Charity Merger Research (The Latest Good Merger Index)

This report is our latest research and review of the charity mergers that took place in 2022 to 2023 where there were record low numbers of charity mergers despite charities struggling with increasing demands and costs.

Only 48 mergers between 96 organisations recorded during the 2022/23 Good Merger Index (GMI) Research period.

The 10th edition of the Charity Good Merger Index (2022/23) the review of charity mergers in England and Wales was launched on 7th February 2024.

While demand for charities’ services is growing at an ever-increasing rate, many face existential threats due to rising costs, falling funding and deceasing donations. In addition, ahead of the Spring Budget in March, charities have asked the Chancellor for additional support to protect the immediate and longer-term financial health of the sector.

Watch the launch event recording to hear a summary of the report findings and an informative and educational Q&A session about charity mergers.

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Our launch panel who all had recent experiences of charity mergers, partnerships and closures were:

1. Sir David Holmes CBE, Chief Executive of Family Action and ex Chair of Children England, a charity that sadly closed in December 2023
2. Liz Searle, CEO of Keech Hospice Care that merged with Bedford Daycare Hospice last year
3. Paul Townsley Chief Executive of Humankind Charity supporting people to achieve their goals & make positive changes for better-connected communities which is merging with Richmond Fellowship this year.

Report Summary:

Over the last 12 months, Eastside People has seen a 70% rise in the number of enquiries from charity leaders looking for expertise in managing and delivering consultancy for merging a charity or creating partnerships. Despite all this activity, however, the Good Merger Index research found that there were only 48 successful charity mergers between 96 organisations during 2022/23, 6% fewer than the previous year and 37% down on 2020/21, the lowest number since the GMI started with the year 2013-14 and a tiny proportion of the total industry¹.

Key Charity Merger Stats:

• The number of mergers recorded (48) and the total number of organisations involved (96) is the lowest since we started the Good Merger Index with the year 2013-14
• Approximately £32m of income was collectively transferred from one charity to another which is 78% lower than the average over 10 years of £146m
• As a whole, the data illustrates that the total number of mergers in this period fell by 6% from the previous year and by 37% from 2020-21
• Despite a slight rise in the number of mergers involving smaller organisations, there has been a more significant fall in the number of mergers involving larger organisations – lower than any previous year
• The total income of the organisations involved in mergers was £483 million This is a rise of £17 million from the previous year
• The 20 largest mergers represented £30.9m of income and 98% of the total financial value transferred, significantly lower than the 2021-22 figure of £77.1m
• There were only 4 mergers of equals during 2022-23 (the merger of similar-sized charities)
• The proportion of transferee (receiving organisations) in surplus remained at a more typical level of 64% giving them a more suitable position to take on the risk of a merger. This figure is significantly higher than it was in the year 2020-21, which could reasonably be attributed to the impact of the Covid pandemic on charity’s finances.
• Despite these findings, Eastside People has seen a 70% increase in enquiries and a 30% increase in charity merger related projects in the last year.

Note: Financial data is from the year prior to the charity merger and for mergers which were completed by 30^th April 2023.

 References:

¹ c169,000 main charities and c14,000 linked charities in England and Wales:  https://register-of-charities.charitycommission.gov.uk/sector-data/sector-overview