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What place for mergers between charities?

Mergers

A recent Charity Commission survey on how charities would respond to the recession showed that just 3% of charities said they had considered merging. However, whilst mergers are never a straightforward solution they can make charities more effective, improving their ability to help vulnerable people.

A recent Charity Commission survey on how charities would respond to the recession showed that just 3% of charities said they had considered merging. However, whilst mergers are never a straightforward solution they can make charities more effective, improving their ability to help vulnerable people.

What place for mergers between charities? looks at whether mergers can contribute to a more effective charity sector in the UK. It argues that by bringing together organisations with similar missions, mergers can improve existing services, create new benefits and save money. But they are also risky—if not done well they can destroy value.

The report makes a number of points about mergers:

  • Evidence suggests that mergers between charities are not very common, particularly among larger organisations. ‘Merger’ is a dirty word in the charitable sector as it seen as implying aggressive and predatory behaviour.
  • Most mergers between charities seem to occur in response to crisis—usually financial problems or the loss of key management—rather than an explicit desire to further charitable purposes. This is because the culture, structure of control, and personal passion invested in charities by their staff tends to favour the status quo.
  • The lack of information available on charities and the sectors in which they work is an important obstacle to the occurrence of mergers, as it makes it hard to spot opportunities for collaboration. Better information and analysis would help trustees and managers to make better decisions.
  • It should be part of a trustee’s role to consider whether a merger is a way to fulfil its charitable purpose more effctively, even if this means the eventual winding down of the charity. This requires trustees and managers to think beyond the limits of their organisation: the question is not what works best for the charity, it is what works best for the community in need.

 

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