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The 6 Forces Driving For-Purpose Mergers You Need To Consider Now.

Summary (TLDR)

Australian For-Purpose organisations are facing a confluence of factors that will drive mergers as a strategic way forward to deliver greater impact – rather than being seen as a sign of failure:

Rise Of Online Service Delivery – Reducing the relevance of geographic boundaries
Policy And Regulatory Headwinds – global aid cuts, aged care reforms, and changes to disability employment funding.
NDIS Funding Squeeze – Rising service costs vs lower annual price adjustments.
Fundraising Pressures – Driven by cost-of-living, inflation, and shifting donor demographics.
Talent Shortages – Making it harder for smaller NFPs to secure skilled staff.
Contemporary Expectations – Growing demand for robust impact measurement and alignment with ESG principles.

By collaborating or merging, organisations can combine resources, strengthen programs expand impact and improve resilience within this changing environment. We will explore each of these in more detail.

1. Online Service Delivery Eroding Boundaries

Accelerated by Covid, our interactions are moving online. Digital channels such as telehealth, virtual counselling, e-learning and social media comms are delivering social impact to clients anywhere, anytime and at scale. Now that Zoom/Teams and social media platforms are ubiquitous, local and state-based boundaries are becoming less relevant. Maintaining federated structures is costly – extra IT systems, offices, admin and management – when online services can be delivered nationally or even globally.

Post Covid, it became clear that Arthritis NSW and Arthritis QLD were essentially duplicating the same work, and same operational structure, with most services and supports provided online. So, the CEO of Arthritis QLD and I (as then CEO at Arthritis NSW), backed by our progressive boards, actively explored opportunities for collaboration. The benefits in terms of client numbers, service breadth and efficiency became quickly apparent – and it was on this basis that the merger to form The Arthritis Movement was later explored.

For many NFPs, digital delivery is exposing duplication and prompting tough questions: why maintain parallel structures when you can combine efforts, free up funds, achieve greater consistency and scale up impact?

2. Policy And Regulatory Headwinds: Aged Care, Aid Cuts & Disability

For-Purpose organisations face significant public policy changes. Internationally, major funders have trimmed their aid budgets, and Australia’s contribution remains low at around 0.18% of GNI. Closer to home, social causes such as DEI initiatives or refugee assistance can see fluctuating public support. Overseas aid organisations and those advocating for social change are feeling the pinch.

Meanwhile, the 2021 Royal Commission into Aged Care Quality and Safety recommended a suite of changes to revolutionise the sector. Whilst of course they ensure better care for older Australians, they elevate costs and compliance burdens and many smaller aged care providers are weighing mergers or partnership models to survive. And theres more reforms coming soon!

“There’s no escaping the reality that recent policy shifts are driving organisations toward consolidation. These changes aren’t temporary; they’re structural transformations that demand new strategic thinking. Mergers offer scale, resilience, and the ability to navigate increasingly complex bureaucratic systems. They can (and should) also be the catalyst for genuine reinvention. To truly thrive, organisations must use mergers as an opportunity—not just to streamline overheads—but to re-centre around authentic community needs and deeply-held future customer expectations.” Adam Woods, Executive Director, Scalabrini Villages

In Disability Employment Services, the government has restructured funding in recent years, with another round of consolidation anticipated in 2025. Smaller agencies sometimes struggle to secure contracts on their own. Merging can strengthen their bid capacity, widen the range of services, and help them stay competitive in a tougher funding environment.

