METROGAVS: surviving funding cuts31 Jan 2019
The October budget of 2018 revealed that funding for local services was set to be cut by £1.3 billion in 2019/20 (Local Government Association, 2018). This is almost certain to have a negative impact on infrastructure organisations, but what could be done to prevent further closures to vital charities?
One solution that an increasing number of charities have taken to ensure their sustainability is to merge with another organisation. In 2017/18, 81 mergers took place, and one of those was between Greenwich Action for Voluntary Service, the CVS organisations for Greenwich (GAVS) and METRO, a charity providing health, community and youth services across London and the South East ( merger index 17/18).
Greenwich Action for Voluntary Service (GAVS)
In November 2017 GAVS took stock of their financial situation and due to low reserves, they were predicted to overspend by £5,000 to £10,000 and with that current rate of spend, the organisation was in danger of ceasing to exist by 2020.
After a period of research with a number of organisations and a due diligence process, the decision was taken to merge with METRO. The decision was made taking into account a number of factors which included the fact they were close in location and had established a good dialogue between their respective chairs, all factors that assisted a successful merger process.
The CVS function has been able to withstand the increased Local Authority funding cuts. In the recent commissioning process there were cuts of over 50%, but by merging with METRO, the CVS function has been able to continue its support to over 400 civil society organisations in Greenwich.
“The merger with METRO has meant that we are now able to see a safe and sustainable future for CVS infrastructure in the Royal Borough of Greenwich despite the very difficult funding environment”
Other benefits have also come to the CVS. Using METRO’s strong fundraising resources, METROGAVS has been able to increase their funding applications and partnership bids.
Learning to share
Mergers can prove incredibly successful, driving innovation and positive change to create a more efficient structure. An important aspect of this merger was the way it was handled. It ensured that the new organisation was able to quickly cement its position and it used the impetus to drive its agenda forward.
A lot can go wrong; mergers are often fuelled by rumour, confusion or miscommunication around the implications of the decision. METROGAVS share some learning below from their experience of going through a merger.
The importance of merging with a local organisation
The context of the local authority politics and voluntary sector intelligence can be shared and understood by the staff in both organisations. Additionally, the office location can be shared which reduces costs and supports the development of working relationships between staff from the two organisations.
Identify a mentor for each of the organisation CEOs
This is much-needed support and gives an independent sounding board for both of the leaders during the merger.
Use online resources
The Charity Commission website was a useful source of information for the process of merging which METROGAVS recommend for organisations about to undertake a merger.
It takes time
The process of merging organisations takes time, it cannot be underestimated the time it takes for the culture and processes of different organisations to come together.
London Plus facilitates the CVS directors network, which you can read about in our blog.