The year 2013 has seen a lot of mergers and acquisitions in the corporate sector. This of course, is nothing new or extraordinary. What is a little surprising though is the news that recent times have been seeing a lot of mergers within non-profit organizations.
Some analysts are calling it a ‘new, rising trend’ while others refuse to acknowledge that such a fad is in the air. According to experts, the need for this merger trend arises from lack of donations and the desperation to stay afloat. Another reason for mergers in the aid sector is the desire to be recognized globally. After all, the only way a non-profit organization can hope to become successful is if it has a stream of donators and volunteers behind it.
For those who don’t know, mergers and acquisitions are a way of financing some corporate company. It deals with the combining of two or more companies to help in the growth of an enterprise. This is all done without the need to create a subsidiary or child entity. Even though the difference between mergers and acquisitions is disappearing gradually, the legal difference still exists.
When a company takes over another company completely, yet the acquired company still maintains its independent existence, then that is known as an acquisition. A merger on the other hand is one where the two companies mutually agree on the combination of the organization, so that a new company is formed and operated thus.
In case of not-for-profit organizations, mergers are becoming common. Many have questioned this move by the aid sector as it might mean that non-profit organizations would turn into for-profit ones. Since this merging has been taking place in the private sector, the reason that most organizations give is the lack of resources and funding. According to them, the government too is relying on their aid programs to provide basic services to needy citizens. So how can they be expected to meet the demands without a proper donation source?
This is the reason for this rising merger and acquisition trend in private charity organizations. Many international NGOs are also opting for new mergers and encouraging this way of acquiring finances. They say that with the aid of like-minded non-profits, it would be easier to make a strong presence and achieve their goals of helping the needy.
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