Financial pressures fuelling highest level of charity mergers in five years

The number of charity mergers is at its highest level in five years, a report has found.

The increase is being driven by a rise in small charities involved in merger activity and takeovers, which are at record levels, the research also found.

During 2020/21 there were 77 mergers, the most since 2017/18.

Mergers last year involved 166 charities, which is the highest number in six years, according to the latest Good Merger Index by Eastside Primetimers.

Meanwhile, takeovers are at the highest level since 2014, which is when the figures were first compiled.

Eastside Primtetimers’ report says that the increase in small charities involved in mergers“may well be symptomatic of ongoing financial pressures”.

It adds that the increase in the number of takeovers is “more often driven by financial necessity rather than by strategic choice”.

“Our data indicates that there has not been a significant shift in the combined income of organisations involved in mergers, but that there has been a significant drop in the value of income transferred,” states the report.

“This is a product of the lower incomes of the organisations involved, and a fall in the number of more complex ‘mergers of equals’, particularly between larger organisations.”

The total income of charities involved is £559m. But the value of income transferred is at its lowest level since the Good Merger Index started. Just £62m was transferred, which is just under a third of 2019/20’s figures of £176m.

It adds: “There has been a fall in the proportion of organisations in surplus and an increase in the proportion in deficit in the year prior to merger. This may be an indicator of financial stress in the sector, and a factor in determining the other trends we have seen.”

Mergers

Mergers during the year include Adferiad Recovery and CAIS Hafal Welsh Centre for Action on Dependency and Addiction, which saw £21m transferred.

Another was Bowel Research UK’s merger with Bowel Disease Research Foundation Bowel and Cancer Research.

Takeovers included Douglas Macmillan’s link up with Donna Louise Trust.

Meanwhile, another two charities to merge in 2020, Asthma UK and the British Lung Foundation, have this week rebranded as Asthma + Lung UK.



“Since the start of 2020, Asthma UK and the British Lung Foundation have been working together to improve the lives of people affected by lung conditions, said the organisation’s chief executive Sarah Wolnough.

“Now we’re going forward as Asthma + Lung UK to drive a transformation in lung health. We’re the nation’s lung charity and we’re here for everyone who’s living with a lung condition, regardless of what that condition is.”

The charity’s five-year strategy outlines plans to reduce emergency admissions for lug conditions by a fifth in the 20 worst affected areas. It also wants to help halve the adult smoking rate from 14% to 7% by 2030.

Another priority is for at least three quarters of people with a long-term lung condition to take up their annual flu jab.

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