CHAPTER 26Mergers, Bankruptcies, and Terminations

26.1 Mergers and Other Combinations

Strategic alliances, collaborations, networks, duplication of effort, modernization of facilities and methods, constituency changes, human disagreements, and countless other factors might indicate the need for a nonprofit organization to combine with another organization. Achieving economies of scale in the operations, eliminating duplicated services, integrating service delivery, acquiring needed skills and assets, and strengthening administrative capability are just a few of the reasons why one or more organizations might combine themselves through a merger or other type of organizational combination. In some instances, forming a partnership, engaging a professional management company, or undertaking some other type of collaboration with a for‐profit or nonprofit organization can accomplish the needed improvement without a change in the structure of the organization itself. Some of the tax issues to consider in such a situation are discussed in Chapter 22.

Once it is decided that an alliance or some other form of cooperating operation is not ...

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