Merger has a negative reputation in the charity sector. It shouldn’t. This research, based on interviews with 50 charities, has found that mergers can be a powerful tool achieving more for causes. It sets out the different models of merger available, dispelling the myth that mergers are always takeovers and makes clear recommendations to charities, funders and regulators to enable more mergers to happen.
Let’s talk mission and merger
The charity sector is under pressure to prove its worth. Duplication, wasted resources and ‘too many charities’ are held up as reasons to question the efficacy of the sector. NPC sees collective action as a means of achieving greater impact—and mergers are an extension of this.
Mergers are too often viewed as a consequence of failure. The concept has become unfairly tainted. It’s time to change the narrative and talk about mergers as a tool for achieving more for causes. Charities frequently collaborate at a project level and understand that causes can be better served by working together, but rarely extend this further.
Responsible charity trustees and leaders should think about merger regularly. Leaders bold enough to use mergers and other sharing models, such as ‘white labelling’—when a charity provides services under another charity’s banner—or back-office sharing, tell us that these have helped them do more, better, and resulted in:
- Stronger action to address the cause through increased reach, better beneficiary ‘offer’, and stronger voice;
- Greater sustainability and stronger finances of charities serving the cause;
- Efficiency gains recycled into action.
We hope this research will make the range of possibilities that exist under the banner of ‘merger’ more widely known and open up conversation about how the sector can work together better, at all levels, for greater impact.
Our research has been supported by organisations contributing to case studies to illustrate key points.
The Brain Tumour Charity and Brain Tumour Research use a white-labelling model which enables small charities and support groups with strong personal connections to keep their identities, and raise funds while benefiting from research infrastructure, expertise, and campaigning heft of these larger organisations.
A grant-maker, Masonic Charitable Trust, told us the story of its merger of four overlapping grant-makers. This makes a powerful case for funders thinking about mergers as well as operational charities.
With nearly £1bn income, and over £1.1bn of reserves the armed forces charity sector has plenty of resources at its disposal. But its complexity has in the past been attacked. We focused on the veterans grant-making corner of this large market, finding it fragmented, but we heard stories of consolidation already under way, and hope that more will come where appropriate.
The stories of Catch 22 and Coram illustrate the different ways charities have used group merger models. This is where the brand and identity of organisations is retained when they merge into a bigger charity.
Sense and Contact have shared their expectations for their new back office sharing model. We also talked to the Wildlife Trusts about what elements of their support functions they have been able to share, in order to increase efficiency and effectiveness.
Breast Cancer Now is a great example of a fully integrated merger, where a new identity and brand was created to push the cause. The charity also generated cost savings of £3m.
The merger of St Mungo’s and Broadway illustrates how an equal partnership decided, in the end, to retain one of the existing names but lose the second. This merger resulted in impressive growth, as the combined organisation could bid for bigger contracts.