Everyone reading this blog will have heard about the importance of charities being willing to consider mergers.
This is sometimes accompanied by the lazy, saloon bar generalisation that there are far too many charities, a proposition that the Directory of Social Change, of which I am a proud Trustee, has challenged for thirty years. More often, it is assumed that mergers will increase efficiency by eliminating duplication of overheads and improve impact by ending the incoherence of independent approaches. When money is a limited resource, we are told, it should be concentrated on efficiently delivered and effective activities. Moreover, partnership with, or even lobbying of Government or business becomes more effective if there is one organisation for them to talk to, not a bewildering multiplicity.
Well, thereby hangs a very long tale full of assertions that need qualification. But even if the attention to the desirability of mergers can indeed sometimes be fully justified, it’s like looking through a window at the view with the curtains half drawn. Because de-mergers are also part of the dynamic development of the charity sector as it strives to unleash energies to meet new social challenges.
De-merging is key to how our sector serves people and creates change
I am privileged to be the Chair of Safe Passage International. It is a relatively new charity dedicated to the rights of refugees to find safe routes to sanctuary and family reunion. Until a few years ago it was a project developed by a larger charity, Citizens UK. Safe Passage began to diverge from the parent body in terms of specialist focus, expertise and risk profile, and the Trustees of Citizens UK took the brave decision to spin the project off to become an independent charity in its own right, in which status it is now flourishing.
This is just one of thousands of examples over the years.
Look at the history of the NCVO. Age Concern, the Citizens Advice Bureaux, the Youth Hostels Association, the charity Waste Watch, the rural umbrella body ACRE, the international development umbrella body BOND, are examples of scores of charities that used to be part of the NCVO before purposeful de-merger. These de-merged organisations have since been able to concentrate on their particular causes, generating enthusiasm, energy, expertise and support in a way that a project competing for attention within a big Behemoth would find much harder.
Nor is it by any means just generic umbrella bodies that incubate new charities through de-merger: some big national charities have spun off their international operation to make its way independently with different focus and expertise. In the case of Gene People (formerly Genetic Disorders UK) offering information and support to individuals with genetic disorders, and to charities supporting them, they quite recently spun off two different charities: Jeans4Genes, which could then focus on fundraising and awareness-raising under licence from a different charity, and Primary Immunodeficiency UK (PID UK) which could then spread its wings and take on all kinds of non-genetic conditions that would otherwise have been outside the parent charity’s charitable objects. The result? More autonomy, clarity and focus enjoyed by all three charities.
At the local level, the same thing goes on all the time. I am an ardent supporter of the Katherine Low Settlement in Battersea, south London. That charity has a very long and continuing history of incubating new charitable initiatives that often become independent once the mission is road-tested. There are numerous charities that do the same all over the country, whether they be settlements, social action centres, Councils for Voluntary Service, faith organisations, local development trusts or community centres.
De-merging can be tricky, but also creates new possibilities
That is not to say that every spin-off is a success, any more than every attempted merger is a success. Tricky issues may include: who gets what proportion of donations, legacies, reserves, other assets? What intellectual property and branding needs to change? How is the new body to try to develop its own policies and competencies when it has previously relied on the shared services of its parent? What sort of Memorandum of Understanding may be needed between parent and new or soon-to-be-new charity? How to handle dual, possibly conflicting accountabilities during the transition process? Yet, so far as I know, there is a dearth of resource materials or advice about de-mergers, other than the expertise within certain professional law firms. Wheels are being re-invented up and down the country. Why should this be so?
Unless one espouses an End of History theory whereby the need to seed dynamic new charities to meet changing challenges and social assumptions has suddenly ceased, de-mergers will remain an important part of how the sector evolves and renews itself.
After all, it isn’t certain that, overall, there is a fixed amount of money available for charitable activity, and when it comes to the other distinctive currencies on which charities depend: enthusiasm, passion, commitment to a cause, love, volunteer effort – there are no fixed limits and we need to find the best way of generating and sustaining them. That can often be by de-merger.
The possible advantages of mergers can be real. But please draw back the curtains fully : the possible advantages of de-merger can also be rich and relevant – not least in focusing on a clearly defined cause and finding new pathways for charitable endeavour. For within the bellies of many large or medium-sized charities, there may lurk the most dynamic new charities of the future.
I suggest a New Year’s resolution for 2022. Every time you hear someone banging on about the importance of mergers, or see an organisation raising awareness about mergers and offering advice and help, let us say: “Yes, but what about de-mergers too?”
One thought on “The Focus on Charity Mergers Misses Half the Picture”
Isn’t there extensive research concluding that regularly mergers in the commercial world are value destructive rather than value adding. Hard to think why that would not often also be the case in the charity sector.