In the wake of our latest report into mergers among charities and social enterprises, Nick Temple, our Chief Executive Officer, looks at the logic behind the research, what we discovered and how our findings can help ease a sector under pressure.
When thinking about where Social Investment Business can add value in the current landscape of investment and support, we’ve been looking at areas where we have expertise and experience, where that maps to what charities and social enterprises need, and where there is not much current provision. One of those areas is around helping organisations with restructuring, recovery and, sometimes, merger.
From our work over more than a decade managing the Futurebuilders fund (for the UK Government) and our own Communitybuilders fund portfolio, our team have helped many with focused interventions, introductions and advice. We also believe that need for this sort of help is increasing, and likely to increase further - margins on contracts are thin, reserves are diminishing, and the broader economic context is putting a real strain on the finances of many social sector organisations.
Of course, plenty of organisations have noticed the need and there is some support out there - Locality has a ‘lifeboat’ programme for its members, individual foundations have funded restructures and strategic partnerships, Institute for Voluntary Action Research (IVAR) have often translated their research into practical help, and Eastside Primetimers have for some years become the leading merger support agency in the sector. So we turned to them when exploring what sort of finance and support the sector might need, and where this should focus.
The report we are launching today, Match Points, is the summary of that research, and we hope it adds to the existing information on the subject from IVAR, Eastside and most recently NPC. The three key points of interest that I take away from it are:
1) Support should be focused on smaller organisations in difficulty and looking to restructure; the research suggests that this is where the need is greatest, the support can make the biggest difference, and with the largest potential to create positive impact
2) Finance is a barrier, both specifically to mergers and more generally to restructure and recovery work; this is particularly the case at the early stages, where funding for backfill or temporary staff can help provide the essential capacity to explore and assess options
3) Technical support is often necessary, but broader practical support and advice is also welcome - including from peers who have been through a similar situation previously.
There is certainly also some evidence of demand and potential for a more strategic repayable fund in relation to mergers - the report makes clear how this might work, and some initial thinking on how it could be structured. This is likely to be at the more strategic and proactive end of the merger spectrum.
For us, we will continue to look at how best we can use the insight and experience we have gained to support organisations going through difficulty, and needing flexible and responsive help. We'd welcome thoughts from those who have been through turbulent times and come out the other side stronger; and would welcome conversations with other funders and investors for how we can work together in this area.