LeArnIng from mergers - THe CAse sTudIes

Voluntary Action Islington
London Borough of IsLIngton

January 2008 Initial discussions on merger, prompted by Islington Volunteer Centre; Working Group set up

An inner-London borough, Islington has a large voluntary sector with nearly three times more voluntary organisations per capita than the national average.1 Islington Voluntary Action Council (IVAC) and the Islington Volunteer Centre, two of the major infrastructure bodies in the borough, merged to become Voluntary Action Islington in April 2009.
Prior to the merger, IVAC was a membership body that provided infrastructure support to voluntary organisations, many of which used volunteers as a resource. Its work involved acting as a third-sector representative in Islington, providing training and advice, and being a first point of contact for organisations in need of support. They employed 20 members of staff. Islington Volunteer Centre was a smaller body, with five members of staff. It focused on matching individuals seeking voluntary work with organisations who needed volunteers. Its work included a number of specific projects, such as increasing diversity amongst volunteers. Prior to their merger into Voluntary Action Islington, the Volunteer Centre was a member of IVAC and as the two main organisations in third sector support in Islington they were familiar with each other’s work. However the two organisations did not have a history of collaboration.

Working Group scopes out possibility of merger and produces proposal for IVAC board

september 2008 IVAC board approves merger

Chief officer of IVAC undertakes preparations for merger, working closely with staff, trustees and external advisors

november 2008 IVAC’s AGM votes in favour of merger

motivations for merger
April 2009 Merger date december 2009

The proposition of merger originated in this informal relationship between the two organisations, and it was the Volunteer Centre who approached IVAC about the possibility of merging. for the Volunteer Centre, the financial stability offered by merger with a larger organisation was a strong motivation. As an organisation reliant on grant funding, staff were finding themselves spending more and more time fundraising rather than delivering. This resulted in instability for staff, who would swap between roles as funding for projects became available. The centre was at risk of becoming unsustainable, and merger was one way of securing their future.

Post-merger phase

Organisation changes name and moves to new office

1

oTs, 2009, national survey of Third sector organisations, conducted by Ipsos morI, London

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“The impetus was financial, but we weren’t just looking for a life raft. We had a genuine belief that these two organisations could get together and have a lot more clout”
STAkehOlder

VoLuntAry ActIon IsLIngton
However, a stakeholder from the Volunteer Centre recalls that organisational fit was also a motivation for merger. It was clear to IVAC too that the organisations offered complementary services and bringing these together could benefit both of their user groups. As their chief officer saw it: “there was a lot of synergy between services for those who were interested in volunteering, and in the capacity building of organisations who want volunteers. so it made sense to be under one roof”.

The merger process
The merger was initially discussed by the two chief officers. more detailed consideration was required and so a working group was formed, including the chief officers and two trustees from each organisation. This group considered the possibility in more depth, before putting a paper to the IVAC board of Trustees to propose the merger. The Volunteer Centre’s board were already supportive of the merger, but for IVAC it was important to consider the Centre’s financial situation, and whether the organisation would be an asset or a liability. examination of the organisation’s finances through due diligence, and further discussions between the Trustees, led IVAC trustees to support the merger. The merger process took 15 months from the point when it was first considered, at the beginning of 2008, to the formation of a single organisation in April 2009. The legal form of the merger was a transfer of assets, with the Volunteer Centre closing and transferring its assets to IVAC. The chief officer of IVAC was the lead in the merger process, but worked closely with a number of external advisors, staff and trustees. • Lawyers drew up the merger agreement and led on other legal requirements. The legal aspects of the merger were relatively straightforward. Trustees who had particular knowledge of Hr acted as advisors in handling TuPe, the process that ensures employees in merged organisations do not lose the employment rights in their existing contract. The Terms and Conditions of IVAC’s contracts were more favourable than the Volunteer Centre’s existing staff contracts, so no extra provision was needed to meet duties under TuPe. Consultants were employed at two stages in the merger process. Immediately prior to the merger process, a consultant was employed to oversee the logistics of the merger, for example the Volunteer Centre’s move into the IVAC’s offices. After the merger had been completed a consultant was selected to provide an independent view on the new organisation’s strategy. This included work on the business plan and strategy for the new organisation, and spent time on interviews and workshops with stakeholders.Both organisations

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VoLuntAry ActIon IsLIngton
undertook staff engagement activities, to inform staff of the changes planned, and also to explore how the new organisation might work. A number of social events for the two organisations were also held prior to the merger taking place. once the merger had been completed in April 2009, the Volunteer Centre staff moved into IVAC’s offices. The organisation continued to be known as Islington Voluntary Action Council until december 2009 when it moved into new premises and was renamed Voluntary Action Islington. The legacy of two organisations is still evident and Voluntary Action Islington retains two distinct functions of volunteer-matching, and voluntary sector infrastructure support.

