Charity Mergers & Collaborative Working

Charities are increasingly considering innovative approaches to collaborative working and mergers. We are here to help you navigate the various legal issues involved.

A charity may wish to consider joining forces with another charity for a variety of reasons. These may be:

• service orientated – designed to secure a greater impact in a charity’s work and to reach an increased number of potential beneficiaries, or
• driven by internal factors, such as the need to find cost savings through sharing resources, or to meet the challenge of recruiting a sufficient number of trustees with appropriate skills.

Collaborating with another charity may provide a suitable solution either short term (for a particular project, for example) or even longer term (to share support services or accommodation, perhaps) where each charity wishes to retain their respective independence. Collaboration can, however, be a point in the journey towards a full merger – even where this is not anticipated by the charities at the outset.

Our services

Our Charities Team lawyers have significant experience in helping charities navigate their way through the points they need to consider when exploring, negotiating, and then implementing, a collaboration or merger with another charity. Our approach is designed to be reflective of the collaborative nature of these arrangements, and the ultimate goal of bringing together two charities to become greater than the sum of their parts.

We recognise the critical role that we have in facilitating this, whilst also ensuring that our charity clients are appropriately advised and that the charity trustees have all of the information they require to make a decision on whether to approve the merger in the best interests of their charity. We understand the importance of the decision-making process, and we have considerable experience providing pragmatic and helpful advice and guidance on how to approach significant, strategic decisions to ensure compliance with legal duties in line with Charity Commission expectations of charity trustees.

We can help charity trustees with the identification of the legal and commercial issues (including those identified in the Charity Commission’s checklist for mergers) and ensure that they follow a proper process throughout. Our services include:

Collaborations

• considering the compatibility of the respective charities’ objects and ensuring the charity trustees work within their powers
• advising on and supporting appropriate levels of due diligence on the proposed “partner” charity
• addressing the need for contractual certainty, suitable oversight and decision-making protocols, and adequate protections for both charities
• advising on the creation of a separate joint venture vehicle to ring-fence the project
• advising on dealing with the ownership of any assets created during the collaboration (such as intellectual property) and how it might be shared once the collaboration is at an end
• addressing the charities’ respective responsibilities for costs and liabilities incurred – particularly where one charity acts as the “project lead” for the other
• advising on employee issues (for example, where secondments may be used)
• advising on how to deal with any constraints on exploring relationships with other charities during the collaboration (if required)
• advising on legal and regulatory compliance, assisting with securing necessary third party consents (if assets are to be shared) and confidentiality obligations regarding the arrangements
• advising on how to bring the collaboration to an orderly conclusion and how the benefits of the collaboration (new skills, additional opportunities) might be secured.