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Merging Isn't So Easy

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As it has become more and more difficult to sustain arts organizations, many arts leaders and boards are considering merging with other arts organizations in an effort to reduce cost and improve efficiency. In some cases, the merger between two arts organizations can be the only way both missions can be pursued long into the future. But for organizations considering mergers, there are several reasons to proceed with caution.

It is a commonly held belief that merging arts organizations will reduce staff overhead; one finance department, marketing department or fundraising department can service two different missions, goes the argument.

While there are times when merging two arts organization makes sense, the efficiency argument rarely holds up in practice.

The savings on personnel costs are typically relatively modest. Yes, there can be some staff overlap that allows for a few less staff members. But arts organizations are not known for being overstaffed and most departments cannot handle the additional work without additional resources. (And staff members are rarely highly-paid; losing one or two or three people probably does little to address major financial challenges.)

Also, the time spent blending staffs and boards and protecting both missions can be immense. So much so that serious fundraising is often ignored while merger talks are in process. Any savings on cost can be easily eaten up by forgone revenue generation.

There can be good reasons for a merger. When one organization is better managed, has a stronger marketing network, or better fundraising skills the merger can benefit the weaker party, for example.

And there are times when the programming of both organizations can benefit from the merger. When the Kennedy Center affiliated with VSA three years ago, the rationale was clear. Both organizations had extensive programs that were offered to schools; providing the programming of both organizations at the same time through the same network made for greater efficiency and a stronger 'product line.' In this instance, the costs of merging could be clearly justified.

But don't underestimate the cost of merger; it takes a great deal of time and effort to develop a strategy, create a financial plan and an operating plan, lay off and compensate redundant staff, accommodate the needs of both boards, revise by-laws and come to contract.

This contract must cover many contingencies especially how resources will be devoted in times of fiscal instability; are both missions protected or does the programming that attracts the largest share of revenue also get the largest share of the budget?

The emotional costs of merging must also be considered. Reducing staff is never easy or fun. The sense that the weaker organization is losing is also hard to overcome, no matter how much the leadership of the stronger organization tries to treat them fairly. (And there is almost always a stronger and a weaker organization in a merger.)

In a perfect world every arts organization would be in a position to pursue its own mission independently.

Unfortunately we do not live in a perfect world.