Social Policy Whisperer: if merging charities is the answer, what is the problem?

In a major development for the not for profit sector in Australia, three of its heavyweights David Crosbie (CCA), Tim Costello (World Vision) and Paul Ronalds (Save the Children) have been prominent in a concerted call for ‘charities’ to ‘merge or close’. The agenda is to be further progressed through several CCA forums. Clearly not the usual suspects (New Public Managers/ Competition Policy Economists), their views warrant our serious attention. What do they see as the problem? Why are mergers the solution?

For Crosbie, the problem seems to be mainly agency selfishness in a funding environment where government revenues and charitable donations are in an apparent state of indefinite decline. People should collaborate. Furthermore he thinks too many small players are running on the ‘smell of an oily rag’ and – dare I say it – relying on volunteers! They should stop serving their own egos, merge and end the duplication which is wasting precious resources.

Strangely for Crosbie the problem of ‘selfish’ behaviour seems to have nothing to do with the competitive funding regimes set up in the economic rationalist period. For him collaboration doesn't translate to a post competitive funding regime but to Merging. If lack of collaboration is the problem it is really hard to see how the intensification of competition through merging is going to be the solution!

Costello has a much more considered and nuanced understanding. His experience tells him that some charities do come into being in a moment of passion and that good intentions do not always translate into effective services etc. He also notes that that there can be ‘duplication’ and, where it exists, it should be addressed by greater agency collaboration. While observing that in Cameron’s Big Society there are actually moves to restrict the number of new charities, his agenda is much more one of reform rather than revolution. Costello clearly argues that society needs a strong and distinctive voluntary sector which isn’t simply defined by government and funder expectations.

Paul Ronalds emerges as the most positive champion of the merger. It’s not a negative outcome of government austerity for Paul but a positive step in the right direction. Writing of his recent experience with Save the Children joining Good Beginnings he says that each organisation got the best of both worlds. We have ‘broadened our reach, deepened our level or programing expertise, and increased our policy influence with government and our attractiveness to many donors. Significant savings were made in the ‘back office’ which were used to reach more clients and improve programs.

Paul’s story ends there which is a bit of a shame. He doesn't take the opportunity to reflect more broadly on the significance of this experience for the overall development of the voluntary sector. It would have been good for example to get an update on those concerns he felt for the effects on civil society created by what he called ‘Darwinian’ style mergers in an earlier Pro Bono report this year.

Taken together these opinions shed very little light on just why ‘merger or close’ has emerged as the answer to the sector’s problems. Certainly they shed no new light on what we know to be the issues.   As has been the case in this whole debate for years now, there is precious little clarity about the distinctive roles and value adds to society of market, bureaucracy and civil society. Unless you are up front about that one, then your ideas on what will promote efficiency will end up being superfluous.

Contra Crosbie, for example, it might well be argued that volunteers and smells from oily rags, far from being obstacles to efficiency are actually the vital resource for the distinctive value add of the third sector.   From this perspective competitive mergers are more likely to impede than enable the sector to function effectively.

Moreover David might reflect on where this passion for merging might not end? Given that so many of what pass for voluntary organisations are now – by my thinking – either Quasi Government Agencies or for profit businesses - might not the ultimate efficiency lie in simply taking them all back into the bureaucratic fold where they probably best belong?

Ronalds’ experience tells us that in the case of his large multinational agency at the big end of service town, a merger can make a lot of business sense but one would like to hear more of his views on the impact on civil society. Moreover one could equally relate countless examples of local services rendered useless when community based organisations were taken over by mega agencies.

Costello’s measured assessment lends the intervention a much-needed balance. A more pragmatic counsel, he allows that yes a merger may be ok in some contexts where it leads to more efficiency, but while passionate little enthusiasms can sometimes go off the rails, passionate endeavour in smaller organisations remains vital for the ongoing renewal of the sector; and so on.

While the ‘Merge or Close’ agenda may appear vacuous in terms of policy content, the support of key sector leaders gives it political importance. 2015 has seen governments up the ante on the policy of marketization of education, health and welfare with many of the smaller and genuine not for profits finding themselves defined out of the game.   With this end of year initiative they may well be wondering from where a real renewal might begin?