The Group exists to provide trustees and senior executives with a forum to consider some of the key issues and challenges they face. This benefits not only participants from top 250 charities but also the wider charity sector is empowered through sharing of good practice.
Set out below are brief summaries and key learning points from the supper discussions that have been held during 2007/8.
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Background/key themes
There is considerable encouragement from the Charity Commission for charities to merge/collaborate. The increasingly-held view is that there are too many small organisations that are not maximising their effectiveness. In the past, mergers were legally simple – this may possibly be different now, but this is probably not due to the requirements of the Charity Commission.
Some of the key drivers for merger noted were:
- Making a greater impact: often by improving services or delivering more services
- Addressing changing beneficiary needs/looking to wider beneficiaries
- Achieving economies of scale
- Avoiding duplication or overlapping services
- Combining strength and improving skills in areas such as advocacy and negotiation of funding
- Addressing weaknesses in financial systems, organisational issues – more easily overcome
- Increasing fundraising (but take care there may be an overlap in donors, the reality may well prove to be ‘1+1 = 1’!).
Major challenges arising from mergers included:
- Blending two different cultures: achieving cultural change can be very difficult
- Areas such as remuneration, pensions, annual incremental increases and redundancies can cause pain
- In strong cause-driven charities is change of culture harder? Makes no difference; people are people!
Learning points
Involve staff as early as possible at all levels:
- This can be difficult, particularly as you don’t want to raise unnecessary fears!
- Need to manage the message carefully to avoid misunderstandings.
Communication internally:
- Getting all stakeholders on board takes time; thoughts on time scales: 1 year at trustee level; 8 weeks with staff – limited time saves uncertainty
- Need to balance showing decisive leadership with the need to consult to get buy in.
The process will be hard work – e.g. balancing confidentiality with research/information gathering – so don’t underestimate this!
Recognise that merger partners may be at different points on their own individual strategic journey.
Be aware that regulators other than the Charity Commission may cause difficulties, particularly The Pensions Regulator.
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Background/key themes
- Key to survival! Charities’ financial sustainability can often be under threat.
- Fair competition – should be equal terms to private sector.
- Fundraising viewed as venture capital – not to subsidise statutory services.
- There is a need to escape from inflationary uplift regime imposed by funders.
- Lack of mutual understanding with public service commissioners.
- Project funding is starving funding for investment in infrastructure.
Learning points
- Understand your costs – use a consistent and transparent costing model to provide robust evidence for your case.
- Obtain effective PR coverage, both locally and nationally to add weight to arguments.
- Use targeted lobbying – so that beneficiaries and charities unite in joint messaging.
- Be prepared to negotiate – and to then walk away, if unsuccessful. Negotiate professionally – and, where necessary, escalate politely but with vigour.
- Need to perform as business managers not operations managers.
- Strong management information systems are very important.
- Be ready to reassess service requirements if it appears costs are unsustainable.
- Seek business efficiencies; partnering, collaboration, joint procurement, improved business processes or merger.
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Background/key themes
The voluntary sector is increasingly defined more widely than just charities – the ‘Beyond Profit Sector’ is now emerging.
A new market place for fundraising exists:
- ‘New’ money rather than old aristocracy
- Some successful entrepreneurs don’t want their children to inherit their entire wealth increasing phenomenon of ‘spend out’
- Large charities can be seen as unattractive, bureaucratic, and unapproachable.
Learning points
Philanthropists want a ‘New Deal’:
- Personal passion for the cause is often the central motivating factor underlying that support
- Increasingly seeking evidence of value for money from that support – particularly, outcome evaluation: a further development on relationship fundraising
- Business processes now being applied increasingly to altruism.
New fundraising methodologies:
- The emergence of venture philanthropy/venture capitalists – seeking charitable return on capital
- Social enterprise is not new for the charity sector but now being reinvented.
We hope you will find these observations on key sector issues helpful. If you are a top 250 charity and would like to participate in future events do let us know.
Our grateful thanks go to the individuals who have kindly shared their experience and expertise:
Andrew Hind (Charity Commission),
John Low (Charities Aid Foundation),
Norma Brier (Norwood Ravenswood),
Michael Shaw (John Grooms),
Cedric Frederick (Adepta) and
David Gold (Prospectus).