Tying the knot

Our critics bristle at the idea of (carefully) applying techniques from the business world to the nonprofit sector. A report released today by New Philanthropy Capital, one of the leaders of the philanthrocapitalism movement, shows that such complacency is misplaced and even, in these tough economic times, downright dangerous.

“‘Merger’ is a dirty word in the charitable sector as it seen as implying aggressive and predatory behaviour, says the report, “What place for mergers between charities?”, noting US research that the rate of mergers across large non-profit organisations, with an annual budget of $50m and over, is just one tenth of the rate of large for-profit companies. Of course, not all such mergers are a success and the desire to grow bigger can have more to do with managerial hubris than adding value. Yet the authors show through case studies from the UK, such as the 2001 hook up between the Imperial Cancer Research Fund and the Cancer Research Campaign to create Cancer Research UK, that mergers can bring enormous benefits. More non-profits, which are often very similar to each other, should follow suit in other sectors. NPC says that one sector in the UK where there are clear merger opportunities is breast cancer, where Breakthrough Breast Cancer and Breast Cancer Campaign look perfect candidates to tie the knot.

“The most important question is not what works best for the charity,” says report author John Copps, “it’s what works best for all the people that charities intend to help.”  The fact that only 3% of charities think about merging, despite the current funding crunch, looks like a missed opportunity that will only harm those that charities say they are trying to help. It is time to throw off the old prejudices and look at what philanthrocapitalism has to offer.