In the week that’s seen the merger announced of two major youth charities, we are constantly being advised that charities should work more closely together, to collaborate more often and even to merge. Bigger is better so the argument runs, it makes it easier for the commissioning bodies and grant givers to manage. As the “contact culture” spreads throughout the sector joining forces with others can make commercial sense. The four organisations that joined to form One Dance UK, the organisation of which I am treasurer have certainly seen the advantages but is this decision right for everyone?

There are several reasons why you may wish to join up with a fellow non-profit. But deciding to get together also brings risks that, if neglected, could cause you to split.

Here are three of the main motivators for merging charities and our advice on what to be wary of with each.

1. To better deliver on your mission

Why have two organisations helping the same people? Surely one joined-up charity could serve its beneficiaries better than two? There are many success stories: NSPCC and Childline; Help the Aged and Age UK; Mind and Mental Health Media.

It makes perfect sense, but just remember: though some may appear similar, every charity is different.

Consider, for instance:
• What is your charity’s funding structure? What part is played by grants, or contracts, or donors?
• How do you sum up your mission and your main aims and objectives?
• Does your charity have a wide or narrow focus?
• What is the organisation’s culture like?

If any core factors don’t match, someone is going to have to compromise. And how will your staff, trustees, volunteers and donors react to the merger? Not to mention your beneficiaries, who have come to trust you in your existing state.

2. To save money

Merging brings many practical advantages that could save you thousands of pounds. Sharing an office space means sharing resources: IT systems and their support; facilities, such as printers, stationary and so on; the rent on the premises and the cost of its amenities, such as phone and internet; members of staff. And if a charity is struggling financially, merging could be the key to its very survival.

But beware that there will be an upfront drain on resources and expenses, so there may be some tough years to weather before the savings start to show. And while it will be convenient to have one centralised location and joined-up branding, you’ll have to decide exactly where you’ll be based and what will be your identity.

Plus don’t forget that ‘sharing’ staff means that you may not need so many of them. More than likely you’ll need to go through a redundancy process, so be prepared for all the related practical, financial and emotional consequences.

3. To streamline in an over-stuffed sector

One criticism that the voluntary sector often faces is that there are too many charities. Opinions vary on this, of course, but bringing yours together with a peer may increase your reach, enhance your capabilities and give you a bigger piece of the pie. There are only so many trustees and donors to go around and only so much funding.

On the other hand, smaller charities merging together or getting absorbed into larger charities means there are fewer small charities. Being small brings its own advantages, such as being able to focus intensely on a smaller group, having lower operating costs and functioning within a more straightforward, less political structure. And does it benefit the sector more to be compressed or to have a range of voices, big and small?

Plus there is something to be said for the galvanising effect of a little healthy competition.

We can guide you

For every successful charity merger there have been many that fell by the wayside. Failure could come not only from the points raised here but from factors such as strategic mismanagement of the merger process, struggles to find the balance of power, and personal conflicts.

So give careful consideration to and seek expert advice about your merger, or you may end up regretting it, as may the people who support you – and the people you help.

 

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Julian Flitter - Partner

E: jflitter@goodmanjones.com

T +44 (0)20 7874 8834

I help charity trustees and chief executives to develop strategies, make sense of their finances and ensure that they can concentrate on delivering the objectives of the charity rather than getting stuck in day to day operational issues.

Working with commercial organisations as well as charities has proved invaluable in assisting Social Entrepreneurs within a range of Social Enterprises from Companies Limited by Guarantee to Community Interest Companies.

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