Disadvantages of merging Public perception Larger charities sometimes miss out on donations because they are assumed to be well funded. Unless managed with care, bringing two charities with clear identities and goals together may result in blurred aims and aspirations. Make sure there is a commonly understood vision for the new organisation. Charities rely on the hard work and goodwill of volunteers. Changing an organisation’s culture can create discontent, and in the worst case, a reduction in volunteer numbers. All of this means that the merger process needs to be handled with caution. For example, you need to decide early on who will be on the new governing body. And decide if the goals of the charity have changed (and if they have, how you are going to communicate that). Successful change management involves keeping everyone informed about why, how and when the change is happening, and managing the concerns that people may have about that change.
Shirley’s advice is “It is very important for your broker to review your existing covers to ensure that all operations for both charities are properly insured throughout the merger, and there is no gap in cover. Having information such as turnover details, wage roll and details of previous claims ready for your broker to check will help the process. Your insurer will need to know as soon as the merger is complete and the liabilities have transferred over to ensure the new policies go live at the correct time. You will also need to consider Run-Off Trustee Insurance if merging two policies into one. This cover states that the insurer will provide cover for any claims against the merged charities in their previous incarnations going back several years. If you are looking to merge your charity or simply want to find out more you can contact Shirley Greer by calling 01206 838439 or emailing shirley.greer@scruttonbland.co.uk
According to Shirley Greer, Charity specialist at Scrutton Bland there are some clear examples of where two charities merging has worked. In 2014 Headway East Suffolk and Headway West Suffolk merged to become Headway Suffolk, and they haven’t looked back. “The rationale for this was to make us a stronger and more efficient organisation, said Suffolk chief executive Helen Fairweather. “We continue to run two neuro hubs, so clients can easily get to the centre nearest to them, and many of them have made new friends.” On a national scale, Beating Bowel Cancer and Bowel Cancer UK were legally joined in January 2018, and were referred to by HRH Prince William in his recent address to the Charity Commission. The two charities, he said “are working together towards similar ends, and are merging from a position of strength. Together I have no doubt that they will achieve more to fight bowel cancer than they could have done alone. This leads me to think this approach could go further.” There are however some insurance implications for charities who merge together which can often lead to an overall reduction in the insurance premium compared to what the two organisations were paying separately.
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