So often this year I’ve had conversations with CEOs of mental health charities looking for investment, telling me their building is no longer fit for purpose, that they are seeing greater than ever demand and that resources are becoming stretched. I’m sure this is a familiar story to many in the sector – many feel they are at an apex in the road. The need to compete and maximise impact is beginning to push some towards a willingness to collaborate or merge, and we hope that this new push could serve to strengthen the sector.
Greater social awareness and heightened political focus do mean Britain’s 1,500 mental health charities have a chance to gain momentum. Recognition from NHS England and public figures has helped to refocus attention on mental health and since 2014, the government has announced an extra £600m for mental health and £1.25bn for children and young people’s mental health services.
However, challenges remain. Mental health receives 13% of the NHS budget, when mental health is about a quarter of the UK disease burden, and only 25% of NHS providers expect CCGs to increase the value of mental health contracts. Health commissioning continues to shift towards larger and more bundled contracts, favouring providers with a mix of services or wider geographies.
These struggles are most acutely demonstrated by tragic cases where vital charities have run into trouble. In the past two years we have seen closures of local mental health charities in Bolton, Portsmouth and Sandwell. Leading LGBT mental health support charity PACE closed after 31 years due to local authority cuts, leaving less supported an LGBT community already twice as likely to report chronic mental health problems.
These cases also contrast with organisations that have shaped a new and stronger future for themselves through merger. Recovery Focus (previously Richmond Fellowship) is a major mental health provider which has made expanding reach and impact a key part of their strategy. They have taken on subsidiaries to allow them to bid for complex needs contracts, most recently Birmingham-based addiction charity Aquarius. The chief executive of another, My Time CIC, described how his organisation had struggled to grow and secure contracts, but are now able to provide Recovery Focus with innovative products and services and win contracts together.
But although there are positive examples of mergers in the sector such as My Time CIC and Aquarius having an impact, our annual Good Merger Index data tends to suggest the charity sector still fears merger. Only around 60 are concluded a year, out of tens of thousands of active charities.
Let’s be clear, partnerships and mergers are by no means an easy option or any kind of silver bullet. Local and specialist mental health charities play a vital role and we need to find ways within the context of collaborations to preserve the quality of support that often only comes from local or specialised knowledge. However, the reality is that scale is now important and more organisations need to be at least looking at their options and having more conversations. If boards start the process of imagining the future by putting end users as the first, second and third consideration, with everything else being negotiable, then we believe a range of partnership options exist that can genuinely be transformative.
Matt Knopp is a director at Eastside Primetimers and chairs our regular charity merger roundtables for CEOs and trustees.
If you would like a conversation about how our merger services could help your charity, please contact our consultant Gemma Pugh at email@example.com or on 07949 249980.