“For small providers, going it alone is no longer sustainable. Rising NDIS costs and lagging price adjustments are eroding margins and increasing risk. Strategic collaboration, through shared systems, workforce pooling, and smarter technology, is essential to staying viable. Those who innovate and consolidate now will shape a stronger, more efficient sector. It’s not just about surviving, it’s about protecting participants, lifting quality, and ensuring long-term impact. The path forward demands bold partnerships and a shared commitment to doing more with every dollar.” — Duncan Wakes-Miller, CEO Northside Disability

Regulatory shifts also help: efforts to streamline fundraising laws across Australia simplify nationwide operations – we increasingly all speak the same corporate language. And there are an increasing number of examples of Government funders requiring small, aligned providers to consolidate. The wonderful Meals On Wheels (still operating through hundreds of small local organisations, very reliant on volunteers) has multiple examples of Government funders requiring them to consolidate for funding purposes.

3. NDIS Funding Squeeze and Rising Costs

The National Disability Insurance Scheme (NDIS) has injected much-needed funds into disability services since 2016, but the model sets rigid prices that rarely cover actual service costs. According to a 2025 study by the Centre for Public Value at UWA, operating expenses at some providers climbed 20% over two years while government price adjustments lagged far behind.

On top of that, many disability organisations face a more complex client base, plus workforce shortages (pushing wages higher). The federal government has indicated it wants to curb NDIS expenditure growth, which could further restrict future payments or eligibility. Its becoming harder and harder for smaller organisations to do good work under the NDIS.

“For disability employment funding growth, partnerships and innovation are not optional — they’re imperative. Smaller providers won’t be able to thrive alone under conditions that demand efficiency and scale. We strengthen and broaden our service offerings by pooling our expertise and resources. Status quo isn’t an option: proactive collaboration and creativity will enable us to maximise impact for every person we support.” — Duncan Wakes-Miller.

Consolidation is increasingly attractive in this scenario. By merging, two or more providers can share staff, systems, suppliers and cut overhead – all crucial for staying afloat in the face of disappearing margins and unpredictable policy shifts.

4. Fundraising Under Pressure: Cost-of-Living & Generational Shifts

No two ways about it – traditional fundraising is under strain. Inflation and a heightened cost-of-living erode donors’ ability (and willingness) to give. Fewer donors gave in 2023 than prior years, and the direct marketing and event markets are increasingly crowded. Generational change is also reshaping donor behaviour. Younger generations often donate online, and give sporadically (to causes) rather than consistently (to an organisation), and increasingly expect (real-time) impact updates. This demands sophisticated digital marketing and transparent reporting and charities find themselves pouring more money into tech and communications, just to compete in an overcrowded field and/or see reliance on and investment in traditional fundraising going up in smoke.

Whilst small volume, high value (HNWI and corporate giving etc) is showing consistent growth, smaller organisations that look just like the others around them, that struggle for attention, or wont / cant invest to meet contemporary expectations (see #6 below) and sophisticated, progressive strategies to address social issues, are unlikely to be of real appeal to Top End Philanthropy.

Boards are increasingly open to merging so they can combine supporters, centralise campaigns, and reduce costs whilst creating an organisation that resonates with progressive donors seeking large-scale impact.

5. Talent Shortages

Across the Not-for-Profit landscape, organisations report difficulty filling roles AND keeping good staff. As more commercial business offer the sorts of staff incentives (flexible working, wellbeing support, bonus days off, social impact measures, investment in employee engagement etc) that NFPs used to ‘own’, convincing someone to work for an NFP over a better paying ‘Values Driven’ corporate is hard. We ask people to work hard, often long hours, whilst paying poorly, hoping that an alignment of values will keep generating discretionary effort. The growing complexity (compliance regime, contemporary expectations, increasingly challenging fundraising market etc) of community services makes this even harder. For many this is not sustainable and leads to high turnover. The ageing of workforce in some sectors (esp health/aged/disability care) looms as an additional challenge.

A merger can offer a more attractive platform for recruitment and retention: larger teams provide better career pathways, peer support, and staff development opportunities. Merged entities typically have the resources to invest in leadership programs or upskilling, and often the new energy or brand that can appeal to employees. The Arthritis Movement can now offer double the opportunities for staff to move roles or teams and learn new skills whilst staying with the organisation they love. We can even offer interstate location!

