Strategic Collaboration in the Third Sector
'Mergers' in the Third Sector are one example, maybe the most obvious example, of strategic collaboration. They can be friendly, positive, and an ideal platform for growth, but there is sometimes a perception that they imply failure by one organisation and a subsequent hostile takeover by another. Both can be true, but often the negative perception prevails. Our arguments in their favour are not new, but when some charities and social enterprises are struggling, and greater collaboration can be a very sensible option, they are worth making again. As with most strategies, the secret lies in implementation.
Age UK came about when two quite different charities that both worked with older people, Age Concern and Help the Aged, merged five years ago. The resultant structure is complex. The national charity campaigns, raises funds and sells commercial services such as insurance; whereas local Age UK's offer services (from assistance at home to day care centres) whilst providing information and advice. These local charities sign up as independent brand partners; they are not owned by the national charity. They have their own employees, trustees and volunteers. AgeUKcharity shops are sometimes locally owned and sometimes nationally owned. Maximising the benefits for all involved from this form of collaboration is no easy task.
Comic Relief (with Sports Relief), helped by celebrity supporters and television exposure, has become a very powerful charity, able to award around £75 million in grants every year. Grants typically go to other charities, who apply against strictly defined priorities and guidelines. But Comic Relief has also found it beneficial to partner with other charities who, in effect, act as outsource agencies to disperse funds for it. Some Community Foundations, with detailed insight into local needs, have benefited from this type of collaboration. Such partnering is a win-win strategy.
In today's turbulent and uncertain world, where only the fittest thrive, we at Anglia Ruskin believe collaboration is a strategic option the Third Sector must take seriously - it is as much a potential growth opportunity as it is about survival. The new and entrepreneurial charity, Help the Heroes, has grown rapidly in the last few years to become the third largest in its sector. Some commentators think the leading two, the British Legion and SSAFA, could now benefit from merging their resources to become leaner, more proactive and more dynamic.
Collaborations can help create critical mass and thus save costs, pool experience and improve reach and competitiveness. Some contracting organisations do not believe small social enterprises are sufficiently robust and prefer to deal with larger businesses, for example. In a larger organisation staff can specialise more and develop real expertise. And there is increased potential for greater visibility. At the same time, though, some jobs might be lost. Managers and trustees, then, have good reason to be wary of getting collaboration wrong.
The Co-op Bank, high profile because of its ethical banking stance, acquired the Britannia Building Society in 2009, but this led to hidden capital exposure problems; a subsequent plan to buy a number of high street branches from Lloyds Bank had to be abandoned in 2013. When this was coupled with corporate governance and leadership issues (with these partly linked to the size and complexity of the business) the partial breaking up of the diverse Co-op Group (with its small supermarkets, pharmacies and funeral homes as well as the bank) became a distinct possibility.
It is also clear that promised improvements do not always come about, or happen quickly enough to deliver the expected return. Implementation problems are to some extent understandable. Much that ideally needs to be known cannot be known until after a merger has gone through. Activities and financial details should be clear; but the real power battles and cultural differences only emerge later - and they are key deciding factors in the ultimate outcome. Charity leaders and trustees may simply not agree on the best way forward; our research in the East of England confirms that some trustees feel they are abandoning the original charity if they agree to its merger with another, even though the benefits are potentially significant. Emotional ties to the past can be a barrier, as can the need for due diligence and the potential costs of essential professional expertise.
In the end, the decision will depend on people and their judgement. Being clear on the situational realities, establishing realistic priorities and keeping an open mind on both options and opportunities - in other words, wearing a strategic hat and blending logic with passion - are major challenges for many in the Third Sector. It is tricky but important - and it matters.
Disclaimer: SEEE may not share all the views detailed in this blog.
John Thompsonis Professor of Social Entrepreneurship atAngliaRuskinUniversity, where he works with the Third Sector Futures Group. He has written a number of books and papers on both strategy and entrepreneurship; and he received the Queen's Award for Enterprise Promotion in 2009. He has also been a Visiting Professor inAustralia,New ZealandandFinland.