At the Independent Sector National Summit in Atlanta, nonprofit mergers were a hot topic. Experts shared best practices.

Mergers and acquisitions have become a popular topic among nonprofit groups coming to grips with a radically shifting funding landscape that threatens to leave many without a reliable source of income. A third of U.S. nonprofit service providers lost government funding in early 2025, according to research from the Urban Institute. And 46 percent of more than 400 nonprofits across the country said they were worried they would have to merge or close as a result of funding cuts, a recent report from the Center for Effective Philanthropy showed.

Mergers and acquisitions are also on the minds of funders worried about the future of the sector. Some foundations are beginning to offer to help cover the costs associated with blending staff and operations.

But when does it make sense to consider a merger? And how do you know whether to start the process? Funders, nonprofit leaders, and consultants offered insights on these and related questions earlier this month at the Independent Sector National Summit in Atlanta.

Just 1 percent of nonprofits merge each year, according to La Piana, a consulting firm for nonprofits and foundations that helps facilitate mergers and acquisitions. The last time there was a big push for nonprofit mergers was more than a decade ago during the Great Recession. Meanwhile, the sector keeps expanding. Currently, there are approximately 1.5 million 501(c)(3) nonprofit organizations, and the number of nonprofits has grown 36 percent since 2000, according to Philanthropy Roundtable, a membership association for funders. The sector added nearly 277,500 jobs from 2017 to 2022, according to data from George Mason University.

Amid that growth, there hasn’t been enough discussion about merging organizations that focus on the same causes, said Onuka Ibe, a managing partner at La Piana.

“Unlike in the for-profit sector, there’s not the same churn, and so there are just more and more organizations looking for more and more funding,” Ibe said during a panel on mergers and acquisitions at the Independent Sector National Summit.

“Part of what’s great about organizations that think proactively about possibilities  including mergers and also dissolution or winding down or asset transfers — is the more that organizations are able to figure out if they’re not able to do this work and maybe somebody else can, the more easily those resources are available to those organizations that can really make an impact.”

“Sometimes it’s hard to let go, but it can be better for the sector over all,” he added.

Uncertainty about how funders will react to signs of financial or economic weakness has kept many nonprofits from exploring conversations about mergers, said Tonia Wellons, CEO of the Greater Washington Community Foundation. If mergers are to become more common, funders will need to shift their behavior and let go of the belief that if a grantee becomes unsustainable that somehow leaves the “stain of failure” on its philanthropic backers, she said.