The benefits of unity

Mergers are a fact of life in business and in
the voluntary sector. Sarah Del Tufo presents her experience of
being an independent consultant advising on mergers and offers some
pointers for successful unity.

Should we merge our voluntary organisations,
and if so, how can we ensure that the merger is successful?

I was asked recently to undertake an
independent organisational review of two small local charities,
with a view to helping the joint steering group they had appointed
to decide whether a merger was the right way ahead for both
organisations.

By appointing the steering group, chaired by
the trusted director of the local Council for Voluntary Service,
they had started in the right direction. They had recognised that a
successful merger is not just an organisational or legal process,
but also one that involves people and their sense of identity,
ownership and history. Trustees, members, users, volunteers, staff,
and funders may all have concerns which, unless dealt with openly
and sensitively, can derail the process, even after the merger is
formally completed.

You will have to live with your merger
decisions for a long time so getting it right is important.

So what might be the gains of a merger? In
this situation, it is thought to offer opportunities for
organisational development and better standards for services users,
as well as gains for staff. It could offer economies of scale but
risks losing the sense of very local ownership for the smaller
charity.

Independent organisational audits will
consider in detail the implications for both organisations
including:

– Constitutional changes and governance
matters.

– Personnel matters.

– Contracts and grants and other assets and
liabilities to be transferred, including covenants, legacies,
endowments and so on.

– Property matters.

– Data protection matters.

Since both organisations work with older
people they have decided to use the useful organisational audit
questionnaire in the Age Concern booklet Joining Forces – A
Guide to Mergers in Age Concern. This allows the organisations
to discover as much as they can about each other before making a
final decision. The work will involve:

– Interviewing representatives from each
organisation.

– Collecting all relevant documentary evidence
from both organisations.

– Reviewing the financial information by an
independent financial adviser.

– Reviewing of information and documents by an
independent solicitor.

– Writing a short summary report for
stakeholders.

– Providing each organisation with an opinion
as to whether a merger is in their best interests.

The involvement of a solicitor was initially
resisted by the organisations, partly because of the costs and
partly because of a sense that both organisations wanted it to
happen.

However, the involvement of a solicitor is
essential, especially if staff, leases and service level agreements
are involved, or if the constitutional position is not completely
straightforward. Because of Tupe or Transfer of Undertakings
(Protection of Employment) Regulations 1981 (amended), charities
risk serious problems like costly industrial tribunals if the
employment issues are not handled correctly.

Seeking the recommendation of a good firm of
solicitors is essential – not the existing solicitors of either
charity. Assuming the merger goes ahead, further legal work will be
required on contracts, lease surrenders, legal transfer of assets,
bank account changes, dissolution, but once agreed by the
organisations, these can be undertaken by the new organisation’s
solicitors.

There are a number of useful publications
available, including Mergers: A Legal Good Practice Guide,
by Jean Warburton available from the Charity Law Unit at Liverpool
University www.liv.ac.uk/law/units/clu.htm,
also a Charities Aid Foundation publication by Chris Cornforth at
www.cafonline.org and Diana
Leat, Joint Working and Mergers, NCVO (01536 399016).