A member of the House of Lords select committee on charities has called on more trustees to consider the benefits of merging with other organisations.
Lord Lupton spoke to delegates at Trustee Exchange, Civil Society Media's governance conference in London, on the Lords committee’s recently published report on the charity sector.
Lupton used the final portion of his speech to discuss collaborations in the charity sector.
He relayed the committee’s findings, including a comment from Mencap that the existence of many similar charities raising funds from “a limited pool of donors” could be addressed by “clear collaboration or mergers”.
Lupton said the merger between Imperial Cancer Research and Cancer Research Campaign in 2002 to form Cancer Research UK was an example of a successful merger and praised MacMillan Cancer Support for gifting its hospices to Marie Curie to enable the two charities to focus on separate areas of treatment.
He said: “I think it was extraordinarily visionary and brave of the chairs of each of those four charities to conceive of a solution to a structural challenge in the sector and execute it.”
“To me, this example shows a heroic sense of strategic vision combined with a force of character and sheer leadership to steer through what I bet must have been at times very emotional debates in the boardrooms of those charities. The point is what guided them was what was best for the beneficiaries.”
He added that some contributors to the report were more cautious about mergers, with some saying they could be complex to navigate and involved technical problems around issues such as legacies.
In response the report authors have recommended the government brings forward a bill to address some of the technical and legal barriers to mergers to make them easier to manage.
'Moral duty'
Lupton urged trustees to consider whether a merger involving their charity could improve the service they provides.
He warned that continued financial pressures would make duplicated costs and functions between two similar charities a bigger issue as they compete for donors’ money.
“All I would ask you to do is stand back and take a dispassionate view on whether what is being proposed truly benefits the beneficiaries of the charity.
“If you conclude that it really does, then I think trustees and especially the chairman have a pretty strong moral duty, if not a legal one, to do their best to merge.”
Transparency
Lupton reiterated the committee’s recommendation for more transparency in the charity sector, partly due to a higher demand from donors.
He said the committee was keen to see all charities publish financial accounts online and independently evaluate their social impact.
While he said impact assessment was more easily applied to some charities than others, the committee recommended the development of standardised contractual impact reporting requirements.
Turnover of trustees
Lupton said the committee recommended a time limit on the length of service of trustees, saying some crises such as Kid’s Company would not have happened with a regular turnover of board members.
When challenged by a delegate on why trustees should not be encouraged to stay as long as they wished, he said their function to hold the charity’s chief executive to account could be hampered by the development of an unhelpfully close relationship between the two.
He gave the example of Kid’s Company, to which he was a donor until 2012, saying the majority of its trustees had been there “for a very long time”.
“I think when you have been there a very long time it is difficult to look at things with a fresh eye. Your relationship with the management becomes misplaced. They become personal friends. There has to be a little bit of distance between the chairman and the chief executive.”
He also expressed a view that 12 to 14 board members worked well for most voluntary organisations.
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