By Lauren Scott
According to the most recent Managing in a Downturn survey, one in five charities is considering merging with another organisation in order to survive increasingly challenging economic conditions in the third sector. The survey carried out by the Charity Finance Group, PwC and the Institute of Fundraising found that more charities are now thinking about an amalgamation than at this time last year, with 20% of charities surveyed now considering mergers as part of their planning process. With the majority of organisations surveyed reporting that they are experiencing both increased demand and reduced income, the report unsurprisingly suggests that merger opportunities are seen as a response to the bleak conditions in the sector, rather than as an opportunity for growth.
It is easy to see why charities are attracted by the prospect of spreading the demand for activities, taking advantage of economies of scale and sharing support services and expertise. Merged organisations may also find it easier to secure funding. A key objective of any merger will, or should, always be to improve or at least maintain the benefit the charities are providing to their beneficiaries. Nevertheless, the merger process can be a significant undertaking for charities, especially for smaller organisations.
As well as analysing whether the two organisations have the right synergies to be able to work together, and also not forgetting the human dimension, just some of the other key issues which each charity will need to consider are as follows:-
There are inevitably a wide range of issues which one needs to consider when thinking about a merger. Getting it right from the start is hugely important.
Our Third Sector Team has many years of experience acting on behalf of charities which are considering a merger, and we have been involved in some high profile mergers over recent years. If your charity is considering a merger, or if you would like more information about the work the Team does, please contact our expert, Lauren Scott, on 0131 247 1085 or email email@example.com.