The 92-year-old Irvington Institute for Immunological Research was in trouble. Donations were down, overhead was too high, and the fellowship-granting institution was worried about staying afloat. In 2006, after considering several alternatives—including expanding its board of directors to generate more funding and disbursing its remaining funds before closing up shop—Irvington’s executive director proposed to the board that it merge with another nonprofit. Deciding this was the best option, the board agreed.

To negotiate the ins and outs of the deal, Irvington sought out Sandy Lamb, an investment banker who spent the first 20 years of her career at the boutique investment bank Lazard, where she advised clients like Colgate and Halliburton on all types of spinoffs and merger activity. Over the next three months, Lamb set up face-to-face meetings with eight potential partners. Among them was the Cancer Research Institute, another fellowship-granting group based in New York, but one with better funding—a $13.5 million annual budget and $41 million in assets.

Lamb oversaw the drafting of the merger agreement by each group’s lawyers and responded to due diligence requests from the C.R.I. By October 2007, the merger, valued at roughly $11 million, was finalized, with C.R.I. taking ownership of Irvington’s assets—such as a building on Second Avenue worth about $8 million—as well as its liabilities, including office expenses.

“The fellowships will continue, there will be more of them, and donors will be cultivated,” says Lamb proudly.

Once solely the domain of the private sector, mergers and acquisitions are becoming increasingly common in the nonprofit sector, as more organizations compete for a finite pool of charity dollars. There are now approximately 1.5 million nonprofit organizations in the U.S., including charities and private foundations, as well as labor unions, trade associations, veterans organizations, and recreational clubs, according to Tom Pollak, program director for the National Center for Charitable Statistics at the Urban Institute in Washington.

Many of the existing groups espouse overlapping causes and therefore tussle for funding, staff, and media coverage. Confronted with such problems as a decline in funding or loss of a longtime executive director, a merger is often the best solution. Pollak says there’s no hard data on the number of nonprofit mergers occurring today, but anecdotally, mergers among nonprofits do seem to be on the rise. He himself has had firsthand experience of the trend as a board member of two groups that both absorbed smaller organizations: a community pool and a child welfare organization.

Michael Clark, executive director of the Nonprofit Coordinating Committee of New York, which provides information for New York nonprofits, has also recently observed more merger activity locally, especially among foster-care and youth-services agencies. As an example, he points to Good Shepherd Services, a social-services agency that has merged with several other agencies in the past few years. Clark says that mergers are often helpful in generating new funding, since the newly formed group is often judged to be more stable and effective. “Funders are very attracted to mergers because they get more bang for their grant dollar,” says Clark. And people like Lamb, who have experience in guiding and negotiating these types of deals in the corporate arena, are starting to advise the growing number of nonprofits looking for a partner.