Better Together: Why Charities Should Merge

The charity sector is a crowded market. As the pool of donations and grants shrinks, calls for mergers are growing, particularly for charities serving a similar cause, writes Fiona Smith.

Calls are being made across the community for charities to concentrate on fulfilling their stated objectives, and to grow the outcome rather than the organisation. In doing so, they may find that the best way to fund their cause could be to merge with a like-minded operator to save on an array of administration costs, and cut the competition for donor dollars and government grants. Walsh says the administration cost savings alone are worth it – from human resources functions to accounting, payroll, IT and marketing.

Charities in the UK are asked if they are duplicating another charity’s work as part of the registration process by the UK Charity Commission. Introduced in the late 1990s, this change quickly whittled down the proportion of successful applicants from 90 per cent to 65 per cent, the commission told The Guardian in 2000.

In a 2015 survey, the Australian Institute of Company Directors (AICD) found that about one-third of Australian not-for-profits had discussed a possible merger at director level. Then-AICD chief executive John Brogden said at the time that directors of mostly larger charities had discussed the option of a merger because they operated on a higher cost base. Many were large enough to employ a CEO, a CFO and a full board, who often bring commercial experience with them and know that finding a more efficient way to operate is simply good for business.

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