Build up when things look down

The negative forces affecting financial stability and the delivery of results may require a shift from the old operating norms for some nonprofits to survive and thrive. Many may not realize the volume of ever-expanding compliance requirements attached to government grants and the continuation of tax-exempt status. Now may be the time when business relationships of different forms represent an opportunity for many not-for-profits to enhance financial and operational stability and broaden their reach and impact. Many not-for-profits may want to view today's economic environment as a buyer's market, an opportunity to invest in future growth and development where it was previously unattainable. SFAS 164, Not-for-Profit Entities: Mergers and Acquisitions (FASB ASC 810-158), provides specific guidance on how business combinations should be accounted for, with prescriptive guidance on what would qualify as a true merger, versus an acquisition. A thoughtful planning and implementation of an integration between entities will drive efficiencies, reduce costs and increase effectiveness. Business combinations also can provide quicker opportunities than organic growth for expanding an entity's geographic reach. The right advisors are critical for ensuring appropriate consideration of all factors.