Let’s talk mission and merger
19 April 2018
Researching mergers has taken me into territory I barely knew existed and exploded my preconceptions.
Firstly, mergers are not always about cost saving, although we have seen juicy savings made. More frequently they arise because one charity is in financial distress, and the stronger charity likes what the struggling one offers. In the current financial climate there is no shame in admitting funding is too tight, and looking for a solution. Starting early conversations to find a safe haven will safeguard valuable services. Consolidation in the housing support and mental health sectors reflects this trend.
Of course the cost savings play into this and should not be understated. The merger which created Breast Cancer Now released £3m a year to spend on the cause. While this scale of saving is rare, the potential is clear.
Charity trustees and leaders should look in the mirror now to assess the next three years and get a real sense of their organisation’s resilience. Honesty must trump wishful thinking, as must the need to continue with the valuable support and services if charities were to close.
Arvinda Gohil, Chief Executive, Community Links
The biggest prize is often strategic—greater reach, improved service offer, stronger voice. This is what excited us most about the benefits of mergers. Stories like The Mix—now reaching two million young people with a comprehensive phone, text, web, social media and face to face offer—really inspired us.
The merger was an opportunity not only for a positive re-brand but also to launch a new, modern service that better reflected our beneficiaries’ needs. Merging was cheaper and more efficient than creating a new charity.
Chris Martin, CEO, The Mix
We quickly discovered all mergers are not the same. A myriad of different merger models awaits the brave—there’s one for almost every occasion, ranging from the full integration, new brand, total immersion model to the ‘lets save some costs sharing our back office’ version. Somewhere in-between are tools like white-labelling—where small charities can preserve identity and fundraising connections while channelling funds through a bigger charity, better set up to spend the money. This is how the brain tumour sector is starting to work.
Look at all the options. Sharing models are attractive for local organisations of similar size, say between £1-10m. You could share a really top FD, HR support, Communications and Marketing between several charities.
Arvinda Gohil, Chief Executive, Community Links
Although the stats show there are a steady 50-70 mergers a year, this hides the fact a lot of organisation are talking about merging. Not all successfully—good intentions get thwarted—but there was greater enthusiasm for merger than we expected. So we predict an upswing in activity, we’ve had four enquiries in 2018 already.
It is frustrating how discussions are thwarted by fear of change, individual ego, reluctant trustees, problems with risk (and there are risks, especially financial). Some good mergers don’t proceed. It takes two to tango—we’ve had a lot of conversations with charities saying ‘We really wanted to merge but the other side didn’t’ or ‘we started our conversations too late and didn’t get the result we wanted’.
We heard that funders could be more accommodating. Funder behaviour, such as not providing unrestricted funding to allow charities to think strategically or pay for merger costs, or cutting funding post merger, dampened enthusiasm.
We wondered if the Charity Commission could exert more pressure on charities to report whether or not they are regularly considering merger and partnership options in their strategic agendas.
But our high priority action following this research is to encourage charities—trustees included—to think about mergers early and seriously. The debate about mergers is polarised thanks in part to a perception that mergers = takeovers. We want to create a movement with friends in the sector to promote knowledge about mergers and the diversity of options, and to make the case for mergers as a tool for impact.
If charities share their stories and lessons, openly and honestly, mergers will be embraced not feared.
Read our mergers research and join the conversation on Twitter with #MissionAndMerger