By John Maddocks, Technical Manager at CIPFA
Charities and social enterprises are under increasing pressure to find new ways of delivering good outcomes in a way that works within increasingly constrained budgets. Collaboration is one approach to meeting this challenge, but organisations need to be both clear and realistic on what the benefits are and why it makes sense for them at a particular point in time.
Closer collaboration between charities, social enterprises and other organisations can provide very real benefits. Charity Commission research on small charities (Strength in numbers, 2010) found that 84% of collaborating charities said they had benefitted in some way. Benefits quoted in the report include: improving or maintaining services, enhancing reputation and reducing costs. An organisation that can combine reducing costs with maintaining or improving services may find itself in a stronger position when looking to engage in public service delivery.
But it’s important to be realistic about what can be achieved through collaboration. For example, while the Charity Commission small charities research identified 84% as benefitting from collaboration, only 28% mentioned a reduction in costs. A report produced by NPC and Impetus (Collaborating for Impact, 2013) highlights two other reasons for charities to collaborate in delivering public sector contracts: increased funding and increased social impact. Furthermore the report suggests that collaborations that don’t deliver at least one of these should be avoided.
The lesson seems to be that the charity or social enterprise needs to be very clear about exactly what benefits it is expecting from the collaboration and how these benefits will support the organisation in fulfilling its own long term goals and objectives. Part of this process of clarifying benefits is considering the different types of collaboration open to the organisation and what each can offer. Collaboration can range from closer networking and sharing of information with other similar organisations, to more formal collaboration through vehicles such as joint ventures and shared services, to taking on a primary contractor role and working with sub-contractors.
Keep in mind also that alongside the benefits there are costs and risks to consider. Costs can include, for example: negotiating agreements, managing joint working, ensuring quality of service delivery and managing change. Risks that need to be assessed and considered include failure of partners to deliver and underestimation of commitments and resources required. The potential collaborators need to have a good grasp of associated costs and significant risks and the extent to which these may outweigh the predicted benefits.
Where it works, collaboration can provide charities and social enterprises with useful additional benefits when competing for public service contracts. But it has to make sense for the particular organisation and provide real, measurable benefits that strengthen rather than weaken its effectiveness in fulfilling its core purpose.
The good news is that there is useful guidance out there for organisations just starting to explore the collaboration option. As a start have a look at:
- The Charity Commission publication Collaborative working and mergers
- The Charity Commission toolkit on Choosing to Collaborate, which includes a due diligence checklist and 20 questions trustees should ask
- The NCVO website content on collaborative working which includes links to further resources
Also look for any local or regional frameworks and models for collaboration. Then consider your options and realistically assess the benefits, costs, opportunities and risks.