Charities use collaboration to compete

Charities contribute tens of millions of pounds to the Cambridgeshire economy each year. Some charities, such as foundations and those with permanent endowments are to some extent protected from the current downturn, though none of course remain totally unaffected. Those charities with a greater reliance on fundraising are certainly finding it tougher to provide enough services to meet demand.

“But make no mistake about it,” says Michael Denmead, one of Barr Ellison’s commercial solicitors, “charities are an increasingly important part of our community with areas of activity stretching across health, education & training, the alleviation of poverty, the promotion of arts and music, the protection of animals and, of course, the environment.”

In order to counter the current economic pressures, many charities are finding benefits in collaborating. For example, Leukaemia Care and the Lymphoma Association have agreed to work together on common projects while remaining separate organisations. Collaborative working can be achieved formally or informally and can be anything from a full-blown merger or takeover to informal sharing of resources.

It may involve no more than outsourcing some administrative back office functions such as payroll, or sharing resources – premises, transport, human resources or perhaps training – with another body (not necessarily another charity) to maximise their use. Emmaus Cambridge, for example, is constantly looking for ways to collaborate with local organisations to assist in the provision of their services to the homeless.

Some charities are finding it beneficial to engage in joint ventures to enable them to diversify into new areas by pooling resources with the aim of securing funding, or services.

Whatever the type of collaboration, it is important to carry out a feasibility study early on in the process to identify the risks as well as benefits and to develop a detailed implementation strategy. Some decisions will be easy- the charity commission should be approached as early as is feasibly possible because this will enable any regulatory issues to be ironed out in good time.

Other decisions are more tricky. When should the charity go public about its plans? Too soon and it could rock the boat unnecessarily. Too late and the plans may be leaked in an uncontrolled manner.

Everything needs to be considered from employee rights, compatibility of the objects of the collaborating charities through to the compatibility of their staff, and back office and service functions. Some charities will be good at raising funds while others are top of their class at the provision of services to the public. Whatever the strengths and weaknesses of the charities, any collaboration needs to be designed to avoid jeopardising current income streams.

In the case of a formal merger or takeover, the size and composition of the new board needs to be agreed and any pension, employment, property and lender issues resolved.

Although time consuming, the benefits from collaboration can be enormous. And time spent working through any planned collaboration in detail will be time well spent.

We offer cost effective legal support to charities in all areas including contracts, employment, property, debt collection, collaboration and mergers and acquisitions. Call Alison Barr or Michael Denmead on 01223 417200 to have an informal chat any time.

The information given in this article is of a general nature only and should not be considered as advice applicable to any particular situation for which specific request should be made to us.

"Barr Ellison Solicitors have made it a point to get to know our organisation and to work with us to help achieve our goals. They are proactive, efficient and always accessible by phone and email."
Graham Butland, CEO, East Anglia's Children's Hospices

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