Disability Orgs Consider Merger
15 March 2016 at 11:16 am
Two Geelong-based disability service Not for Profits have entered into a memorandum of understanding to explore the benefits of merging as a new organisation just months prior to the launch of the National Disability Insurance Scheme.
“As a new merged entity we believe we could reach more clients, assist more people who are excluded from participating fully in the life of their community, and we could provide a stronger voice for people who are disadvantaged,” Chair of Karingal Rod Payne and Chair of St Laurence Dr Patrick Lockie said.
“Our coming together into a single new organisation could significantly build on each organisation’s present financial strength.
“During 2015 both our organisations independently engaged in separate preliminary merger discussions with other organisations. In late 2015 there was a realisation by both Boards that there is likely to be advantages in joining to create a new single Geelong-based organisation.
“Such a merging would significantly increase our capacity to deliver a shared mission and vision. Both Boards believe that if we establish a new merged organisation it would give us enhanced capability to deliver a wider choice of quality services to a larger number of clients.
“While we are at the early stages of our discussions, each of our Boards believes a merger would result in an excellent fit.”
The organisations said that during the investigatory processes there would be no change in delivering services and supports to St Laurence and Karingal clients.
The CEO of St Laurence, Toby oConnor told Pro Bono Australia News that the MoU was not a takeover but an agreement to create a new entity.
“The new entity will need a new board and the directors of that board in the first instance will be made up of the boards of the two existing organisations,” oConnor said.
He said that it was already determined that the new CEO would be the CEO of Karingal, Mike McKinstry, and that oConnor would move into the position Chief Operating Officer in the merger agreement.
“I have been around for a long time … and St Laurence was doing a potential merger with a NSW organisation that fell over basically because the CEO of that organisation took his bat a ball and went home because he didn’t get what we thought was fair,” he said.
“So given that the CEOs make or break [a merger] my view is that this is such an important initiative… and sorting this out at the beginning is really the linchpin for how this has progressed.”
He said the rest of the service and executive or backend staffing arrangements were yet to be worked out.
“Clearly it will require some downsizing because that’s one of the reasons we are doing this to get scale,” oConnor said.
“We have deliberately not gone into the staffing configuration that will now be a process we will move through.
“Unlike Ford and Alcoa closures in Geelong where their staff have limited opportunities, all our staff have skills that would set them in good stead to take up other positions in the region.
“I have spoken to staff about the NDIS which is still recruiting staff in the region as part of the national office here, we have got Worksafe coming down, we have the Epworth Hospital coming down, the Australian Bureau of Statistics coming down and you have the Commonwealth Department of Human Services coming [to Geelong].
“I would be really confident they will get jobs because they are high quality staff in the service industry. I think the future is pretty positive.”
The board statement said the organisations were very enthusiastic about the potential a merged organisation can offer to Geelong in terms of new employment and career pathways to local people.
“It would also reinforce local efforts to transition Geelong to being the nation’s centre of excellence for disability,” the statement said.
“Our separate experiences of the National Disability Insurance Scheme trial in the Barwon Region acknowledge the fact that disability providers must not just deliver quality services but that these services must be offered at a price attractive to discerning consumers. We believe by growing the size of our present operations we can achieve more competitive prices for clients across the suite of services we offer.”
The organisations said they expect a recommendation about the potential merger to be put before the members of both organisations, for their endorsement, by mid-2016. The NDIS will launch nationally on July 1, 2016.
In November 2015, sector leaders said hundreds of charities should merge or disappear altogether because too many of them are wasting valuable resources competing with each other.
CEO of the Community Council for Australia, David Crosbie, sent a stark message to charities and Not for Profits to put self interest aside and minimise the duplication that is creating “a significant amount of wasted effort” and negatively affecting the sector.
Crosbie said while many charities were running off the “smell of an oily rag” and relying on volunteers, this frugal approach was not always the best way to save money and serve the community, and collaboration and possible mergers should be a part of future planning for all organisations.
“Self-interest can be a hard thing for charities to put aside, however we are in the business of serving communities, not ourselves,” Crosbie said.
“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 in the interests of the communities they serve.”