Legal structures for collaborations and mergers

1. Legal structures for collaborations and mergers David Saunders David Kelly NCVS

2. Association Consortia Collaboration Alliance Merger

3. Why collaborate? Funders Less money available Combat bigger threats Convenience for commissioners

4. Combines the benefits of large and small scale • Rationalised area-wide structure, dovetailing independent service delivery responsive to local or specific client group needs

5. How do you do it? • Look before you leap • Find potential partners • Communicate throughout • Does it fit with trustees/vision/values/priorities? • Take advice • Agreement

6. Models Separate organisations keep their independence but work jointly on some activities or functions Organisations with resources/expertise offer assistance to others New organisation is formed to do joint work on some activities (track record) Group structure with lead organisation Merger to form a new organisation, working as one on all activities

7. Type of activities • Can be used to carry out charitable activities, service delivery, campaigning or policy work • Share premises or functions • Improve strategic efficiency

8. What is a bidding consortium? A group of organisations who come together to win contracts Speculative Longer term collaboration, set up in advance with a wide membership and wide areas of activity Responsive Shorter term collaboration, set up in response to a particular opportunity with only relevant partners

9. Lead Provider Delivery of contract and services

10. Prime Contractor / Managing Agent Delivery of contract and services

11. Special Purpose Vehicle New legal entity Either delivers contract itself through transferred staff/resources or subcontracts to member organisations Organisation 1 Organisation 2 Organisation 3

12. Standing Consortium member New Entity Operates as hub or long term standing consortium member member member member member s.c. s.c.

13. Merger Merger is where two or more organisations formally combine to form one organisation. The term merger has no precise legal definition and is used to cover a number of different processes. Some mergers may also be referred to as takeovers

14. External drivers Pressure from funders to reduce duplication Government encouragement Competition with similar organisations Stakeholder opinion Public perception of an overcrowded voluntary sector

15. Internal drivers Desire to provide more or better services Need to increase efficiency through better use of resources Preventing duplication of services Financial difficulties Raising public profile or boosting income Loss of key staff or trustees ‘Survival’ &‘ rescue’

16. Merger leading to a new organisation Organisation A Organisation B Organisation C New organisation

17. Merger using an existing organisation’s structure Organisation B Organisation A Organisation A

18. Things to consider • Do the outcomes justify the time and resources invested? • Loss of autonomy • Cultural mismatch • Mission drift • Damage if unsuccessful, which could be fatal

19. What if it goes wrong?

20. Any questions ?