# Charities and collaboration: an alternative to merger?

- Link: https://fundraising.co.uk/2011/06/08/charities-and-collaboration-alternative-merger/
- Published: 2011-06-08T10:52:38+01:00
- Author: Howard Lake

As we’ve seen from recent reports from the Charity Commission, despite feeling the
effects from the economic downturn, very few charities are considering merging. 
Why?

 

There are a number of different reasons why this might be the case. In this post
I’m going to look at the role of collaboration rather than merger.

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### Alternative to merger?

 

Collaboration is an alternative to merger allowing charities to pool resources

 

and expertise without having to make significant adjustments across the full range
of their operations. In addition, some of the more successful charity mergers have
stemmed from a period of collaboration and joint working. Should a merger become
desirable or an absolute necessity, this is easier to achieve with a charity partner
that is already well-known.

 

For some charities and social enterprises, there are particular opportunities at
present, perhaps allowing them to move into areas that were previously solely services
by the private sector. Those opportunities may only be exploited by joining forces
with another social enterprise or charity, whereas for others, it’s more a matter
of strength and depth – sharing expertise and costs.

 

There are a variety of ways that charities or social enterprises may choose to work
together. One option is an informal collaboration under an agreement to carry out
services jointly, but great care is needed to demarcate risk and function.

 

Where more formality is desired, a joint venture company may be established in order
to carry out the proposed activity. This option has the benefit of isolating the
original ‘parent’ charity or social enterprise from risk so that if the venture 
fails, only the assets of the joint venture company are at risk, rather than the
assets of the charities or social enterprises themselves. Alternatively, social 
franchising sees a successful delivery model being replicated through distinct, 
but separate, social enterprises.

 

Trustees are required to act prudently in the best interests of their charity at
all times. This is no different when considering collaborative working and therefore
the trustees of each charity must be convinced of the benefits of proceeding with
the collaborative arrangements.

 

Before entering into a collaborative arrangement, the Charity Commission recommends
that trustees:-

 

• Satisfy themselves that there will be adequate benefits to their users and beneficiaries.

 

Identify the key success factors for the collaboration, e.g. compatible activities
and organisational structures and a clear definition of what each party is responsible
and liable for.

 

• Regardless of the size and complexity of the proposed arrangement, trustees should
assess the risks involved in order to ensure that these have been sufficiently addressed.

 

In identifying and evaluating the options available to your organisation, merger
is not the only answer and collaborative working, when carefully considered and 
properly documented, can provide a useful alternative.

 

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**Catherine Rustomji is Head of Third Sector North, [Hempsons](http://www.hempsons.co.uk)**

 

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