Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Mergers and collaborations Kate Sayer 16 September 2016 Charity Commission “trustees of a charity have a duty to consider regularly whether the charity could be more effective at achieving its objects by collaborating or merging with other charities” The collaboration continuum • • • • Joint working Two or more charities On a project or venture Or sharing resources Joint committee or info sharing Working jointly on a project or sharing services Joint venture company Full merger Model for collaboration - 1 Grant or contract? Organisation B Organisation A Lead partner Organisation C Model for collaboration - 2 Joint activities = JANE (Joint Arrangement , Not an Entity) Organisation A Service or activity Organisation B Organisation C Service level agreement – what service and how delivered Model for collaboration - 3 Jointly owned company Organisation A Organisation B Joint venture company Employs staff Runs services Holds leases Organisation C Service delivery Model for shared services - 1 Lead partner Organisation A Organisation B • Lease or buy premises •Hire sufficient staff Organisation C Model for shared services - 2 Outsourcing Organisation A Supplier Fees Organisation B Organisation C Service level agreement – what service and how delivered Model for shared services - 3 Service company Organisation B Organisation A Buy level of service required Management services company • • • • Employ staff Manage facilities Raise funds Hold head lease or own property Organisation C Sell services Other Organisation What to think about…. • Will you get on with your partner(s)? • Do you need to undertake due diligence on them before you work together? • Will one control and subcontract? • Or will you be equal partners? • What about conflicts of interest? • Who decides who gets what? • Accountability to funder vs. control More to think about…. • Will there be: a fair share of effort and reward for each? measurable benefits? cost savings? any effect on income? added value from collaboration? any downside or other loss? And more to think about…. • Is it within your charitable objects and powers? • Do you need: a contract a grant agreement or a memorandum of understanding? or a separate company to work through? • Is there a termination clause in agreement? • What happens if your partner is unable to meet their obligations under the collaboration? Benefits include: • New or improved services • Access to funding • Improved services for beneficiaries • Cost savings • Knowledge, good practice and information sharing • Sharing the risk in new and untested projects • Capacity to replicate success • Stronger, united voice • Better co-ordination of organisations' activities • Competitive advantage • Mutual support between organisations Risks include: • Outcomes do not justify the time and resources invested • Loss of flexibility in working practices • Complexity in decisionmaking and loss of autonomy • Diverting energy and resources away from core • Damage to or dilution of your brand and reputation • Damage to organisation and waste of resources if collaboration is unsuccessful • Lack of awareness of legal obligations • Additional costs/liabilities if partner fails • Stakeholder confusion Merger options - basic A B New charity C OR A Operations, assets and liabilities transfer B Quick merger • Gain control of a charity • Appoint your trustees to be their trustees as well – de facto control • Ask their trustees to resign • You can then take your time to decide what you do next Group structures New holding charity Some trustees Some trustees A B Feasibility study • Will this help you achieve your charitable objects more effectively? • Is there a cultural fit? • What are the benefits and risks? • Are there legal issues to overcome? • What will the costs (time and money) be? Develop a business case Background – key drivers Describe new way of working Benefits – tangible and intangible Costs and compare with status quo One-off costs of change, including staff time • High level plan • Risks and how they will be managed • Exit strategy • • • • • Collaboration agreement • Purpose of agreement • Accountability and • Activities it is to cover liabilities • Roles and responsibilities of each • Monitoring • Communication • Name, PR, logos etc • Costs and assets and • Exit strategy how shared • Dispute resolution Due diligence • To ensure the merger or collaboration is in best interests of the charity’s beneficiaries will not expose the charity’s assets or beneficiaries to undue risk • Consider is the merged organisation a safe house for the charity's assets? what risks and liabilities are being taken on? Due diligence • Background and governance • Management and people • IT and accounting systems and management information • Financial information • Assets and liabilities • Other legal issues • Post-merger issues Background and governance • Overview of external environment and competition • Organisational structure – governance and management • Review of strategic planning document and risk register Management and people • Details of staff, job titles, pay and length of service • Pension contributions and schemes • Details of contracts of employment, staff manual and policies • Staff relations and trade union representation • Details of volunteers and related policies Information systems • Analysis of age and suitability of IT systems – finance and donor or other records • Overview of internal controls and financial procedures • Management letters from auditors and management response Financial information • Statutory and management accounts, budgets, cashflow • Funders: grants, contracts • Fundraising activities and rate of return • VAT and other tax compliance issues • Restricted and unrestricted funds • Reserves policy and position Assets and liabilities • Premises – owned and leased • • • • • details of tenure, usage, rents, dilapidations, tenants and terms etc Investments Debtors and creditors Pension liabilities, deficits, guarantees Contingent liabilities Bank facilities Other legal issues • • • • • • • • Power to merge TUPE and contracts of employment Pension schemes Properties, leases and dilapidations Intellectual property Other legal contracts Insurance Permanent endowments Post-merger issues • Pro-forma post-merger statement of financial activities and balance sheet • Financial projections going forward • Accounting for the merger • Consents from regulators, funder etc • VAT • IT systems • And more!