Charity mergers still rare, though they are increasing, says index

Eastside Primetimers' Good Merger Index says 70 charity mergers to place in the year to April 2017, compared with 54 in the previous year

Charity mergers remain relatively rare, despite having reached their highest level for three years, according to this year’s Good Merger Index.

The index, which was released today by the management consultancy Eastside Primetimers, says that 70 charity mergers took place in the year to 30 April 2017, involving 142 organisations with a combined income of £974.9m.

In comparison, 54 mergers took place the previous year and 61 in 2014/15.

Despite this increase, the mergers that took place in 2016/17 involved only 0.09 per cent of charities in England and Wales, the index says.

Of those mergers that took place in 2016/17, the index says, 36 per cent were federated charities, charities working in supported housing or mental health charities.

Takeovers accounted for 56 per cent of all mergers in 2016/17, the index says, and 29 per cent were so-called "mergers of equals".

The largest merger was the transfer of Action for Blind People to the sight-loss charity the RNIB.

More than half of the organisations involved in mergers had annual incomes of less than £1m, and another 24 per cent had incomes of between £1m and £5m, the index says.

In comparison, 8 per cent of organisations involved in mergers had annual incomes of between £5m and £10m, 14 per cent of mergers involved charities with incomes of between £10m and £50m, and 3 per cent exceeded £50m in yearly income.

The report says Eastside is working with the Social Investment Business and a group of sector funders to create a "merger turnaround fund", which would provide funding and support to small and medium-sized charities that want to merge.

No details on the levels of funding that might be available have yet been announced and further details are expected to be laid out later this year.

Richard Litchfield, chief executive of Eastside Primetimers, said: "These findings give the impression of a charity sector overall still not consolidating for greater impact, despite competition for constrained resources.

"But there is reason for optimism, both from the valuable lessons delivered by the innovative new partnerships we do see and from developments in the sector such as the governance code and discussions about a merger turnaround fund."

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