Charity mergers scuppered by self-interest of staff and trustees

08 Jan 2018 News

Very few charity mergers take place because staff and trustees in danger of losing their positions choose to block them, senior individuals in the sector have told Governance & Leadership magazine.

This month’s G&L carries a series of articles about charity mergers, which include several charity leaders saying that beneficiary needs are being overridden by the self-interest of staff and trustees who fear a merger could jeopardise their positions.

It is usual, when two charities of equal size merge, that one chief executive and half the trustees lose their positions. For this reason, G&L found, most charity mergers take place when one chief executive is ready for a new job, or for retirement, or by the “financial distress” of one or more parties.

Several of those interviewed said that for boards and senior directors to back a merger would be like “turkeys voting for Christmas”.

As a result only 70 mergers involving 142 charities took place in the year to March 2017, out of 167,000 registered charities, according to Eastside Primetimers, a consultancy specialising in mergers.

Two mergers which never happened

David Fielding, managing partner of recruitment firm Attenti, told G&L he had been involved in two potential mergers which had not gone ahead because of the “individual personal desires” of those involved.

“It’s absolutely depressing,” he said.

In one case, he said, he was hired to look at the skills of two chief executives involved in a potential merger. But when one began to fear he was not the preferred candidate, he began to smear his counterpart and persuaded his board to abandon the merger.

“The redundancy terms were not very good and he was not convinced that he would easily land another job,” Fielding said.

In another case, a group of paid trustees lobbied heavily against a merger because they feared to lose their incomes.

Confidential dating service needed

Julian Stanley, chief executive of the Education Support Partnership, also says many mergers are also blocked by “self-interest, self-preservation and sometimes over-identification with the original founding cause”.

But he also said that another major barrier was the lack of any mechanism for charities to discuss the idea in confidence. He said a “confidential dating service” for charities is needed to allow charities to express an interest without weakening their own position.

To read more about the subject of merger, read Governance & Leadership magazine, the only title specifically catering for charity trustees. For more information, or to subscribe, click here.

 

 

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