Pros and cons of charity mergers

Do political and funding pressures make merging inevitable for smaller groups?

The Charity Commission's guide on collaborative working
The Charity Commission's guide on collaborative working

Mergers can be a bit of a sticky subject. Mention the word to some charity employees and it sets pulses racing and raises fears of redundancy, moving office or working for a different organisation.

But others claim it's all part of unavoidable consolidation within the sector, and it's hard to argue that reducing the amount of duplicated work is a bad thing.

In its report about the merger of five councils for voluntary service in Cumbria to form England's first county-wide CVS, the umbrella body Navca claims the move would improve services across the county.

The report, Anatomy of a Merger, reveals that the organisations had to pool their resources in order to stay relevant. There was a general view that the Cumbria CVSs had no choice but to merge "because of the political and funding climate", it said. But is this a reality for the rest of the sector? Are political and funding priorities pushing charities into merging?

Linda Laurance, a governance consultant, says charities are merging to avoid duplication rather than because of any funding or political pressures. "There is a realisation that charities might have been wasteful with their resources," she says. "This applies particularly to smaller organisations, which could be sharing basic resources such as photocopiers or maybe even some staff."

Last year's Charities Act oiled the merger wheels by introducing practical measures to smooth the process. The Charity Commission has handled more than 1,500 inquiries relating to mergers since last July, although it has no firm data on how many of these have resulted in full-blown unions.

Mergers have also been an issue among charities involved with the Government's Supporting People programme. Emma Daniel, chief executive of Sitra, an umbrella group for organisations managing Supporting People contracts, says the programme could be seen as a barometer for the future of the charity sector in terms of public service delivery.

Supporting People was introduced in 2003 and requires charities providing housing-related support to have a contract with the relevant local authority. Some providers have merged, some have pulled out of the field and others have folded after losing crucial contracts.

But Daniel argues that, although it has "shocked any complacency out of providers", the scheme has not pushed many organisations into merging. "It is possible that rationalisation will continue, and it is possible that smaller organisations will have to look at merger as one of a range of options, but I would not say that it is a forced thing," she says.

Pat Armstrong, chief executive of the Association of Chief Officers of Scottish Voluntary Organisations, says current funding requirements in Scotland demand that charities work together more closely. "In the past, you would get funding if you were doing something new or innovative," she says. "Now there is a realisation that you have to think about the bigger picture and what is better for the sector as a whole." This will force more partnership working, if not mergers, between charities north of the border, she adds.

Debra Allcock Tyler, chief executive of the Directory of Social Change, believes that the Cumbria merger would not have happened if the organisations had had a genuine choice in the matter and that the move is "indicative of the current climate that devalues small, local and diverse voluntary and community organisations.

"The most enlightened local authorities and other statutory funders will realise that it really is in the best interests of wider society for organisations operating at grass-roots level to remain small and connected to their local areas, and for funders to find ways to enable that to happen.

"What a tragedy that a government that says localism and devolution are at the heart of its agenda pursues policies that result in precisely the opposite happening."

Kevin Curley, chief executive of Navca, insists it is down to the politicians at local and national levels to ensure small community groups can thrive in the face of a drive to push up the size of contracts to save money.

"We want government to say that scaling up the size of contracts makes sense if you are buying toilet rolls, but it doesn't make sense if you are buying local community resources," he says.

Curley believes that councillors must implement procurement policies that protect such groups. "It's no use councillors saying it's a shame we lost the small community groups when they can introduce the policies to make sure they remain viable," he says.

"A great deal would be lost in our society if pressure forced smaller organisations to disappear or become bigger ones."

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