International health charity Merlin suffered a 12 per cent loss of total income from £68.9m to £60.9m in 2012, the last full financial year before it joined Save the Children.
The charity explains in its accounts for year ending December 2012 that the decrease was largely due to there being no significant emergencies during the year, and in particular a reduced level of funding from DEC appeals. Also its cost of generating voluntary income increased, from £2.6m to £3.2m.
Merlin received most of its funds during the year directly from institutional donors, including the UK government, US government, the European Union and the United Nations.
The charity's level of funding from direct donations and legacies declined slightly from 2011, which the charity again attributes to the absence of significant emergencies. However, it points out that it continued to enlarge its donor base despite this.
The total net movement in funds for the year was a deficit of £3.4m (2011 £1.9m), of which £2.6m is a deficit on unrestricted funds and £0.8m on restricted funds. At the end of 2012, Merlin’s level of unrestricted reserves was £2.8m.
Phased transition
Merlin became part of Save the Children on 16 July 2013, and the charity elaborated on how the merger will effects its activities:
“Our expectation is that there will be a phased transition of Merlin’s overseas programme operations to Save the Children, which we are aiming to complete within 18 months,” reads a statement in the document. “During this time Merlin’s lifesaving work for children and their families around the world will continue.”
Merlin states in its accounts that the level of both voluntary income and overhead from operating projects had been insufficient to enable the organisation to grow and develop. The £2.8m of unrestricted reserves “was below what was considered acceptable by the trustees”.
On 23 July Save the Children passed an amendment to its governing documents to allow it to provide funding to Merlin.
Merlin also appointed a new CEO to oversee the transition: David Alexander, former international director at the British Red Cross. During the transition phase Merlin still remains a separate legal entity.
