Better Together? Is partnership the right approach for your organisation? Richard Davies & Christina Dempsey

The Partnership Continuum Model Legal Document Description Informal alliance Memorandum of understanding Informal partnership working Based on good relationships No separate legal status outside of the members Possibly partnership agreement Non-contractual Peer collaboration (with lead) Lead and partner agreement Loose consortium with lead delivery organisation Lead organisation applies for contract funding on behalf of consortium members Uses some of the funding to deliver own services and to manage contract Distributes rest to other members Consortium with a new legal entity Joint Collaboration agreement & governing document of a Special Purpose Vehicle (SPV) Formally constituted as an independent legal entity Single point of contracting Hub & Spokes structure Prime collaboration (with lead) Contracts & sub- contracts Need available managing agent that can hold contracts and distribute sub-contracts Managing agent charges management fee Merger Governing document of new vehicle Parties merge to become a new entity (where there is relative equality between the joining parties) or enlarges an existing entity.

The Disadvantages of an Informal Alliance Doesn’t save resources Doesn’t offer economies of scale May not prevent duplication Doesn’t enable joint bargaining power Procurement agencies less likely to support it There are multiple points of contact No clarity re: processes, who owns what etc. Can be based on “good will” – however,disputes may well arise

The Disadvantages of a Peer Collaboration (with Lead) Individual members have less ownership and control over the funding and contracting process. Individual member organisations may find it more difficult to establish a separate identity and brand Leader may carry all the risks and liabilities and relationships may be damaged as they have to supervise performance to keep standards up Inherent tension with managing provider function Members may have “issues” or “baggage” with the lead body There may be an imbalance of power between the lead member and the other members e.g. negotiating management top slice. Members may have a conflict of interest Passengers!

The Disadvantages of a Consortium (with new legal entity) Only as strong as the weakest link There may be a conflict of interest with the independent entity by members Some smaller organisations may not have the capacity or resources to co-manage the consortium (as they have a right to and are obligated to) It can be very difficult to establish an effective accountable body infrastructure from scratch Can tie each other in knots in the pursuit of a set of democratic rules Could be perceived as “more risky” by funders at outset - no established track record as new entity May cause displacement of existing staff as management functions move out of the domain of individual organisations Increased costs of admin, insurance, TUPE, accounting etc.

The Disadvantages of a Prime collaboration (with lead) Sub-contractors will not be in control – loss of autonomy Sub-contractors may find it much more difficult to establish separate identity and brand The managing agent may lack empathy with sub- contractors Sub-contractors may have “issues” or “baggage” with the managing agent Sub-contractors do not get to agree management top slice There may be no infrastructure to support collaboration

The Disadvantages of a Merger Expensive/time consuming process A risk of clash of ethos/values Stakeholders become confused about the identity of the organisation A risk of personality clashes/ego clashes Problems integrating staff from different organisations and systems Constitutional and legal headaches – Powers, Objects compatibility, trustees and board members (who stays on, who goes, TUPE, pensions, contracts held by individual organisations Merger or takeover?

Disadvantages of Partnership Working in General…. Identity  Confusion among beneficiaries  Cultural mismatch between organisations  Diverting energy and resources away from core aims  Damage to or dilution of brand and reputation Working practices  The challenge of managing change  The complexity of decision making and loss of autonomy  Lack of consistency and clarity on roles and responsibilities  Damage to or dilution of brand and reputation Finances  Additional management costs of developing the partnership, tendering and delivery  Cash flow difficulties if lead organisation is affected by late payment  Cash flow difficulties felt by smaller organisations Performance  Outcomes that do not justify the time and resources invested  Failure in delivery or breach of contract by another member may seriously impact on ability to tender alone or with other  Damage to the organisation, waste of resources if the partnership is unsuccessful

Benefits of partnership Reduce costs and overheads by sharing resources Benefit from economies of scale and increased buying power Access skills which complement those already within your charity Learn from collaborators’ experiences and practices Raise your charity’s profile and public awareness of your cause Reach new donors Seek funding from new sources, such as the local authority which would not have funded your charity on its own Compete (for contracts, funding and so on) where your charity could not compete effectively on its own. Use skills you do not have Deliver outcomes you can’t on your own

Benefits of: informal alliances Easy to set up Minimal financial costs Build on the strengths of partnering organisations Opportunity share learning, good practice etc. Quick to establish Flexible Builds on natural compatibility Retain independence

Benefits of: Peer Collaboration (with a lead) Able to make use of existing contract management and accountable body systems Due to the established reputation of the lead organisation in particular, this model may be perceived as less ‘risky’ by funders Lessens requirement for tendering, monitoring and reporting for lower-level organisations Due to the established reputation of the lead organisation this model may be perceived as less ‘risky’ by funders Lead organisation able to focus on quality and quantity of output, and to take charge of recording and reporting mechanisms Retain independence but benefit from added “weight” of partners Piggybacking

Benefits of: Consortium with new legal entity Allows the consortium members to have full ownership and control You can define levels of authority/control/involvement Easier to create a clear identity and brand Less ‘institutional baggage’ Offers the possibility of passing risks to a new entity Allows organisations to separate partnership working from the rest of their activities Retain independence!

Benefits of: Merger 2 main types: i. create new third organisation and both transfer into it and the both close ii. One party transfer its assets into the other and closes Reduce costs/duplication Focuses message and identity Service users gain access to all available resources/staff Single point of entry for partners an service users Managing debt, reputational “baggage” New start High profile launch/re-launch

Clarity = certainty = success A CLEAR agreement forces you to think about things you should think about anyway but might not want to/feel too busy to, e.g.: o Who delivers what o Powers and duties o Access to resources o Decision making processes o Joining/leaving o Intellectual property o Membership o Identity o Dispute resolution o Closure Have a clear process for investigating partnerships e.g. informal discussions, exchanging information, joint SWOT analysis, due diligence etc. Set your own boundaries before entering into negotiations. Define your red lines and stick to them. Don’t be afraid to pull out! External facilitators can be useful

What do you think? Q & A

What is your preferred partnership approach?

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