Legal structures for collaborations and mergers David Saunders David Kelly NCVS
Association Consortia Collaboration Alliance Merger
Why collaborate? Funders Less money available Combat bigger threats Convenience for commissioners
Combines the benefits of large and small scale Rationalised area-wide structure, dovetailing independent service delivery responsive to local or specific client group needs
How do you do it? Look before you leap Find potential partners Communicate throughout Does it fit with trustees/vision/values/priorities? Take advice Agreement
Models Separate organisations keep their independence but work jointly on some activities or functions Organisations with resources/expertise offer assistance to others New organisation is formed to do joint work on some activities (track record) Group structure with lead organisation Merger to form a new organisation, working as one on all activities
Type of activities Can be used to carry out charitable activities, service delivery, campaigning or policy work Share premises or functions Improve strategic efficiency
What is a bidding consortium? A group of organisations who come together to win contracts Speculative Longer term collaboration, set up in advance with a wide membership and wide areas of activity Responsive Shorter term collaboration, set up in response to a particular opportunity with only relevant partners
Delivery of contract and services Lead Provider Lead Provider Subcontractor 1 Subcontractor 2 Subcontractor 3 Delivery of contract and services
Delivery of contract and services Prime Contractor / Managing Agent Prime/ Managing Agent Subcontractor 1 Subcontractor 2 Subcontractor 3 Delivery of contract and services
Special Purpose Vehicle New legal entity Either delivers contract itself through transferred staff/resources or subcontracts to member organisations Organisation 1 Organisation 2 Organisation 3
Operates as hub or long term standing consortium member New Entity Operates as hub or long term standing consortium member member member member member s.c. s.c.
Merger Merger is where two or more organisations formally combine to form one organisation. The term merger has no precise legal definition and is used to cover a number of different processes. Some mergers may also be referred to as takeovers
External drivers Pressure from funders to reduce duplication Government encouragement Competition with similar organisations Stakeholder opinion Public perception of an overcrowded voluntary sector
Internal drivers Desire to provide more or better services Need to increase efficiency through better use of resources Preventing duplication of services Financial difficulties Raising public profile or boosting income Loss of key staff or trustees ‘Survival’ &‘ rescue’
Merger leading to a new organisation Organisation A Organisation B Organisation C New organisation
Merger using an existing organisation’s structure Organisation B Organisation A Organisation A
Things to consider Do the outcomes justify the time and resources invested? Loss of autonomy Cultural mismatch Mission drift Damage if unsuccessful, which could be fatal
What if it goes wrong?
Any questions ?