Whether they come together out of a financial imperative or not, a well-handled merger can give charities a new lease of life. Hannah Gannagé-Stewart reports
The announcement that No Smoking Day is joining with The British Heart Foundation (BHF) is the most recent addition to a growing list of high-profile third sector mergers. It seems that as funding cuts continue to reap their savage impact on small charities, the option to merge is increasingly appealing.
No Smoking Day is reliant on government funding for half its income – £250,000, which it has now learnt will be cut in full as of 2012. It was with that in mind, and safe in the knowledge that No Smoking Day is a widely recognised and appreciated cause with 29 years of experience in its field, that it set about pitching its merger plan to like-minded charities.
It was in BHF that it found the right match of values and an opportunity for its cause to compliment the wider work that BHF already does to advocate the health benefits of giving up smoking.
Vishnee Sauntoo, the marketing director at No Smoking Day, is enthusiastic about the merger. The charity is one of the most cost effective anti-smoking campaigns in the country, she explains. It’s a fact that the charity is proud of but sadly it’s not enough to shelter it from the cuts. BHF has done a lot of work on tobacco control policy over the years, but they’ve never run a campaign to rival No Smoking Day and Sauntoo is keen to show them how it’s done. “That’s probably what we’re most excited about. Getting the opportunity to share what we’ve learnt over the last 29 years,” she says.
Millennial mergers
Back at the turn of the century, some big names brought merger well and truly onto the agenda for discussion in the third sector. Imperial Cancer Research Fund and Cancer Research Campaign came together to form Cancer Research UK in 2002. There were fears among some that the overall funding of cancer research in the UK would decline as a result of the merger, but that hasn’t been the case.
The Terrence Higgins Trust (THT) began merging with other charities working in the fields of HIV and AIDS over ten years ago. The charity has done approximately 30 mergers, two of which were with charities with significant existing donor bases. The charity still holds the annual Lighthouse Gala Auction, from its first high-profile merger with Lighthouse in 2000 and last year THT merged with Crusaid, a well-known fundraising charity for HIV. It seems they are becoming a bit of a dab hand. Genevieve Edwards, THT’s director of communications, seems unfazed after so many mergers and is confident that, handled the right way, mergers are a positive move for charities wanting to sustain their impact in the long term.
It is a noble to suggest that charities can always find positives in the face of adversity, but does there come a point when merging is nothing more than a means to an end? When it comes to the crunch are charities choosing merger over closure with little consideration of the knock on effects on either fund-raised income or brand identity?
Cath Lee, chief executive of the Small Charities Coalition (SCC), an organisation that supports charities with an annual income of less than £1m, suggests not only that merger is just one of many options, but that there are many types of merger. “Certainly, we’ve noticed a trend for charities wanting to collaborate more, and wanting to collaborate on all sorts of levels. Whether that leads to full merger or not really depends,” she explains.
She doesn’t dispute that this trend towards joint working of various types is often driven by financial need, but she also says that historically small charities have been open to collaboration anyway. It is clear that as money becomes more scarce there is a far greater pressure on charities to identify the points of similarity that they can join forces on. Trusts and foundations have been promoting joint working for some time now and Lee says that joint funding applications are also on the increase.
“It sounds quite easy but when you’re talking about a joint fundraising bid, you come across some of the same issues that you would if you were merging,” Lee explains. So what are the considerations are critical to a successful merger or collaboration? Lee goes on to ask: “Are your values in tune? Do you share objects? Then there’s culture and sometimes egos. Are the people involved able to work together? You need to be honest and upfront before you get too far down the line.”
Lee should know, the SCC underwent it’s own merger with the Charity Trustees Network (CTN) in March. Both organisations were very small and trying to reach a target audience of thousands of charities. With around 80 per cent of CTN’s trustees operating in small charities, it was apparent that there was a substantial crossover and collaboration seemed the obvious course of action.
The boards of trustees on both sides were open and positive in their communications about the merger, which, according to Lee, made it a fairly smooth process. It started in November 2010 and was signed and sealed in February this year. For larger charities the process would probably be longer, but the fact remains that if the motivation for merging is right and the plan for doing so is well executed, it shouldn’t be as painful as many might assume.
Maintaining focus
The issue for fundraisers is how do you ensure that the process of merging doesn’t divert attention away from the cause, and ultimately the beneficiaries. Whether it takes three months or 18 months is probably proportionate to the capacity of the charities involved. So any amount of time spent not fundraising or delivering services will ultimately have an impact on beneficiaries even if the long-term goal is to sustain support for longer.
Paul Farthing came on board as director of fundraising at Age UK, just as the charity’s new identity launched. There is, he says, an inevitable period of stasis in any merger where much of the organisation’s resource is channeled into the actual merger process. “What you don’t want to do is stop investing at all,” Farthing explains. “It might mean you have to innovate more, but to just stop creates a gap in future growth when you do come together”.
Farthing suggests that you continue to invest in donor recruitment and maintain your core programs. It is difficult he says, because you’re tied up with the day-to-day management of internal expectations and people’s reactions to change within the organisation. But it seems that if you fail to take your donors with you on the journey through merger, the whole exercise might be doomed to fail, leaving you pretty well where you would have been if you’d never attempted it.
There are two particularly crucial elements to taking your donors with you. Firstly, you need to come up with a message for both groups of existing supporters that sets up a new proposition for what will essentially be a new charity going forward. Supporters are generally loyal to the cause rather than the individual organisation, so keeping them on board should not present too much of a problem providing the message makes it clear that merging is for the good of the beneficiaries and will save more money that it costs.
The practical side of retaining all your existing donors is then merging the two databases. For small charities without specialist database knowledge it is advisable to seek expert help with this. Errors can be costly and although the process of merging databases is always going to take time and be difficult, the smoother you can make the process, the more likely you are to hit the ground running once the merger is complete and you are all working in the same office.
Twyla Jenner is head of individual giving and legacies at Prostate Action and lead the charity’s fundraising department through its merger between Prostate UK and Prostate Cancer Research last year. In retrospect she see’s that the charity was not fully prepared for huge the job of combining the databases would be. “We tried it on our own at first and then we realised we really needed a hand and got somebody in from the consultancy, Purple. They made the process a lot easier and were really reassuring” she remembers.
Jenner admits she was anxious that their direct debits would fall as a result of the merger or that they would have complaints. But the response from donors was positive, they had a few donations as a direct result of the communications they sent out and overall the regular giving remained stable. However, she warns against being over ambitious; “Just because you merge two charities doesn’t mean that you’re going to double your income. It would be premature to have raised expectations about your level of income in the first year of a merger because there’s so much that you need to put in place.”
As the effects of the recession plod on, it is likely that charities that have been reliant on statutory funding in the past will not only seek to collaborate as a pure means of survival but because they have a limited knowledge of how to acquire alternative funds. Collaborating with a fundraising team from another charity, as Lee suggests is happening more frequently, may be a good way to build that expertise without undergoing a full merger.
Whether or not a merger comes about as the result of statutory funding cuts, or any other external factor, the first consideration should be what benefit does merging have for the beneficiaries. Once it is established that there is a benefit, it is down to the fundraisers to deliver that throughout the merger and beyond.
This article first appeared in The Fundraiser magazine, Issue 10, October 2011
