As charities evolve in the face of Covid-19’s consequences, many will find alliances and mergers the best way to secure a sustainable and successful future.
Good governance underpins the third sector, but never more so as organisations consider how they must adapt in light of changes forced by the pandemic.
That may mean making major decisions critical to the shape of the organisation.
For some, that will involve restructuring to counter the collapse in income that has followed the cancellation of major fundraising events and sources because of measures put in place to slow the spread of coronavirus.
Charities will perhaps see sharing services with other organisations as a more effective way of working. Others will find that only a merger will bring the efficiencies and effectiveness needed.
Whatever the course of action, sound legal advice is critical.
We are working with organisations across Scotland to help them deal with the vast number of issues they face as a result of coronavirus and its impacts, from governance and employment to building leases.
It is work that is shaping a stronger future as charities look to make themselves more resilient to continue their vital work.
Alastair Keatinge, Partner and Head of Charities, says: “Most mergers do not happen through choice. They happen because circumstances dictate it. My advice to those organisations who believe this may be the avenue they have to take would be to be on the front foot and be the party which leads that process.
“A merger or joint working arrangement can often be the best way to support service users and use resources efficiently. Technical, legal, governance and identity issues can generally be resolved or avoided with good advice.
“Charities often view such changes as a solution of last resort, but trustees should be proactive. The sector is not blind to innovation - and we see some great examples of it. Change could well be the way to ensure long-term continuity.”
The prospect of change was highlighted by research from the Office of the Scottish Charity Regulator (OSCR) this summer which found that one in five charities at risk of collapse within 12 months under the financial impact of Covid-19.
For particular advice on mergers, alliances and other legal issues affecting the third sector, please contact one of our charity law experts.
