Mergers are not the only option for charities looking to ride out the recession, according to a leading charity law expert.

Catherine Rustomji, head of Third Sector North and charity law specialist with Hempsons, said recent Charity Commission reports that more than half of UK charities are feeling the effects of the downturn with 64% of the largest charities concerned that future work will be affected, had put the spotlight on potential joint working.

She said: “It has long been predicted that Third Sector organisations will choose to merge in response to the recession, but according to the Commission only 3% of charities are actually considering that route.

“Some charities are linking up with social enterprises where there is a distinct opportunity to move into areas previously solely serviced by the private sector, but others are looking at innovative ways to share expertise and costs in a less formal way.”

Informal collaborations could bring substantial benefits, added Catherine, but the joint service providers must have clear agreements on demarcation of risk and function.

Joint ventures might also be an option, adding more formality to the agreement and isolating the “parent” charities from risk, so that if the venture failed, only the assets of the joint venture company itself would be at risk.

“A collaboration or joint venture is seen by some as a getting-to-know-you phase, which eventually leads to a merger, but not all planned mergers proceed and not all mergers work,” said Rustomji.

“To be successful, mergers must address crucial issues, from compatibility of objectives and advantages of economies of scale to organisational fit and staff integration.”