More charities are turning to collaboration with other charities to pool resources, gain efficiencies and better serve their mission. Charities can merge their back-office functions to enjoy lower overhead costs, enter a joint venture to expand their offerings or service area, or even merge entirely into one completely new entity. But navigating which option is right for your charity can be challenging. The first step is to understand the differences between the different types of collaboration.

Mergers.

Mergers are the most formal process in this list. A merger can involve completely combining 2 charitable entities. Or one larger charity adding a smaller organisation to deliver a new programme or service. The merger process ranges from short and simple to lengthy and complicated. But it is always important to do your due diligence during a merger. Many charities use a consultant during the process to help perform due diligence and implement best practises. When your organisation is ready to officially merge after the due diligence process, it is important to seek the requisite legal advice from a body that is skilled and versed in non-profit law.

Further help:

• Charity Commission’s guidance Making mergers work: helping you succeed and Collaborative working and mergers: an introduction (CC34).
• Trustee’s merger checklist – not all questions are relevant to every charity

Joint service delivery

A joint venture is historically used when 2 charities want to collaborate on an isolated programme or project.

Here is an example.

A youth charity and a horse rescue charity coming together to provide horse riding classes for isolated or vulnerable children over the summer.

These types of ventures are helpful as they increase capacity and resource, extend the geographic reach of a service or programme, and add expertise and skills to both organisations. Joint ventures are usually time limited.

Partnerships.

The word partnership can be used in many ways and can mean different things to different people. Generally, though, a partnership is a formalised agreement between two or more charities which has a specific goal or a set of ambitions. Partnerships can allow your charity to pool resources with another organisation to help you reach your goals. A good partnership helps increase efficiency, add resource and allows for joint funding activities. Many grant funders liked the concept of partnership as it allows them to fund more services at a lower cost.

Partnerships can range from joint funding bids where one organisation is the Lead Agency and sub-contracts to the other organisation through to, in some cases, a separate constituted Consortium is created.

Fiscal sponsorship.

Fiscal sponsorship allows a fledgling charitable programme to be incubated by an established charity. Here is an example:

In the faith sector new church networks are often incubated by larger faith organisations until such time as their development and their funding is viewed as sustainable and robust.

This type of arrangement is useful for new charity programme as it gives support when it is most needed. For the incubating charity, it raises profile, adds to the resilience of the sector and forms a platform of allies for the future.

Notes

No matter what type of collaboration you pursue, it is vital to undertake research on the organisation you wish to connect with. While the impact to the successful partnership, joint venture, fiscal sponsorship or merger can be great, the implications of one of these methods failing are also great. Trustees would need to agree the approach and in general terms, always look for a charity which has similar cultures, aims and ambitions. Always schedule an interim consultation, which could at its very basic level be a simple phone call, CEO to CEO. There is no harm in talking to others before committing to a formal approach.