Working together, growing together

Who We AreWho We Are

• Set-up in 1982.

• Now the largest co-operative development agency in UK.

• Support and train co-operatives and social enterprises throughout Wales.

• Funded by: Welsh Government, European Union, Local Authorities & Consultancy fees.

What We’ll Cover TodayWhat We’ll Cover Today

• The consortia development process• Opportunity and strategy• How to select a partner• Developing the vision• Boundaries for engagement• Models• Governance issues• Legal considerations

The Consortia Development Stages The Consortia Development Stages

Stage 1 Strategic Rationale

Stage 2 Identify Partners

Stage 3 Early Stage Planning – Joint Vision

Stage 4 Developing the Business Model

Stage 8 Review and Evaluation

Stage 5 Agree on the Structure of the Consortium

Stage 6 Legal Framework and Governance

Stage 7 Start Delivering

Co-operative Consortia - Co-operative Consortia - The The OpportunitiesOpportunities

• Shared costs / pooling funding to buy services• Shared resources – staff / premises• Bulk purchasing• Increased brand recognition• Enhanced business efficiency & professionalism• Continuity and volume of supply• Shared skills and knowledge• Opportunities to share good practice and ideas• Greater presence in the market place & access to new markets • Ability to tender for large contracts – required scale• Peer support and creative exchange – mutually supportive

culture • Shared responsibilities and risks• Inter-trading • Add value to a procurement bid and help increase the chances

of winning a bid• Provides an infrastructure to explore other areas of joint activity

Strategic PlanningStrategic Planning

• New money/opportunities?

• Diversification?

• Sustain existing revenue streams?

• Reduce expenditure?

• Consolidation?

• Survive?

The Consortia SpectrumThe Consortia Spectrum

Who Should You Work With?Who Should You Work With?

• No hard a fast rules

• Links to your strategy – what do you want to achieve?

• Geographic coverage v breadth of experience and service offering – or both?

• Size – do you need to partner with larger organisations to give you access to new markets?

• Just social enterprises??

Developing the VisionDeveloping the Vision

• Recognition of the need to collaborate

• Clear understanding of everyone’s starting point

• Clear understanding of each partner’s respective goals – what are the common areas on which to hook a collective vision

• Be clear on people’s breaking points – no go areas

• Recognition of the need to compromise

• Terms of reference – set out the framework for engagement and objectives

• Devise a work plan with timescales to meet expressed outcomes

• Be clear on how to resource early stage development

• Need to have the approval of the respective boards / trustees

Cilydd• Independent tea houses and

cafes in North Wales.• Share a common commitment

to an independent ethos. • Improve their approaches to

marketing, buying, training and quality standards whist retaining their own individual identities.

• Aim to create a unique tea and coffee culture for North Wales.

• Future aim – establish a co-operative roaster for members.

Boundaries for EngagementBoundaries for Engagement• Purpose of the consortium• Principles• Decision making processes• Administration• Finance• Dispute resolution• Membership termination• IP• Duration of agreement• Confidentiality / data protection

Special Purpose VehicleSpecial Purpose Vehicle

The Special Purpose Vehicle

The Membership Usually the core consortia partners

Hold assets

The Board of Directors Drawn from the

members

Employ Staff

Draw down grant funding Bid for contracts

Special Purpose VehicleSpecial Purpose VehiclePros Cons

Promotes more of an equal partnership amongst the members.

Can be difficult to attract funding as no track record of delivery at start-up phase.

Once established can be used over and over again to deliver new initiatives, bid for contracts.

Lack of understanding of the model by commissioners.

The model can be flexible, so if agreed, not all members need be involved in delivery, for example.

Could create additional costs for the founding members – need to balance this against the proposed return.

Membership can be expanded if additional skills / coverage is required.

As no one partner has direct control, this could put off those who like operate in this manner.

Can be established using a non-for profit legal structure or can be more commercial.

