The urge to merge: collaboration or an alternative to closure?

Christine Wykes Driver tackles the thorny issue of mergers for small charities in advance of VAL's briefing session for Trustees Week

 

In the corporate world, mergers and acquisitions are at a record high, fuelled by low interest rates.
 
The voluntary sector has seen mergers of some big national names – for example Age UK was created by a merger of Age Concern and Help the Aged.  Some local examples of recent mergers include Volunteer Centres and Councils for Voluntary Service such as Merton Volunteer Centre and Merton CVS.

 

But are mergers relevant to small local charities?

Many trustees and directors see merger with another charity as tantamount to throwing in the towel.  ‘Merger’ translates as ‘takeover’ for charities that have no option but to join with another, often financially healthier, organisation in order to continue their work.

Charity-bashing is now a media pastime. There is political pressure for charities to be more effective with fewer resources and many believe that too many charities exist, with funders frowning on perceived duplication.

In this climate, can opting for merger be a positive step?

One of the main problems identified by small charities is their difficulty in attracting skilled trustees.  Merging two or more boards into one can be a means to strengthen governance.

The prime directive for charity trustees is to put their beneficiaries’ interests at the heart of every decision. Sometimes that means re-designing services and organisational structures to get the best outcomes for the best price.  Most trustees would acknowledge that if another organisation with similar aims works with the same client group, working together might be in the best interest of beneficiaries.

Often it is not the what but the how of merger that is crucial.  Mergers that build on the goodwill and trust generated by existing partnerships and collaboration are more likely to move forward.  If both sides have caught the vision of creating a new organisation that has the potential to widen its income sources, bid for contracts or improve service outcomes, then they can all get behind the task of building a sustainable future … but this is unlikely to happen if merger is not considered until an organisation is in crisis and one party has no bargaining power.

Is it time to put merger on your trustee board’s agenda?

If you are a trustee of a local charity and want to explore these issues come along to our Governance for Change event during Trustees Week on 4 November 2015. Titled Collaborate? Merge? Close? it will help you understand your role in investigating and initiating mergers and formal partnerships as well as legal responsibilities around closure.

We would love to hear from trustees of local groups about their experiences of exploring or achieving merger so come along and join the discussion.

 

Note: Merger is not a precise legal term but usually refers to two or more organisations formally combining their governance to create one organisation.

 

Christine Wykes Driver is the Development Support Officer for Finance, Governance and Social Enterprise.

Reserve your place now for  Collaborate? Merge? Close?, our exclusive, expert briefing session for trustees and directors of member organisations on Wednesday 4 November 2015.

Want to know more? We now have resources on mergers available on our Collaboration resources page.