success factors for the merger
The trustees, chief officer and stakeholders saw the merger as successful, and felt that they had encountered relatively few problems and issues. Key reasons for success included the willingness of each organisation to be involved in the merger and the fact that trustees supported the merger. Another factor contributing to a smoother process may have been that there was no competition for the chief officer role in the new organisation, as one of the chief officers had stepped down in the run up to the merger. However, the really significant success factor identified by those involved in the merger was the opportunity to move into new premises and take on a new name. even though the merger was a transfer of assets, the change of name was seen as significant in showing an openness to becoming a new organisation, rather than one ‘taking over’ the other. The commitment to name change was made quite early in the merger process. The chief officer argues that this helped both organisations to “see the merger as an opportunity”. similarly, the new building contributed to the sense of positivity around the merger. It was seen as symbolic of the new organisation, suggesting a fresh start, and mitigating the sense that one organisation was being absorbed by the other. In practical terms, the new offices are of better quality and in a better location than IVAC’s old accommodation. moving into open plan offices allows staff to mix and meet, resulting in “a real buzz”.

Benefits of merger
“We’re never lacking opportunities for volunteers”
STAkehOlder

18 months after the merger, some benefits have already been realised. staff members have seen an increasing number of volunteer opportunities coming to Voluntary Action Islington. The benefits of closer working are evident in the number of volunteers being placed in organisations who had previously only accessed IVAC’s support services and not those of the Volunteer Centre. The new building, which is located in a busy area of central London, brings greater visibility and gives the organisation a shop front for the first time.

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In addition, a clear benefit for the Volunteer Centre has been more financial stability, as it has become part of a bigger organisation. Although the organisations did not receive any external financial support for the merger, the cost of £21,500 was carefully budgeted for by IVAC over two years, and has not resulted in a loss to the organisation. It has not created savings, either - but the merger was not undertaken to create efficiencies. The new organisation has also started to develop a stronger strategic role and is better positioned to offer leadership for volunteering in Islington, encouraged by the local authority. for example, the Borough Council influenced Voluntary Action Islington to recruit a new post as Head of Volunteering at a higher grade to be both a manager, and a representative for volunteering more strategically.

Challenges
overall the merger was seen as a smooth process, notwithstanding “irritations” such as integrating IT systems and details such as redirecting post. Voluntary Action Islington had a mixed experience with employing professional advisors. Although external perspectives proved invaluable in some areas of the merger, with hindsight the management were unclear what value was added by one of the external advisors they hired. A second issue came from the pro-bono legal advice accessed by IVAC in the first stages of the merger. IVAC’s experience of this was a lack of clarity from the providers, and it was only after a period of slow progress on the merger agreement that the organisation decided to employ alternative solicitors. staff coming to Voluntary Action Islington from the Volunteer Centre faced different challenges, as what the merger meant for them was less certain than for IVAC staff. staff knew that the merger would bring more stability to their work, but felt unprepared for the changes associated with this. In one case a project was cut, and one staff member remembers finding the merger ‘stressful’. They suggest that frank communication from management about the possible negative impacts as well as the benefits would have been better. one longer term issue arising from the merger is the refresh of governance structure and board membership. IVAC was a membership organisation, and therefore had a board elected by the membership, whereas the Volunteer Centre’s board did not require election. governance arrangements are still to be fully reviewed. However, instead of seeing this as an obstacle, the trustees and chief officer see a balance of the two models as a way to strengthen the trustees as a group. for example having a number of trustees elected by members and another number co-opted to allow certain skills or knowledge to be brought to the organisation and result in both a strong and representative board. Also in the long term, from the staff perspective there is still some distance to travel before the two staff teams feel like one. details such as exVolunteer Centre staff members still having Volunteer Centre contracts, have been slow to be resolved.

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Lessons LeArned
• • getting paid legal advice early on would have been worth the expense, compared to the delays caused by waiting for the pro-bono service. Choose carefully what external advice is commissioned. Professional advisors can be valuable because of their neutrality in the merger process as well as their expertise, but other forms of help may also be appropriate and less costly. getting new premises was fortuitous, and created an opportunity for the merger to create a more ‘level playing field’ for staff as well as signalling to the public and service users that a new organisation had been launched. management should manage staff expectation with frank communications. staff should be able to understand the benefits of merger but also be aware of the potential negative impacts of the change.

For further information about this case study, please contact:
Mike Sherriff, Chief executive Officer, Voluntary Action Islington 020 7832 5800, information@vai.org.uk

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