Author Archives: Julian Flitter - Partner

About Julian Flitter - Partner

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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.

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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Has George Osborne been giving to charities in his final pre-election budget? The answer I think is a qualified yes. Certainly no big giveaway but there is a planned increase in the amount that can be donated under the Gift Aid Small Donations Scheme (GASDS).

The government has not seen the widespread take up of the scheme that it had hoped and therefore plans to introduce legislation to extend the maximum annual donation amount which can be claimed through the scheme from £5,000 to £8,000 from April 2016.

Many would argue that this still does not go far enough in encouraging take up of the scheme since a charity still has to have a two year Gift Aid history before becoming eligible. Similarly it only applies to cash payments and this too has come in for criticism.

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Thursday 7th March saw a packed Central Hall Westminster host the inaugural Charity Staff Foundation Awards.

Rory Fenton, Dialogue Officer of the British Humanism Association with Martin Bailey, Goodman Jones.

Rory Fenton, Dialogue Officer of the British Humanism Association with Martin Bailey, Goodman Jones.

The Charity Staff Foundation is a charity which aims to encourage and provide access for young people to make long-term careers in the charity sector. It also provides a support structure for those who work and volunteer for charities. This involves the CSF providing training, advocacy and practical support such as a helpline and mentoring programme www.charitystaff.org.uk.

The awards are part of this work and Goodman Jones are proud to be founding sponsors of the awards which recognise and celebrate the immense contribution and outstanding achievements made by volunteers and charity staff across 20 different categories, ranging from Community Volunteer of the Year to Social Entrepreneur of the Year, and Small Charity of the Year to International Aid Courage Award.

As Paul Hackwood, of The Church Urban Fund, said when he presented an award to Volunteer Co-ordinator of the Year “whilst the CSF Awards might not have the glamour of the Hollywood Oscars, it does have the commitment, people and passion” to improve society.

Goodman Jones were particularly proud to sponsor the award for ‘Charity Innovator of the Year’, as we know ourselves, now more than ever, organisations are seeking smarter approaches to working to combat reduced resources and tighter financial constraints.

This award celebrates those who achieved significant changes within and for their organisation through the use of innovation.

The standard of entries was extremely high and the nominees included Michelle Saliba da Costa of Ataxia UK and Geoff Wheeler of SIFA Fireside but the award, presented by Charities Manager, Martin Bailey, went to Rory Fenton, Dialogue Officer of the British Humanism Association.

Rory’s enthusiastic and committed work with faith and community groups focuses on inclusion and equality by encouraging the representation of the humanist and non-religious in local forums and networks. Rory’s work has increased the wider understanding of Humanism and ensures that its voice is heard along with those of differing faiths www.humanism.org.uk.

Rory has fully embraced innovation across a diverse range of subjects from international development to physics, and from economics to humanism; he is a regular blogger on these and many other topics.

CSF Awards 2013

Rory Fenton being presented the award by Martin Bailey.

So if your Charity has a true innovator or unsung hero within its ranks, or if you work with someone who goes beyond the call of duty, do get in touch with the Charity Staff Foundation later in the year as nominations open for the 2014 awards in November.

The annual awards are a great opportunity for people within the charity sector to get together and celebrate the wonderful work that is carried out by both staff and volunteers, highlighting special achievements, encouraging good practice and recognising dedication.

Photos courtesy of Charity Staff Foundation

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“The willingness of those who run charities to give their time freely for the benefit of others and not for their own financial reward” is the reason given by the Charity Commission to the question – what makes Charities distinctive? So does the suggestion by Lord Hodgson in his 2012 Review of the Charities Act that “large” Charities (those with income over £1m)  should have the automatic power to pay trustees – do away with this fundamental voluntary principle?

It is a question which has provoked much debate across the third sector. Attending the recent ICAEW Charity and Voluntary Sector Group Annual Conference I heard the question raised once more. So why has this proved such a divisive issue? What is it we fear from paid Trustees?

Paying Trustees is in fact nothing new, indeed as Sam Younger, Chief Executive of the Charity Commission, pointed out at that very conference; many Trustees receive payments, albeit with permission from the Charity Commission. The Commission’s guidance notes CC11 ‘Trustee expenses and payments’ – provides excellent advice on how this may be done, not only for reimbursed expenses but also payment for services provided and even payment for Trusteeship Duties. So if even the Charity regulator does not have a problem with payment for the provision of Trustee duties – who could object? A large body of opinion, if the legion of third sector forums is anything to go by!

Would Trustees still have the interests of the beneficiaries at heart if they were being paid – would they not have greater allegiance to those that pay them? This somewhat cynical view does not necessarily follow. If a CEO of a Charity were to be a paid Trustee, for example, would he or she be any less driven to act for the good of the beneficiaries? I think not. In fact it seems to me to make perfect sense that the person who is trusted to run the charity from an operational and very often from a strategic standpoint is also part of the Board that has the legal responsibility for those decisions.

This would also have the effect of reducing “them and us” situations between a Board and the management, providing for better and more effective buy in on decisions.

A recent poll reported in ‘Third Sector’ found that 67% of the sample was opposed to Lord Hodgson’s proposal. From my reading online this seems an accurate split. But I am shocked at the vehemence of the argument against paying Trustees. Lord Hodgson does not advocate the compulsory payment of all Charity Trustees, in his own estimate; it would affect about 3% of Charities. Even here it is only the power to automatically pay Trustees that is being recommended not the obligation.

In my work at Goodman Jones, I come across many talented and dedicated Trustees who provide valuable voluntary support for their chosen Charity; should they be disadvantaged in comparison to those who work in the Commercial sector, purely because of a historical legacy?

Do we really value something we get for nothing?

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