The initial shock of the Covid crisis and the subsequent lockdown have subsided. Your organisation will have fallen into one of two camps: increased pressures on delivery if you are in the ‘keywork’ arena, or serious money worries if you are not. Or if you are REALLY unlucky - as many in the charitable sector who provide support to vulnerable people have been - you may count yourself in both camps at the same time.
While our society begins to unlock and government support will soon start to tail off, your scenarios are becoming clearer, though not necessarily rosier. If you haven’t already done so, now is the time to think the unthinkable and consider all options for your organisation, including merging with a sector partner.
In my fifteen years of working with social enterprises and charities I have been asked countless times why there have to be so many of them. By now the UK must have at least 170,000 registered charities and more than 100,000 social enterprises (some overlap possible). Surely many should merge? Wouldn’t that be much more efficient? In my various roles as interim CEO and trustee in the not-for-(private)-profit sector, it was a topic that often returned but equally quickly abandoned. Why was it such a no-go area?
I remember the time when my daughter was just a toddler. As I considered the part of Cambridge where I live, I realised there were plenty of good, wholesome families who matched my values and who had some food to spare and probably a space for an extra bed. Nevertheless it didn’t cross my mind to propose that they would perhaps take in my child as well… Surely that would be much more efficient?
When opportunities for mergers arise in the private sector, an important incentive will be the financial upside for shareholders and leadership. Of course, when your sole drivers are passion and values, it is pretty hard to give up your baby for the sake of some rational argument. However, we now have a crisis on our hands and this calls for some radical thinking.
So although the numbers of not-for-profits may not be a valid reason (imho) for considering whether it is time for your charity or social enterprise to start talks with your equivalent down the road, neither is it a subject that should be avoided at any cost. As a mission-driven organisation, you should always be on the outlook for a better or more sustainable way to fulfil your purpose, and to consider joining forces with a similar outfit should be part of that.
I believe there are three considerations why you should put your parental feelings to one side and seriously look into this without delay.
For starters, timing is of the essence. In these covid-dominated days this is more relevant than ever, and for some of you the ideal time to start this process has perhaps already passed. But all is not lost.
Timing is important for two reasons:
You want to explore options from a position of strength, while your organisation is as healthy as it can be even if there are dark clouds on the horizon. That means having a stable team, a good board, decent financials. And some successes under your belt and assets to build on if not to negotiate with.
On top of that, it is important to consider that a process like this takes a long time to complete. This does of course depend on your starting point, the speed with which solutions need to be found, the decisiveness of you and your board, etc. But some timelines are out of your control (e.g. the lease on your office) or unwise to rush (for instance the building of a collective vision with the other party).
Both arguments lead to the conclusion that you cannot start early enough. Have your shortlist of favourite potential partners in your head, have exploratory conversations with key stakeholders as a matter of course, do your research. And do all this while your platform isn’t quite burning yet.
Secondly, if time required is not to be underestimated, then also consider the resources you will need for this process once conversations with a potential partner start in earnest. Once, as a trustee of a mid-sized charity, I was involved in the merger with a similar sized organisation. It took us more than a year and a substantial (think six figures) sum of money to get to the finishing line.
Those financial implications contained a whole host of items: lease break penalties, search for and refit of the new office (although after our improved videoconferencing skills who knows whether you will want one), a new name and logo design, legal advice, redundancies, IT refit, the list goes on.
But equally importantly, the resource drain on the organisation was substantial too: management and board members’ time to discuss all ins and outs and gauge views of key stakeholders and funders, craft financial projections, align our vision and create a joint direction for the new organisation. All essential activities that take time and energy away from the day job, if you are not careful.
And finally, and this comes back to my point about the 2-year old daughter, think about the emotional rollercoaster you are embarking on and how you might guide your organisation through this time. When you have been operating as (quasi) competitors for years, don’t underestimate the time it takes to build mutual trust and understanding with your new bed fellow. It will be crucial to keep your eye on the (purpose) prize and not get side-lined by emotions, frustrations, and general them-and-us-ness. You should also consider how you will be dealing with the feelings of bereavement, involved with bringing your adventure as an independent organisation to an end.
Does that come down to just you as ‘the leader’? Perhaps that is where it starts, yes. But don’t think this is a leader’s job only. Why don’t you bring frontline staff into the process early on, and let them co-shape what a new organisation could look like? It would set the tone for the future and address a lot of the helplessness many parts of the organisation usually feel in processes like these.
Don’t forget that symbols play an important part in times of change, so if you can set the tone early on by making some clear decisions, show your own vulnerabilities and walk the talk, all that will stand you in good stead when tough asks are made of the rest of the organisation in the months to come.
Of course, merger is not the only possible answer. You may go one step more radical and consider being taken over. Or you can use this as an opportunity to take someone over yourself! Or perhaps this is the push to radically transform yourself and consider only delivering that fraction of your current services that deliver by far the biggest value to your customers, but doing it really, really well…
I wish you and your team much strength, courage and wisdom in these challenging times. While you are working out what is best for your baby.