourteen cases were the following:
1. Mergers are prompted by changes in an association’s external economic environment, specifically changes in the composition of the industry and alterations in the association’s membership base.

TK: Industry consolidation has arguably reduced the membership base of both PMA and United. PMA is more flush with cash than United.For 2005, PMA's IRS Form 990 total assets were $11.9 million. Prior to its merger with IFPA, the United Fresh Fruit and Vegetable Association's 2006 Form 990 showed assets of $3.97 million.

2. In order for associations to consider substantive action, a critical mass of awareness among organizational players regarding the need for change must build in the organizations. This critical mass of awareness is contingent on three factors: the attentiveness and proactivity of a catalyst leader, a mechanism for scanning and understanding the changing external environment, and support for action among a nucleus of organizational players.

TK: My impression is the major catalyst for change comes from PMA and its board, though there may be champions for the cause in United's board. In any case, it is a critical mass? The industry wonders about marketing/expos and government relations; must both organizations do both? And who is the lead dog for crisis communication?

3. Two fundamental shifts in thinking about the relationship among the merger players underlie the merger decision: associations must view each other as valued, prospective partners rather than competitors; and, the dominance of one of the partners in the merger transaction must be either informally or formally accepted. Successful mergers are built upon the success of precursor partnering activities.

TK: There's the catch. "The dominance of one of the partners in the merger transaction must be either informally or formally accepted." The balance sheet points to PMA as the dominant association, but United's role in lobbying for hundreds of millions in government support is hard to overlook. As to the last point, how well have PMA and United worked together in the past? That's a good indication of how they might do when combined.

5. Four factors are critical in moving from awareness to action: a skilled catalyst leader must be present; a nucleus of individuals within the organization must be positioned to embrace and drive the action; an extended time period must be allowed for discussion and processing of the merger; and opportunities to build and preserve social capital must be incorporated throughout the process.

TK: An extended time period for discussing and processing the merger(check), but who is the skilled catalyst leader? Is there a nucleus of individual within each organization to embrace and drive the action?

6. The implementation of the merger decision requires extensive choreography of process and people. The use of a transition champion brought in for an interim period for the purpose of merger implementation contributes to merger success and insulates key executives and board members from negative consequences..

TK: It is great that United and PMA are talking. It can only mean that communication is happening. But ultimately I think there is too much going on in Washington for United to have the time to focus on a possible merger with PMA. I believe a blue ribbon panel should be comprised of members of each board. That powerful panel should issue findings to be considered by the boards of PMA and United, with recommendations on ways the groups can avoid redundancy and increase their utility to their members and the industry.