Dragon says egos stand in the way of scale in the charity sector 5

Governance | Vibeka Mair | 18 Nov 2011

James Caan, entrepreneur and ex-Dragon's Den investor, says ego and emotion get in the way of achieving scale in the charity sector, and has urged more charities to merge, saying the sector is ripe for consolidation.

Caan was speaking at the Acevo annual conference yesterday, where he said the cost of delivery in the charity sector was very expensive, because people were creating “little fiefdoms” instead of creating synergies and merging.

“There is no economies of scale,” he said. “The charity sector is so fragmented, but the opportunities for scale are massive. Ego and emotion lead people to build their own organisations, when the sector is ripe for consolidation.”

Caan, who chairs the Big Issue, also said charities were rightly cause-driven, but often not business-driven. To illustrate the point, he relayed a story from when he started at the Big Issue:

“All the boardroom meetings were about the cause, homelessness. But we also have a business model which is publishing,” he said. “When I arrived I looked at it from a business perspective and suggested raising the price of the Big Issue, something which had never been discussed – it raised an extra £1m a year for the organisation.”

He suggested that boards break their talks into two parts – the cause itself and how to deliver the cause cost-effectively.

To merge or not to merge?

Later in the day, chair of NCVO Martyn Lewis also spoke about charity mergers, starting his speech with the question "to merge or not to merge?"

Lewis, who described his invite to speak at the Acevo conference as “unprecedented” for an NCVO chair, spoke on the new developing partnership relationship between umbrella bodies NCVO and Acevo:

“NCVO and Acevo are moving forward together,” he said. “We’ve even considered setting up a dating agency for the sector.

“I don’t know if we’ll merge. But our members want collaboration, and NCVO and Acevo have open minds about the developing partnership.”

Directory: Association of Chief Executives of Voluntary Organisations (ACEVO) | National Council of Voluntary Organisations (NCVO)

Place a comment

Jon Bodenham
18 Nov 2011

In business there are many drivers and incentives to merge; merchant bankers who want commissions, analysts and journalists who want something to write about, shareholders who want a better deal and directors who want to better themselves and get bought out or grow. Charities have the opposite drivers and are not motivated as much by money. Few captains of industry get this.
That said we need to create better incentives and an easier process to merge, and definitely drive for back office integration for elements that add little causal value.

[Reply]

Jay Kennedy
Head of Policy
Directory of Social Change
18 Nov 2011

This from a man who set up his own foundation - guess what it's called? Yep, the James Caan Foundation! I fully support his ability to do that and respect his generosity for having done it. But if he believed his own words about ego and consolidation in the sector, he should have given his money to another existing trust with somebody else's name on it. Surely an example of one rule for me, another rule for everybody else (how perfectly egotistical!)

[Reply]

Niki May Young
Website editor
Civil Society Media
18 Nov 2011
Response to [Jay Kennedy]

Hi Jay, might be worth reading my blog on the matter too?...http://www.civilsociety.co.uk/fundraising/blogs/content/10990/egos_and_emotions_-_well_we_are_the_charity_sector

[Reply]

Matt Knopp
Director
Eastside
18 Nov 2011

I agree with the comments and the need for more collaboration. Surely the question trustee boards need to be asking themselves is how do we best look after the long term interests of the people we are set up to support. Too often I sense that the question becomes clouded in other less important issues around notions of identity and brand. For many true collaboration is a hard step as for so long commissioners have pitted small charites against each other through tender processes which have often led to feelings of mistrust around self interest when challenged to collaborate better. Everyone has a part to play in creating a new environment where strong partnerships can flouish.

[Reply]

Carl Allen
18 Nov 2011

A reasoned mix of competition and collaboration emerging by force rather then goodwill is a process needing independent and external analysis (among other things such as transparency) for the mix to become a part of culture rather than a face saving exercise.

[Reply]

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