Collaborative working and partnerships
What makes a good basis for collaboration or partnership working?
Charlie Cattell, a specialist in legal and governance matters relating to social enterprises, charities and voluntary organisations, in particular legal structures, organisational management and regulatory issues, explains that there are key distinctions between different partnership models. The following guidance is adapted, with his permission, from Charlie Cattell’s “Collaborative and Partnership Working” training:Collaborative working can take place in an informal way, through networking, meetings and information sharing, with few resource implications for those involved in the “working partnership”. Voluntary sector organisations are used to working in this way without any particular problems and there are many benefits to working together in the interests of beneficiaries and service users. Collaboration which is not tied in with service delivery may result in cost savings, better use of expertise and resources, shared back-office services and better quality assurance.
Increasingly, though, charities may need to consider entering a more formal consortium or executive partnership in order to bid for contracts, particularly with statutory authorities, or to manage shared resources. In these cases, there are a number of possible ways forward.
The “lead body” model does not involve forming a new body – it is a collaboration between autonomous, independent organisations and the partnership itself has no legal identity of its own. One of the partner organisations will be the lead body or accountable body, which is this signatory to any contract, holds the funds, employs staff and may sub-contract to other partners. Commissioners and funders often favour the “lead body” model because they will essentially be contracting with a single, established organisation which has its own legal identity. This kind of arrangement, however, can be risky for the accountable body, which has legal responsibility for the grant or contract and has to manage sub-contracts and the performance of the other partners as it relates to the contract requirements. Other members of the partnership may feel sidelined and may feel that the lead body has too much power and influence. Often, problems arise because the partners have to form the partnership hastily, but a clear partnership agreement is an essential pre-requisite to a successful collaboration. The key provisions should include the duration of the agreement, respective responsibilities, payments and charges, insurance, intellectual property rights, confidentiality, assignment, termination, variation, breach and disputes.
The “coalition model” is similar to the “lead body” model in that it is a collaboration between autonomous organisations and does not have its own legal identity. It is likely to be a fixed-term arrangement. The key difference is that all of the partners are signatories to the grant or contract and the funds involved are allocated and distributed to the individual partners, who control their element of the contract and take legal responsibility for it. This model is likely to be less attractive to commissioners and funders as for them it is little more than multiple small contracts and there is little motive for the partners to work together.
Another model which does not entail establishing a new legal body is the “trustee model”. This is essentially an administrative convenience, which involves a trustee being designated to hold and expend funds on behalf of the partners. This trustee is likely to be an organisation which may be one of the partners. A formal trust deed is required and, while the legal responsibility for the contract or grant is shared between the partners, the problem for commissioners and funders is that this effectively remains a multiplicity of small contracts.
Charities engaging in any of these collaborative ventures must bear in mind that they are public trusts, governed by trust law. This means that all charities must only do the things specified in the objects, conform to the wishes of their donors, obtain maximum benefit from resources and spread benefits fairly amongst beneficiaries. In relation do working as a member of a partnership, the partnership activities must be within the charity’s objects and powers, the charity’s own beneficiaries must stand to benefit, participation in the partnership must be a prudent use of the charity’s funds and the risks should be assessed and managed. It may be possible, with the Charity Commission’s approval, for a charity to amend its objects to bring them in line with those of the partnership and, if the partnership activities represent a relatively small part of the charity’s work, they may be termed small scale trading and therefore permitted.
The alternative to the above models is the creation of a new entity. This is a permanent arrangement, until it is formally dissolved and the partner organisations are the voting members of the new legal entity. Because it has its own identity, this new body may enter into contracts in its own name, hold assets, employ staff and have its own policies and procedures. This avoids a number of the problems associated with the less formal partnership models – responsibilities are clear, trust law is not an issue, there is no lead body exerting influence – but it is not an easy option. Despite the appeal of dealing with a single legal entity, the body will have no track record, which can be a serious problem for commissioners and funders, it may actually be in competition with one or more of its constituent member organisations for funds and work and it will require additional resources for governance and administration.
Charities should be aware that, sometimes, “accidental organisations” may emerge, through the practice of pooling assets and liabilities. This can occur even when there is no intention amongst partners to merge. Where there is a merger, whether or not this was intentional, this may result in a larger, stronger organisation which is attractive to funders and commissioners, consistent quality standards and a more effective and efficient use of resources. There are, of course, initial costs, which are almost always underestimated, which may mean that it is more economical for one of the partners to be adapted, rather than creating a brand new organisation. Whilst there may be good, sound arguments for merger, there are many considerations which need to be addressed. Trustees, in particular, are likely to be resistant to the prospect of organisations merging and many will see merger as a sign of weakness or failure, rather than a sensible approach. Staff, volunteers and beneficiaries will also have concerns and there may be many legal issues which present barriers. The organisations merging may be in very different positions in relation to their finances and governance structures and, even if the decision is taken that there will be a merger, the whole process may take up to two years.
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