June 08, 2009

British Charity Mergers Examined

Should more charities consider merging? Two British blogs are discussing this question.

According to a new study by New Philanthropy Capital, a nonprofit research group in London, charity mergers in Britain are infrequent, usually occur in response to a fiscal or management crisis, and that nonprofit groups lack sources of information about how to do them well.

On New Philanthropy Capital’s blog, John Copps, author of the report, discusses the findings. While some have criticized the report as a call for more mergers, Mr. Copps writes, “throughout the report we say that mergers are never straightforward and should only proceed if there is a strong case. The report shows that mergers can create value for charities and their beneficiaries, but the process also carries considerable risks.”

Yet Matthew Bishop and Michael Green, co-authors of Philanthrocapitalism, are saying the study’s findings indicate a need for greater consolidation in the nonprofit world. They argue that not enough charities are considering merging as the recession continues.

With so few groups considering such a move, it “looks like a missed opportunity that will only harm those that charities say they are trying to help,” they write on their blog.

Read The Chronicle’s recent article about nonprofit mergers or learn more about our Webinar on Wednesday offering expert advice about the topic.

What do you think? Should more charities consider merging or are the benefits of mergers often exaggerated and the difficulties overlooked?