There are still very few charity mergers and many barriers preventing more taking place, a report published today has said.

The Good Merger Report, produced by consultancy Eastside Primetimers, analysed the 54 merger deals which took place in the year ending March 2016, involving charities with a cumulative income of just under £800m.

It found that most mergers in the charity sector were driven by “financial distress, rather than by sound planning and aims for growth”.

It said that many organisations are “simply not responding to the conditions they face” and that many more charities go into liquidation rather than find a new home for their services.

The report says it has found evidence that mergers in the charity sector create value for the organisations involved.

“The economic case for charities merging – especially where organisations are in a position of strength – is frequently compelling, given there is no financial consideration changing hands as there is in private sector mergers,” the report says.

“This of course does not mean that mergers are easy – far from it, they are difficult and time-consuming to implement – but they are at least worth the investment, in the right circumstances.”

Recommendations

The report makes seven recommendations about how to create more mergers in the charity sector, including:

1. A requirement on charities for chief executives and trustees to consider mergers.
2. Stronger Charity Commission guidance on mergers.
3. A voluntary merger code to provide advice and support.
4. A greater focus on social impact measurement.
5. The creation of tools and resources to promote merger.
6. A research programme to encourage merger.
7. A mergers and acquisitions fund to overcome the financial barriers to merger.