An innovative merger model and strong governance framework have allowed at-risk youth charity, Whitelion Group, to flourish. Tony Featherstone reports.
Arguments for merging not-for-profit (NFP) organisations are usually based on cost savings and the need for sector rationalisation. But the experience of Victoria-based Whitelion Group, a charity that supports at-risk youth, shows NFP mergers can be so much more. Whitelion merged with Open Family Australia in 2011, Stride Foundation in 2014 and the Balga Detached Youth Work Project this year. More mergers are likely as Whitelion expands its services in other states.
Whitelion has an innovative strategy. Rather than merge charities under a single brand, it operates a portfolio of brands. Each is aligned around program delivery and they work together under one legal entity: the Whitelion Group. This model has challenges, but it overcomes a key obstacle for NFP mergers: the potential loss of identity, goodwill, and philanthropic support. Some charities resist merging because they do not want to lose their brand and history. “We wanted to keep the brands alive because they were built over a long period of time and have significant equity,” says Whitelion Group CEO Mark Watt. “Also, it removes a barrier to mergers because other charities know they can be part of a larger group, while retaining their identity.”
After operating as a standalone group for just over a decade, Whitelion had a crash course in charity mergers. It led and integrated three successful mergers in five years, came close with a few others, and now views mergers as a core part of its strategy. Whitelion is championing mergers in the NFP sector. It is presenting NFP merger conferences in Sydney and Melbourne in late October, featuring global NFP merger expert David La Piana as keynote speaker and Company Director columnist Phil Ruthven AM FAICD. Whiltelion Group chair, Anne Barker MAICD, says more charities will be forced to merge as all sources of funding reduce. “A lot of small charities will have no choice; mergers will be their only chance for survival. It’s important that smaller charities think about mergers upfront, be clear on why they need to merge, and have forthright discussions with potential partners about creating stronger organisations.”
The Whitelion Group’s first two mergers saved $800,000 and delivered ongoing efficiencies. A bigger outcome was creating an end-to-end service for at-risk youth, by merging complementary organisations that worked across different parts of the problem.
Watt says the mergers’ best feature was the alignment of services. “We now have a more sustainable organisation that can help keep young people out of jail, off the streets, get them into work, and provide ongoing support.” Barker says board and management have a clear merger strategy. “Saving money and creating economies of scale were key considerations. But we also wanted partners who could help the combined Whitelion Group expand the breadth and depth of its services, build a stronger platform, and help youth more, in more states.”
The Whitelion Group’s caseload has more than doubled to 1,900 at-risk youth each year and it helps another 21,000 kids through outreach and food-bus services. Watt says it achieves positive change in about 80 per cent of youth it supports.
Whitelion was founded in 1999 by Watt and former AFL star Glenn Manton to help young people find a job after leaving detention, as well as a purpose in life through mentoring. Watt, then working in Melbourne youth detention centres, was concerned about the “revolving door” of young people leaving detention and returning shortly after on remand. Manton had a troubled youth, benefited from counselling, and wanted to help others.
Open Family was transformed by merging with Whitelion. Founded in 1978 by the prominent Melbourne priest Father Bob Maguire, and formerly chaired by Ruthven, Open Family helps homeless youth. The merger meant Whitelion could further support youth who were in and out of detention centres and ended up living on the streets. The Whitelion Group was officially formed in 2011.
The merger with Stride Foundation, itself the product of three NFP mergers, gave the Whitelion Group a preventative service. Stride works to improve the physical, mental and social wellbeing of young children, and their schools and communities.
Whitelion Group’s merger with the Perth-based Balga Detached Youth Work Project, established in 1978, further expanded the service offering. Balga provides grassroots youth support, information, advocacy, referral and case management.
The culmination of these mergers meant the Whitelion Group could help troubled schoolchildren stay out of detention; those who leave detention to find a job and to not offend again; and those who end up on the streets. Barker says the mergers have raised Whitelion’s profile with corporate partners. “We now have a range of programs for our partners. Some of their staff volunteer to help out on our buses; others might mentor young people. Our partners can get closer to our work, contribute in different ways, and get more from the experience. They also recognise we are creating efficiencies and enhancing our sustainability through mergers.”
No merger, charity or commercial, is easy. The Open Family merger was particularly complex because it combined legal entities and was arranged sooner than expected. Watt says the Whitelion board’s expertise was invaluable. “There is no way we could have done it without the board’s support and guidance.”
Subsequent mergers have added an organisation’s brand, programs and staff, and kept its legal entity separate. That also poses problems. Barker says: “It can be harder to tell a concise story when there are too many brands, or to ensure staff feel like they work for one organisation. We are mindful of the challenges of having multiple brands.”
The Whitelion Group board includes directors from the merged organisations. Others, such as Ruthven, have become ambassadors. The board has 10 directors, meets 11 times yearly and has two annual all-day strategy meetings. There are risk and finance committees and a “breakthrough committee” which drives innovation and strategic change.
Several directors have merger skills and experience, and Barker says the board composition is based on having directors with the right skills and commitment. As with most charities, financial sustainability is a key issue. Whitelion worked with PwC to create financial equity targets, shape its long-term sustainability and guide its merger strategy.
Barker, managing director of City West Water, joined as chair in 2011, just before the Open Family merger. The former lawyer had known Watt for 12 years through her involvement in corporate partnerships with Whitelion Group. “Mark and I have an enormous amount of respect and trust for each other, built over a long period,” says Barker. “We are honest and transparent with each other and there are no surprises.”
Watt says Barker is incredibly supportive. “Anne and the board are always available to give an honest, well considered opinion. Whitelion’s governance gives us the foundation to merge with more charities and help disadvantaged young people have the courage to choose a better future.”
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