Article Summary: The Rise of Not-for-Profit Mergers and Acquisitions
Not-for-profit (NFP) organizations are increasingly pursuing mergers and acquisitions (M&A) amid workforce constraints, rising costs, and uncertain funding. The article outlines key risks and benefits and provides examples of recent mission-aligned transactions.
- Why M&A now: Lean workforces, inflation of costs, and unpredictable revenue are pushing more NFP leaders to consider consolidation.
- Risks vs. benefits: Leaders must weigh mission alignment, cultural integration, and legal/financial complexities against capacity, reach, and resilience.
- Recent examples: Brightli/Centerstone and Horizon House/Goodwill of Central & Southern Indiana illustrate different paths to expanded impact.
Introduction
Historically, leaders of not-for-profit (NFP) organizations have viewed mergers and acquisitions (M&A) as a last resort. However, the unique challenges and extreme volatility facing the NFP sector in recent years have driven a significant increase in mergers and acquisitions among NFP organizations.
Why are organizations considering M&A transactions?
Lean workforces, increases in demand and costs, and uncertain funding are not new issues facing the NFP sector, but in recent years, these issues have reached unprecedented levels. NFP organizations generally face significant workforce challenges due to salary competition with for-profit businesses and burnout from heavy workloads due to understaffing, among other factors. But, as many of us have experienced in our everyday lives, NFP organizations are seeing continued inflation of costs, impacting salaries/wages and essential expenses such as rent, utilities and transportation.
Additionally, federal funding has become an unpredictable source of revenue for NFP organizations due, in large part, to continuous changes in federal regulations. Individual charitable donations have historically been the largest contribution source to NFP organizations but have been abnormally inconsistent in the past few years.
Ultimately, rising costs combined with unstable/decreasing revenue streams create a difficult and potentially unsustainable situation for these organizations. These factors have driven many organizations to consider M&A as a strategy to continue serving their communities and fulfilling their missions.
M&A Challenges/Risks and Benefits/Opportunities
M&A transactions come with challenges and risks such as mission alignment, leadership transitions and cultural integration, legal/financial complexities and community/stakeholder concerns. But there is a flip side: a number of benefits and opportunities for organizations considering M&A:
- Increased capacity and resources: Entity consolidation pools expertise, skills and knowledge of staff members, leading to stronger leadership, more efficient operations, and opportunities for cost savings on combined administrative functions.
- Broader reach and enhanced services: Whether due to geographic expansion or combination of complementary services, M&A allows for enhanced and broader reach of services.
- Improved sustainability and resilience: A merged organization might have diversified revenue streams, which could allow it to be more financially resilient and better able to withstand economic fluctuations, and it might realize increased purchasing power with vendors.
Examples of Recent Transactions
As with for-profit M&A, these transactions typically take place between organizations that have either shared or complementary missions.
In 2025, Brightli, a behavioral health and addiction treatment provider headquartered in Springfield, MO, merged with Centerstone, a Nashville-based organization providing similar services. The merger of these organizations created the largest NFP provider of mental health and substance use disorder care in the United States. Centerstone CEO, David Guth, Jr. noted that “What makes this merger historic isn’t just the scale; it’s the opportunity to reach more people, invest in innovation and ensure no one faces behavioral health challenges alone.”
Horizon House was a small NFP that provided services such as health care, mental health services, storage, laundry and job training for people experiencing homelessness in Indianapolis. Goodwill of Central & Southern Indiana is a much larger organization and, in addition to its well-known retail locations, provides a variety of services to help individuals become employable. Through different means, both organizations share the mission of helping people in their community become economically self-sufficient. These two organizations merged in July 2025 and now operate under the Goodwill of Central & Southern Indiana name. Sherry Seiwert, chair of the Horizon House board, commented that “Horizon House has always been a place where people experiencing homelessness can find help, hope and dignity. This merger with Goodwill allows us to keep that promise – and grow it – so we can serve even more neighbors in need.”
These transactions differed slightly in that Brightli and Centerstone provided very similar services in different regions and Horizon House and Goodwill of Central & Southern Indiana provided different services with a shared mission. However, both leaders commented on the enhanced opportunities post-merger and emphasized their newfound ability to reach more people than ever.
Conclusion
While the NFP sector presents distinct challenges, organizations that have successfully completed M&A transactions demonstrate that through thoughtful integration and by leveraging combined strengths, organizations can align their missions, expand their service capacity, and position themselves to better serve their communities. As this sector continues to evolve, strategic partnerships and consolidations offer promising pathways for NFP organizations to increase their impact and ensure long-term sustainability.
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