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An Introduction to Charity Mergers, Collaboration and Joint Working

An Introduction to Charity Mergers, Collaboration and Joint Working. Joint working and collaboration. “If you want to go fast, go alone. If you want to go far, go together” (African proverb) Working together, but entities remain separate organisations

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An Introduction to Charity Mergers, Collaboration and Joint Working

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  1. An Introduction to Charity Mergers, Collaboration and Joint Working

  2. Joint working and collaboration “If you want to go fast, go alone. If you want to go far, go together” (African proverb) • Working together, but entities remain separate organisations • Informal sharing of facilities, information, administration, resources, fund-raising activities (etc) • Collaboration on a project or for particular aims • More formal arrangements include: • sharing premises • contractual arrangements • outsourcing functions (e.g. administration) • strategic alliances

  3. Joint working and collaboration cont’d • Other possible joint working options: • partnership (including pre-merger partnerships) • forming an umbrella body • coalitions, federations and grouped entities • using management agreements

  4. Joint Working : practical considerations • Ensure objects are compatible • Ensure constitution does not rule out collaboration: • usually there is an implied power • if not, may need an amendment to the constitution or a Charity Commission Scheme • Consider the best interests of the charity • Ability to carry out the project (both parties)? • Ability to exit the collaboration?

  5. Joint working: examples • Charityshare: IT infrastructure provider owned jointly by the NSPCC, The Children’s Society, and the Alzheimer’s Society and incorporating Childline. • According to Charityshare, unit costs have fallen by over 25% since operations started and annual savings to the participating charities are now running at over £1 million a year. • Broadway Homelessness: collaboration with 11 other charities to provide support in the development of HR skills and procedures, including manager training, quarterly HR surgeries and key policy and procedure documents. • Funded partly by the London Housing Foundation and partly by contributions from the charities requesting the services. £157,500 ultimately raised by Broadway.

  6. What is a merger? • Combination of organisations to create one entity • Available guidance: • Charity Commission Guidance Note CC34 • NCVO mergers and collaborative working: http://www.ncvo-vol.org.uk/collaborativeworking/index.asp?id=2625

  7. Merger structures (1) • One charity transfers all of its assets to the other and is then wound up Charity A Charity B Transfer of assets

  8. Merger structures (2) • One charity is transferred to the other but continues to exist as a subsidiary • More common where Charity A is already incorporated Charity B 100% Charity A

  9. Merger structures (3) • Both existing charities transfer to a new charity and cease to exist Charity A Charity C Charity B

  10. Factors affecting structure • Perception of Staff/Volunteers (resistance to a 'take over') • Maintaining sources of funding • Difficulties in transferring existing funding agreements and risk of claw back • Financial difficulties • Retaining member involvement • Avoiding transfer of staff • Pension deficits • Permanent endowments

  11. Mergers : the benefits? • Operational effectiveness • Cost savings • Sharing resources • Reaching beneficiaries • Common funder pressure or funding cuts • Help for charities suffering from poor governance or financial pressures • Amalgamation of many smaller entities • Opportunity to modernise procedures • Combining merger with incorporation

  12. Mergers: things to think about • Membership approval – is any change to the constitution required? • Consents: • landlord • funders • banks and chargeholders • any regulatory or supervisory body, e.g. Financial Services Authority, General Synod of the Church of England • Charity Commission consent: • any new constitution • differences between charities’ purposes

  13. Mergers: things to think about cont’d • Transfer of: • licences and permits • grant funding agreements • commercial contracts • intellectual property rights • Dealing with restricted funds (distinguish from unrestricted, designated funds) • TUPE consultation with employees and practical negotiations • Unclear legal arrangements, e.g. missing or very old documents giving unclear legal rights, missing nominee property owners

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