holding hands

When two become one: Mergers—an insider’s view

By Oliver Carrington 16 September 2016

It’s a fact: the current state of the sector is making it difficult for charities to operate effectively, and some are closing. Often when this happens—as with the recent case of the 4Children—other charities step in to pick up services that will no longer be delivered by sinking charities. Which begs the question: why wait until the eleventh hour to join forces?

Mergers are an opportunity, not a last resort

It’s common that charities only consider a merger when they’re in financial trouble, but for a healthy merger this is far too late.

Charities that are about to go under are not attractive partners. And mergers that do materialise at this point can never be a coming together of equals, often meaning a missed opportunity for success. This lack of consolidation is bad news for the sector and for the people who need the charities that support them to be at their strongest.

The sector needs to see mergers as an opportunity—not a last resort or a sign of defeat. The possibility of merging should form part of a charity’s regular strategic review, instead of being treated as taboo. Because mergers offer valuable benefits, and are in many cases a no-brainer.

A problem shared

In my previous work as a grants manager I found it excruciating—and not uncommon—to see services being duplicated by very similar applicants competing for the same funds.

Consolidation exploits the economies of scale, making savings in staff, functions and space. This outweighs the upfront costs which, though daunting, are only short term.

There are also many ways to approach a merger. Rehabilitation for Addicted Prisoners Trust and Blue Sky joined up their services but decided to remain separate legal entities. What is clear is that too few mergers are taking place and maintaining the status quo can be very wasteful.

Joining forces can add real value

Not all mergers are motivated purely by financial reasons. One recommendation from NPC’s 2009 report on mergers highlighted the benefits that could arise if Breast Cancer Campaign and Breakthrough Breast Cancer were to merge.

This actually became a reality last year. As Breast Cancer Now—the UK’s largest breast cancer charity—they aim to use their combined strength to make greater progress in research, and to give breast cancer patients a more powerful voice than they could ever have done separately.

An insider’s view

Up until recently I worked at one of the four charities that came together to form the Masonic Charitable Foundation, a merger that took place in April. These charities were not facing any funding problems. But they recognised that they all broadly shared the same mission and beneficiary pool, had similar fundraising processes and were already working closely together. It just made sense.

My direct experience of a merger showed me it can be a complex and unnerving process with many challenges, costs and fears that are not always apparent at first. But over all it was motivating and energising. It gave staff the chance to access new resources, learn from different perspectives, and rethink solutions to make services more efficient and effective for their beneficiaries. I feel up-skilled by the experience.

Mergers offer charities a real chance of survival when things get tough. But much more than that, mergers—when initiated from a position of strength—can also add considerable value to the work that charities do.