NGOs are evolving to amplify their role in progressing the United Nations Sustainable Development Goals (SDGs). This means building speed, scale and innovation into their everyday operations. From social impact to a greater return on investment, there’s so much room to add value.
Using M&A, a strategic tool previously underutilized in the international development sector, NGOs can create more holistic change, faster than ever before. Unlike the for-profit sector, which focuses on valuations and multiples, the primary purpose of M&A for NGOs is to expand impact.
The speed and scale M&A provide are crucial. As the world enters the decade to deliver, the time to act is now.
Moving the needle at the pace and scope required means NGOs need to try a new, more impactful strategy.
NGOs cannot go it alone and still achieve outcomes at the speed and scale necessary. A modern M&A strategy can create growth, amplify impact, improve efficiency and shore up financial diversity and sustainability for NGOs.
Organizations can start by considering partners within their existing network to merge with or acquire, capitalizing on shared purpose, complementary capabilities, and more.
That is what happened when Corus International formed from two existing NGOs with complementary purposes. Accenture Development Partnerships was able to help the organizations merge, bringing our NGO and M&A experience together for the transformation. Ambassador Daniel Speckhard, president and CEO of Corus International, shared his post-merger reflections from an NGO CEO’s perspective in the full report.
The benefits of one integrated organization through a merger or acquisition include:
Unified brand, vision and mission
Diversified donor pool
Sustained joint program offerings
Simplified governance and reporting
Programmatic impact driving systems change
Several factors are driving the need for NGOs to explore M&A
Starting in your own backyard
Current partners will be a good fit for shared purpose, while providing complementary capabilities and donors. However, before beginning to identify good potential partners to merge with or acquire, NGO leaders need to clearly define the intent of the deal.
We see three major deal types in the NGO space:
Funding play. A complementary funding model brings advantages. For example, an organization primarily funded by restricted grants can benefit from combining forces with an NGO that emphasizes individual, unrestricted donations.
Geography play. Scale is becoming increasingly important not only for holistic change but for NGO survival. When scale is combined with speed, meeting SDGs within the next decade is within reach.
Domain play. Many NGOs have focused on a specific sector or domain, but combining complementary ones boosts speed, scale, and holistic change. A health NGO and an agriculture NGO, for example, can be more effective together in creating a synergistic cycle of good for populations in need.
Three considerations for NGO leaders
As NGO leaders investigate M&A as an option for growth and innovation, we recommend three key areas of consideration:
01. Envision the impact you want to make
Leaders should review their organization holistically with an objective eye, consider the impact they desire, assess that impact against their organization’s capabilities, strengths, and weaknesses.
02. Consider your existing network first
NGOs should look to their current network of partners first, beginning conversations to determine if deepening the relationship via M&A can benefit all parties. A foundation of collaboration and trust helps smooth the inevitable culture, operations, and talent issues that can arise.
03. Determine the right partnership model
There is no one-size-fits-all solution. NGO leaders should consider the “fit-for-purpose” partnership model and integration strategy that best meets both organizations’ gaps and strategic vision.