A Rarely Utilized Tool at a Time When We Need It Most

At The Philanthropy Workshop we encourage our members to seek leverage at every opportunity.  Local, national, and global problems extend well beyond the reach of any one social investor, so our members seek out models and tools with extraordinary social impact.  Rather than focus on any one issue area, many TPW members invest in tools including media, social entrepreneurship, capacity-building initiatives aimed at strengthening fields, organizations, and individuals to better deliver impact, and many more.  One of the most leveraged tools in philanthropy, fomenting and funding organizational mergers, has been the initiative of choice for one of TPW’s most innovative members and his team at the Lodestar Foundation. 

Two years ago, the Institute for Philanthropy (the home of The Philanthropy Workshop) and The Philanthropy Workshop West (formerly housed at the William and Flora Hewlett Foundation) initiated merger discussions.  When we started into these conversations our first call was to the president of the Lodestar Foundation.  For years, Lodestar had encouraged the leadership of both organizations to merge together, ending a separation that came about in 2002.  Lodestar Foundation has rare expertise investing in the field of philanthropy and collaboration generally.  Bringing together two of the most prominent entities in the donor education space would serve both of Lodestar’s mission objectives.

Bringing the two entities together meant that each would double their membership, staff expertise, and access to models and investments across the globe.  In addition, both organizations could grow, exponentially, opportunities to advance member to member engagements, programs on cutting edge topics in new geographies, and partnerships and collaborations between individuals and organizations separated only by branding.   We merged in March of this year and are just starting to get our heads around the potential for exponential impact.  We know, however, that the key ingredients have multiplied beyond either organization’s individual strategies crafted before we began merger talks.

Through this process I have learned that to invest effectively in a merger, you must embrace some of the key tenants of strategic philanthropy.  For one, you must be willing to take risks.  At every step of the negotiation and integration process landmines exist.  Step on one, and all your investment could be jeopardized.  You must be prepared to see a few mergers fail, however when you get wins the impact will extend beyond your expectations. 

Second, you must have patience.  At the outset of merger negotiations, there is a tendency to expect quick results, leading one to declare victory before the hard work begins.  Mergers involve integration of systems, cultures, and egos.  Getting through all of these challenging factors takes significant time.  For the investor, it may seem like years pass before you will see your impact.  Stay in close contact with the key negotiators, and give them the leeway to work through time intensive challenges. 

Finally, you must be supportive.  If you make it a practice to invest in mergers, you will quickly become one of the leading experts in the space. Smart organizations will seek you out for more than money – they will want your experience and skills.  Make them available. 

For TPW, Lodestar’s commitment, patience, and support were critical.  Today, TPW is the largest, curriculum-based, donor education entity in the world.  We are poised for significant growth in social impact far beyond what we would have been apart as competitors.  Can you say this about some of the organizations in your field, if so, why wait for someone else to step in?