6. Contemporary Expectations: Impact Measurement and ESG

Funders, regulators, and donors are increasingly looking for solid evidence of outcomes. Impact measurement – tracking not just outputs but real social change – requires tools and data analysis that can be expensive or complicated. By consolidating, two organisations might afford a shared impact evaluation specialist or a robust software platform.

I was surprised – and pleased – to see how prominent outcome measurement and reporting was in Pillar 3: (Adaptive and Forward-Focused Sector) of the Not-for-profit Sector Development Blueprint released in Nov 2024 (as an aside – why is this paper is getting so little airtime???). This report also underlines the growing importance of reducing duplication and collaborative approaches.

At the same time, Environmental, Social, and Governance (ESG) standards are no longer just for corporates. Larger nonprofits are expected to demonstrate sound governance, responsible resource use, and inclusive practices. This can be a steep climb for smaller charities that lack the bandwidth to undertake detailed ESG reporting. A merged or collaborative structure might help spread those costs and commitments. ESG themes are also evident through the NFP Sector Development Blueprint.

A Strategic (and Constructive) Path Forward

None of these forces automatically mean collaboration or merger is the only path forwards. Innovation, especially through emerging technology, will also present opportunities for a more impactful or sustainable future.

However, these factors do create conditions where leaders should consider whether a strategic alliance or merger could amplify impact, reduce duplication, and unlock new funding.

“In a tightening funding environment, waiting isn’t an option. We must treat every challenge as an opportunity to reinvent ourselves. For some strategic mergers and bold innovation, may provide opportunities to multiply our impact by combining strengths and embracing new technologies or service models. Those who shrink will falter — those who grow strategically and innovate will define the future of our sector. Our focus must be long-term: scale what works, adapt continuously, and ensure our organisations thrive sustainably.” — Duncan Wakes-Miller.

A well-executed merger isn’t simply a fallback. It can transform your impact, provide an opportunity reset and realign your relationship with customers, rejuvenate a nonprofit’s brand, make over your culture, galvanise staff, and expand services to more communities.

As Adam Woods says “Mergers are often seen through a purely operational or financial lens. But a merger done right is an exercise in profound customer empathy—an invitation to pause, listen, and deeply understand what communities genuinely value. Organisations that see mergers as opportunities for deeper alignment with their communities’ future aspirations—not just internal optimisation—will be those best positioned to deliver lasting impact.”

If you are feeling the pressure of these 6 forces, or see the opportunity to ‘do more good’, exploring the potential for collaborations and even a merger should be on your agenda.

Next Steps


Raise the question internally. Merger is a not a dirty word. What is the internal appetite and interest? Is this something you could consider as an organisation? Is there a business case or strategic plan through which to explore this?
Articulate your goals. What do you want to achieve through a merger? What are the goals? How will this help your clients and mission?
Identify potential partners and get to know them. Are your values and ambitions aligned? Do your business models complement each other? What do you want to achieve? What is your shared purpose (and what are your non-negotiables)?
Develop a plan and engage stakeholders. Well before any commitment is made, you must develop a plan to engage key people and step through a thorough process to minimize risks and maximise chance of delivering your shared purpose. The process to deliver a successful merger is complex – don’t leave it to chance.

If your not-for-profit is navigating any of these pressures, acting early is key. Loom Consulting supports For-Purpose organisations with merger readiness, collaboration strategy, and change management – always with social impact at the centre. Whether you need to explore the feasibility of a merger or strengthen your strategic plan to meet these challenges head-on, contact Loom Consulting today. Don’t wait for a crisis to force your hand. A proactive approach in 2025 and beyond can ensure your mission thrives for years to come.

Alex Green 22/5/2025

CEO, The Arthritis Movement

Founder, Loom Consulting

Sources:

Every Loom Consulting project funds a loan on Kiva.org. Partnering with Loom will change lives and help underserved communities thrive.

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