Less Division, More Collaboration
11 November 2015 at 11:09 am
Merger may be a dirty word in many organisations, but that should not stop consideration of possible consortia, partnerships, and collectives, writes the CEO of the Community Council for Australia, David Crosbie.
The charities and Not for Profit sector is a remarkable success story in Australia. Growth over the last decade has averaged more than 7 per cent a year, outstripping any industry group. Turnover grew from $46 billion to more than $105 billion in less than a decade.
The reality is that this growth will be difficult to maintain. Increases in government revenue have stalled, levels of giving as a percentage of average income have not returned to pre-global financial crisis levels and there is increasing competition from for-profit organisations in many areas of service delivery.
Competition breeds division. Charities competing for income highlight their differences rather than their similarities. While competition can have some positives, a divided sector is less able to serve our communities well. It can also lead to inefficient and ineffective strategies, depending on what is being rewarded through competition.
The governance structure and approaches that may have served organisations well during the good days may no longer be as appropriate in tight times.
Merger may be a dirty word in many organisations, but that should not stop consideration of possible consortia, partnerships, and collectives – all versions of collaboration that need to be much higher on our agenda.
It is difficult, for instance, to see a clear justification for national organisations to have a federated structure with nine Boards, nine CEOs, nine back offices, finances, IT, HR, etc. If less was spent on duplicated structures, more could be spent offering services within each jurisdiction.
Big companies run regional branches, but very few even consider operating a Federated model with state and territory stand-alone organisations, all with their own CEOs etc.
Small can be beautiful. Many smaller charities are closer to their communities and better able to respond to local issues. They often drive innovation and provide a measure of dynamism to the sector by encouraging new ways of doing things.
Some charities only survive by living off the smell of an oily rag and relying on volunteers, but it is important to recognise that this frugal approach is not always the best way to save money and serve the community.
Ensuring smaller organisations can continue to be effective in their communities may mean encouraging stronger collaborations offering more back office support and relieving some of the administrivia.
Charities and Not for Profits serving the same communities may need to work much harder at collaboration and possible merges – not just because it is in their interests, but also in the interests of the communities they serve. The options should, at least, be part of the scoping exercise in forward planning discussions.
The CCA believes that the best way to drive change within the sector is to work directly with sector leaders, providing opportunities to engage with peers and external experts in a safe and open discussion about where their organisation is, and how it can be improved.
This is why CCA are now running CEO and Board Leaders Forums to bring together leaders involved in both successful and unsuccessful mergers and collaborations. This work has been supported by the Myer Foundation, PwC, and the ACNC.
CCA believes the work to engage leaders in sector discussions will not only impact their approach in their own organisations, but also to inform broader policy settings, the regulatory and operating environment, and the way the sector positions itself to build a stronger future.
We need less division in our sector, but there is still a long way to go if greater collaboration and mergers are going to become more widespread in our sector.
About the Author: David Crosbie is the Chief Executive Officer of the Community Council for Australia (CCA), and a member of the Advisory Board to the Australian Charities and Not-for-profits Commission (ACNC).