Pandemic has had little effect on rate of charity mergers, figures suggest

The coronavirus pandemic has had little effect on the rate of charity mergers, emerging data suggests.

Figures from the consultancy Eastside Primetimers’ latest annual Good Merger Index show that 31 mergers involving 65 not-for-profit organisations took place between 1 May and 31 October 2020.

Eastside said this was broadly in line with the number of mergers it would expect to see in a typical six-month period.

The figures were in addition to the usual annual figures produced in the report, which focused on the year to the end of April 2020.

The consultancy said it had published data beyond the usual time scale of the report to try to establish what effect the pandemic had had on the rate of charity partnerships.

The figures in the main section of the report, covering 2019/20, show it identified 67 mergers involving 136 organisations during that time.

This was up slightly from the previous year, which featured 58 mergers, but within the normal range of between about 55 and 75 partnerships a year that the consultancy said it had recorded since it started the index in 2014.

The report says the organisations involved in merger activity were predominantly smaller organisations with annual incomes of less than £1m.

It says merger activity continued to be dominated by takeovers, where one organisation transfers its assets and activities to become part of another, which represented 61 per cent of the deals in 2019/20.

One-third were identified as pure mergers, in which two or more organisations join to form a new body.

In terms of financial value, by far the biggest merger completed during the year was the one between Breast Cancer Now and Breast Cancer Care, which brought together organisations with combined annual incomes of £61.3m.

The second-biggest was the merger of Asthma UK and the British Lung Foundation, which was worth £16.9m.

The report says there remain “significant structural barriers to mergers in the social sector, including a systemic lack of knowledge and awareness of merger processes, limited funds available to support mergers, and an absence of immediate motivation for boards to consider merger unless as a result of external (usually financial) pressure”.

Dave Garratt, director of partnerships at Eastside Primetimers, said: “In the months and years ahead, we will find out whether the rising demand and financial difficulties that the crisis has brought will have pushed more organisations towards consolidation, but this is not a given – charities largely defied speculation in the 2010s that austerity would lead to more mergers.”

The company identifies mergers and partnerships through methods including examining Charity Commission data and scanning media coverage.

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