2017 – 2018: Charity mergers decline by 25%
Data taken from The Registry of Merged Charities has revealed that between 2017 and 2018, charity mergers declined by 25%.
The already comparatively low number of mergers dropped from 169 in 2017 to just 127 in 2018 – showing that despite there being a duplication crisis in the not-for-profit sector, charities are still not choosing to merge.
The biggest reason for this is because in contrast to the private sector, where it’s commonplace for company owners to sell off their businesses, there are far fewer financial motivations for charities to merge. Trustees will not benefit financially and could even lose their place on the board if their charity merges with another.
Where the interests of beneficiaries are concerned however, merging is by in large good news for the sector. Economies of scale for the same or similar charities mean that the beneficiary of the charity should receive more of the funds as less will be spent on overheads and central administration.
Collaboration, however, only works if both parties are committed to it and most importantly, the right cultural fit exists.
To help charities to decide whether merging is the right thing for them, the Charity Commission has a checklist that includes 20 questions charities need to ask before considering if a merger is the right move for them.
A shared mission and goals are key if any merger is to be successful, closely followed by clarifying the objectives and motivations of both parties.
If the voluntary sector consistently put outcomes for beneficiaries first then we would almost certainly see higher numbers of mergers. There are technical barriers such as costs, pensions and finding the right partner but these are manageable if the leadership is behind it.
For further information on Charities, please contact Michaela Johns on 023 8046 1256.