Editorial: Merlin goes the way of the world

The charity's takeover by Save the Children shows the way the wind is blowing in the sector, writes Stephen Cook

Stephen Cook
Stephen Cook

People have been warning for some time that the trend away from grants to ever-larger contracts is putting pressure on medium-sized service-delivering charities, especially if their income is not sufficiently diverse. They don't always have the financial resilience and flexibility to compete effectively.

A case in point is Merlin, the international health charity that became part of Save the Children two weeks ago. As our analysis this week shows, it was beginning to struggle and made the commendable decision to stop soldiering on alone and to look for a new way to preserve and expand its work.

It may well have wanted partnership, but - the world being what it is - takeover is what it got, softened by an 18-month integration period. In a couple of years its name will probably have disappeared and people will be watching to see how Save implements its pledge to integrate and develop Merlin's staff and health programmes.

Merlin was not the first medium-sized charity to go this way, and it is unlikely to be the last. One concern is that this trend will lead to a less diverse sector, dominated by the largest players, with less space for the smaller specialists who really know their stuff and command great credibility. The takeover of Merlin leaves Save with a potential annual income approaching £350m, not far behind Oxfam, and a wider range of activities.

Other lessons from this episode might include the importance of branding and of voluntary income, which was perhaps Merlin's Achilles' heel. It has worked on fundraising from the public for only eight of its 20 years, and has had to compete with Medecins Sans Frontieres, which has a romantic, well-recognised name and a higher public profile.

Most conversations about Merlin, by contrast, have to go through an explanation of the name and what it does before you get on to its outstanding work. Last year its voluntary income, a vital part of the unrestricted funds that build financial resilience, slipped again to less than 5 per cent of its total intake - and it knew it wasn't enough.

- Read our analysis

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