Let’s get together: Navigating the risks of collaboration

As charities try to do more with less, collaboration grows ever more important

In the context of constant funding challenges, it’s hardly surprising that a current primary focus for most charities is income sustainability. And while most are reacting to this challenge by exploring ever more innovative fundraising methods, an increasing number are exploring collaboration with other charities.

There’s growing recognition that partnering with those that share your mission is a sensible way of delivering greater impact; it brings potential to future-proof all parties and the vital work they carry out in an ever-changing economic and political climate.

In NPC’s recent State of the Sector research, involving around 400 charity leaders in total, the topic of collaboration was returned to often. There were encouraging signs from the 300 charities surveyed. 60% reported that they are already partnering with other charities, at least a fair amount, and that figure was even higher for larger organisations. And 52% of those asked—the top answer in the survey—said that they expect to be partnering with other charities more in three years’ time. Only 2% said they expected to collaborate less. In Ecclesiastical’s most recent survey of our own charity customers, we have seen a similar step-change increase in those considering collaboration, with 20% saying they were actively considering a merger.

But collaboration holds challenges of its own, which puts charities off

One of the notable quotes that jumped out at me from NPC’s report, however, was that:

‘The [third] sector is way more competitive, way less collaborative than the private sector.’

Speaking as someone who has experience of both sectors, that’s not a sentiment I disagree with.

It’s likely that the operational, financial and strategic risks involved in collaboration may be acting as a barrier for charities. Indeed, another key theme that emerged from the research was the need for charities to move towards a more positive appetite for risk, particularly in light of the challenges the sector faces.

So how can charities navigate the risks involved in collaboration?

Collaborations and partnerships can take lots of forms, and are part of a broad spectrum. For some it might mean sharing information, or co-developing or delivering a service. For others it might mean very close work that even leads to a merger. Where collaboration becomes more extensive or formal the risks can increase. So in these cases, it’s worth taking the following practical steps:

• Get backing. One simple but important thing to remember is to seek the support of others as early as possible in the process. Gain feedback from beneficiaries, learn from other organisations that have dealt with similar challenges, and work with specialist professional advisors such as insurers and brokers.
• Write it all down. Thinking carefully about what your collaboration aims to achieve and who will do what is really important. So getting clear agreements upfront and writing it down will help you do this and avoid fruitless partnerships. There are unlikely to be legal barriers but it is important to set out clearly which party has responsibility for staff and volunteers. Any collaboration agreement needs to protect each party’s interests and take account of risks to their assets and reputation, without incurring unreasonable administration costs or over-complicating the relationship. The process does not need to be drawn out or difficult but putting things in writing could save a lot of pain down the road.
• Make sure you’re covered. Uncertainty over responsibilities, as well as the type and extent of other existing partners, can leave all parties vulnerable. From an insurance perspective, a lack of clarity on who is insured can lead to gaps in cover. Before you go too far down the road to a formal partnership, it’s vital that you talk to your broker. They can check for any potential gaps in insurance cover or duplication, reducing the risks of having any claims refused.
• Step up your support if the collaboration escalates. If, ultimately, increased collaboration leads to a merger taking place, the people, property and liability risks move up several more notches, and this should be reflected in the support you receive.

Overall, the key to successful charity partnerships is good governance, flexibility and shared mission from all parties. Get the right structure in place and there can be greater support for beneficiaries, an increase in the skills base and reputational gains for all involved.