The passing of Her Late Majesty marks the end of an era, the sudden absence of a reassuring figure who has been with most of us for all of our lives, but it is only the latest in a series of seismic events to remind us of constant change and of our need to continually adapt.

With rising inflation and increasing energy costs and an anticipated fall in donations, charities face meeting more demand from fewer resources and the question of what they should be doing at this time.

This question is simple to answer – they have to advance their charitable purposes – but how they are to do so presents the real challenge.

Should any charities consider calling it a day?

Over time a charity may address various needs, all within its mandate, but 2022 is forcing many organisations to identify their core purpose and what they are really good at, and to ask themselves whether they should leave others to deal with everything else.

Sometimes self-reflection will justifiably lead trustees to decide to close their charity. For various reasons, recently the board of one of our charity clients decided that another organisation was better placed to carry on its work and so transferred its operation to that other charity, to ensure that its good work could continue in the hands of others. Those trustees have followed the good practice outlined in Charity Commission guidance CC3, The Essential Trustee, by seeking to act in the best interests of their charity’s purpose, rather than vainly trying to continue the institution through which its work has been delivered to date.

Is merger the only way to survive and thrive?

Other charities may decide to combine their operations, but since the onset of the pandemic there has not been an expected surge in mergers, which tend to be time- and resource-intensive, and where cultures as well as operations need to come together (‘Marry in haste, repent at leisure...’)

Instead, increasingly charities are exploring how they can work better together, whether that is by sharing back-office functions, the resource of key personnel, or in the delivery of their work.

Last year the Girl Guides joined forces with Children in Need to fundraise Charity collaboration in action: Act Your Age!, Robert Nieri (shoosmiths.co.uk).

And recently the RSPCA and PDSA have announced a significant partnership. With reports of an almost 25% increase in abandoned animals during this cost-of-living crisis, these two charities are responding to increased need by playing to their own strengths: essentially the RSPCA is going to focus its veterinary resource on the treatment of animals it rescues from cruelty and neglect, while PDSA is to take over the RSPCA’s subsidised veterinary care services to the public.

We anticipate that this solution will have involved the charities working through a number of legal issues and we flag some of these for the purpose of illustration.

Some legal issues to consider

Purpose

It is evident that both charities have focussed on what they are really here to do.

RSPCA’s mission is to ensure animals have a good life by rescuing and caring for those in need…. which is very wide and can comprise the provision of veterinary care to the public – but is RSPCA better placed to act here than the People’s Dispensary for Sick Animals, whose first object is “…the provision of free medical or surgical treatment, or such treatment at reduced charges, to animals belonging to persons who are unable to afford the services of a veterinary surgeon…”?

Property

PDSA is proposing to acquire one of RSPCA’s animal hospitals, to deliver its charitable public veterinary work services, and while at the same time continuing to treat RSPCA rescued animals. On the basis that work is also advancing RSPCA’s purposes, this would mean there would be flexibility around the terms on which that property acquisition could take place.

Staff

We understand around 40 RSPCA staff are being consulted on a transfer between the charities on the same pay and conditions.

Transferring the whole or part of a business can trigger the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). When TUPE applies, the contracts of those employees assigned to that business will automatically transfer across on their existing terms with any dismissal of staff because they have transferred being automatically unfair save for in very limited circumstances.

Charities will therefore need to carefully consider the cost implications of inheriting staff on what could be more advantageous terms and conditions, which again can only be changed in very limited circumstances. An incoming charity will effectively step into the shoes of an outgoing charity, taking on all of the rights, duties and liabilities, and therefore careful due diligence is a must before deciding whether to go ahead with a transfer.

That said, where a transfer will allow both charities to better advance their charitable purpose it is likely to be in everyone’s interests for a transfer to take place

By withdrawing from the provision of subsidised veterinary care to the public, we note that RSPCA qualified staff at the other three affected sites will instead support their frontline colleagues by treating more animals rescued from cruelty and neglect, aligning more closely with that charity’s core mission.

However, this illustrates the general point that care is always needed to determine whether changes in role for retained staff would result in a fundamental change which could amount to a contractual change. Such a change would need to be agreed with employees and, if not agreed, could result in claims for constructive unfair dismissal should an outgoing charity seek to impose the changes without a proper process being followed.

Funding and ongoing collaboration

While at a point in time employment and roles will change for some staff, these two charities will enjoy a continuing working relationship. PDSA will offer services to pet owners at three RSPCA sites around the country by giving them access to its pet hospitals or to alternative support through a £1m treatment fund to which the charities have contributed equally.

And in Greater Manchester new PDSA catchment areas will be open to currently registered RSPCA clients. No doubt the charities will have agreed precisely how they are to work in partnership to serve their respective beneficiaries and how they are to monitor the effectiveness of their ongoing working relationship.

As the PDSA Director General, Jan McLoughlin said:

“Amazing things can happen when charities work together, and the positive benefits of our work will impact pets, animals and people across the UK. Collaborating with the RSPCA strengthens our position in the sector as the vet charity in the UK, and allows us to move closer to our vision of a society in which no pet suffers due to poverty.”
RSPCA Chief Executive, Chris Sherwood, said: “This is a powerful partnership which helps both people and animals at a time when our services are needed more than ever due to the cost of living crisis.

“By working together with PDSA we can both focus on our strengths, our core charitable objectives, and ours is rescuing the thousands of animals most in need, those who have no one else.”

The law should be used as an enabler of solutions, rather than as a barrier to collaboration or as an excuse to avoid necessary change.