Growing numbers of charities are seeking advice on mergers and collaborations as a result of the recession, according to consultants working in the field.
Enquiries from voluntary groups about working together have increased by 50 per cent in the past three months, according to Mike Caudrey, a partner at management consultancy firm BlueSpark Consulting. He said the figure had doubled since this time last year.
"The recession is definitely a factor in this rapidly increasing interest in mergers," he said. "Heads of charities who might not previously have considered working in partnership with other voluntary groups now face a situation in which mergers have become a viable option for getting through the difficult times."
Tim Waldron, director of management consultancy at charity consultancy Action Planning, said: "A lot of third sector chairs and chief executives have sought advice on mergers and collaborations during the past few weeks.
"There's an acute awareness of diminishing returns from investments and fundraising. Some charities are in survival mode and hope working together will help them to weather the economic storm.
"But others are being opportunistic. Merging is a chance to increase effectiveness with economies of scale."
Waldron said the Government's £16.5m 'modernisation fund' for mergers and partnerships, part of the £42.5m action plan for the third sector announced last month, had got chief executives talking about collaborations, and he expected such projects to become more widespread this year.
Amanda Tincknell, chief executive of management consultancy charity the Cranfield Trust, said an increasing number of charities were hoping to merge or collaborate in order to tender for contracts from government departments and local councils.
"Charities are looking for new sources of income in these difficult times, and contract income is one good source," she said. "This often requires charities to pool their resources."
But Waldron warned that mergers should not be rushed as charities run low on funds. "Some organisations look to mergers as a way of diverting attention from problems with their service provision," he said. "If mergers are rushed, these problems may not be addressed - they'll be passed on to someone else instead."
The Charity Commission is shortly to publish research on the effect of the recession on charities. It is expected to include detailed information on mergers and collaborations.
A MANDATE FOR MERGER
THE OFFICE OF THE THIRD SECTOR: "Refining the sector's efficiency and performance has never been more important. This will enable third sector organisations to direct the maximum possible proportion of their resources into service provision for people who need real help now. Stronger collaborative arrangements between organisations are a key means of achieving this, boosting economies of scale and enhancing efficiency."
From the third sector action plan, published by last month
- DAVID CARRINGTON, SECTOR CONSULTANT: "Funders should never force mergers on organisations - but opportunities for more effective service or mission delivery should never be secondary to a wish to 'preserve' the continued existence of an organisation."
From a paper for the NCVO's Funding Commission
- THE CHARITY COMMISSION: "All charities should consider seriously and imaginatively whether there are ways in which they could do more and better for their beneficiaries by working together. Examples of this range from shared helplines, shared service delivery, combined grant administration and joint marketing or purchasing initiatives, to partial or full mergers. As good practice, trustees should carry out regular reviews to explore their strategic position and possible partnership arrangements."
From a policy statement on mergers, collaborative working and due diligence, October 2007
Merger case studies
Help the Aged and Age Concern
The charities are adopting a low-key approach. Tom Wright, chief executive of the merged charity, has so far refused interviews, and few details about the new organisation have been released. Even a name may not be chosen until 2010.
A 15-strong board, chaired by Dianne Jeffrey, and a seven-strong senior management team are in place. A spokesman for the merged charity said other staff would be appointed after 1 April, but there would also be redundancies "to address duplication of services and activities". Staff will be based in the two charities' existing London headquarters pending "a longer-term property strategy".
The 350 local Age Concerns have until autumn to decide whether to join the new organisation. The spokesman said "well over half" had said they wanted to.
Heyday, Age Concern England's loss-making membership scheme, criticised by the Charity Commission last month, will not be replaced by a similar scheme.
TACT AND PARENTS FOR CHILDREN
Adoption and fostering charity The Adolescent and Children's Trust, known as Tact, has absorbed five charities since Kevin Williams was appointed as chief executive in 2001. The charity bailed out Parents for Children last week after it went into administration and will take over all of its adoption and foster care services.
Williams said the charity had increased its annual turnover from £4m to £16m since 2001, but did not enter into mergers lightly. "We look at mergers only when there is a cultural fit between the organisations and a clear benefit to service users," he said. "Our staff benefit when we take in smaller charities: there's a better career structure and more training and support."
The new merger will result in the closure of PfC's office in Islington, London, and the transfer of 10 of its 12 staff to Tact's offices. Two PfC staff will leave the charity.
Jacky Gordon, development manager at PfC, said: "Small charities are very vulnerable in this economic climate. It would have been very dangerous for us to try to continue with our work alone."