Former UK PM Weighs in on ‘Desirability’ of Charity Mergers

Former UK Conservative prime minister, Sir John Major, has warned Britain that it needs a reality check when it comes to the charity sector but the call for more mergers may not be the answer.

In an annual Not for Profit lecture, Major also criticised the impact of “shocking” inequality in Britain and said more needed to be done to urgently tackle the gap between the rich and the poor.

The former PM was delivering the annual Not for Profit  Hinton Lecture, called A nation at ease with itself?

While Major spoke about the increase in philanthropic, voluntary and charitable work across the UK, he said, “We cannot be complacent about our charitable sector.”

“There are negatives: we have all seen the publicity generated by bad fundraising practices and poor governance,” Major said.

“I won’t dwell on these shortcomings, except to note that all charities have a duty to protect their reputation. Unless they are seen as efficient and well run, donations will fall away.”

He said he had consulted specialists on the work of civil society.

“Some suggested that we have too many charities, and that it would be less wasteful, more efficient, and minimise duplication of effort, if they merged.There is a logic to that suggestion – but I have reservations about how desirable it is,” Major said.

“The urge to set up a charity is surely driven by the heart, not the head, and I would be disinclined to discourage that. In any case, I fancy small charities dip into a different pool for funding – and it would be folly to lose their enthusiasm.

“In my experience, they also offer small, anonymous acts of kindness, vital to the recipient, that may be overlooked by their larger brethren.

“Others – with an eye to the reputation of charities – have argued there is a strong case for charities to make a sound business case before they are formally registered. This I do agree with.”

Major’s comments come as Australian charities have been warned to merge or shut down.

The Community Council for Australia has warned that the Not for Profit sector is facing an efficiency dilemma and hundreds of charities should merge or disappear altogether because too many of them are wasting valuable resources competing with each other.

Major said, as a general principle, he was not an admirer of regulators.

“I am therefore surprised to have reached the conclusion that we would be wise to expand the remit, and the funding, of the Charity Commissioners,” he said.

“I believe, in so doing, we can improve the chance of eliminating malpractice and scandals in a charity sector that has an annual income of nearly £70 billion. I see advantages in the Commission engaging with more charities and encouraging ‘friendly’ mergers.

“They could act as a catalyst for change by encouraging charities to become transformative as well as palliative.”

He said if this transformation is beyond charities’ current remit and resources, then it’s necessary to change their remit and increase their resources.

“Today, I have no power and no public money at my disposal, but I care no less now than I did then. I also have a voice which – by and large – the poor don’t,” he said.

“The poorest among us not only live meaner lives – but shorter lives. In some of our great cities … the lifespan of the poorest is twenty years shorter than that of the most wealthy. I have no doubt that much of this disparity is caused by poor lifestyle, poor choices, poor diet – but poor environment, poor housing and poor education must surely be contributory factors. Whatever the reasons, this is a shocking situation in 2015.

“As the world becomes richer, inequality becomes less tolerable, and the case for reducing it more urgent. A crusade to widen prosperity more equally will not only ease hardship, it will build our national wealth – and health.”

The annual Hinton Lectures honor Nicholas Hinton who had a long history of working in the UK voluntary sector, notably Save the Children Fund and NACRO. He was also a Director of the National Council for Voluntary Organisations. His impact on the sector has been described as  profound and lasting and he was widely respected both in the UK and internationally.