Can be time consuming to establish, hence can be obstructive if working to a tight timescale.

Case Study – Three C’s Partners Services

• This is a consortium offering services such as cleaning services, catering services and local resources to the people in the Graig-Y-Rhacca and wider Caerphilly area.

• The consortium consists of one business – a cleaning business – and the resource centres of White Rose and Graig-Y-Rhacca.

• The members have come together to form a company which will employ a joint business development manager funded through the Social Enterprise Fund.

• The company is a company limited by Guarantee with the 3 members as legal Members.

Lead Body ModelLead Body Model

Lead Body This organisation would draw down the required

start-up funding, lease any premises, employ staff.

Lead Body Board of Directors / Membership The lead body is accountable to its own Board of Directors

and membership.

Steering Group Made up of all delivery

partners

Delivery Partners

Delivery Partners

Lead Body ModelLead Body ModelPros Cons

It is a model that public sector bodies are used to working with and their procurement processes and management systems are geared up to work around this model.

The financial responsibilities fall with the lead body, hence you need to identify an organisation willing to take that risk.

Gives the commissioner a single point of access for services to be delivered.

The sub-contracted members of the consortia could feel disenfranchised as it is not an equal partnership.

Can be pulled together relatively easily if working within a tight timescale.

Small organisations still at a disadvantage, as due to their size, they would never be in a position to tender as lead body so would always have to act as a sub-contractor body.

Smaller organisations can benefit from scale of working with larger partners who can act as lead body.

Case Study – N. Wales Textile Recycling Consortium

• 6 social enterprises in North Wales looking recycling textiles collectively.

• Textile recycling has become a highly lucrative market.

• Better bargaining power with textile merchants if work together – can command a higher price fore textiles.

• Can also have more control of end use of clothing e.g. ethical markets.

• Aim to set up a textile recycling depot – creates jobs and training opportunities for people in N. Wales.

• Collectively bid for local authority recycling contracts.

Hub and Spokes ModelHub and Spokes Model

Hub and Spokes ModelHub and Spokes ModelPros Cons

Don’t need the same type of legal arrangements associated with the SPV model as each member has their own relationship with the commissioner

This model would mean the commissioner would engage in a financial relationship with all the partners not just with one body, be it a lead body or a SPV. Given the changing nature of public sector commissioning and the move towards rationalisation of process this may not be something they would be keen to entertain as a viable model.

Allows for flexibility so delivery organisations can develop and change over time quite easily.

Allows for more innovative service delivery.

Things That Can go Wrong Rushed planning and decisions at

start-up Non-compliance with legal

requirements Poor decision making Lack of financial control Lack of transparency Conflict and misunderstandings Member apathy Wasted time, money and other

resources People are not protected

Governance Issues to Consider

• One member one vote• Delegated powers• Consistent representation• Mediation of the different interests within the

consortium • Membership• Decision making• Document control• Quality management procedures & project

management

Legal ConsiderationsLegal ConsiderationsIssue Potential SolutionClear Understanding of the Relationship Between Consortia Members

Joint Working Agreement

Disclosing sensitive information

Non-disclosure Agreement

Collective Ownership of Assets

Creation of a TrustDeclaration of Trust Document

Ownership of Products / Services

Be clear on any potential Intellectual Property issues

Role of the Lead Body Managing Agent Contract

Legal ConsiderationsLegal ConsiderationsIssue Potential Solution

Delivery within a Lead Body Model

Sub-contract Agreement

Engaging with New Members

Accession AgreementMembership Prospectus

Ensure the Consortium is Recognised as Social Enterprise in its own Right

Socially Structured Memorandum and Articles of Association

Clarity on Role of Steering Group in Lead Body Model

Terms of Reference

Legal ConsiderationsLegal ConsiderationsIssue Potential Solution

Employing People Contracts of EmploymentHR Policies

Taking on Assets Lease / Freehold Agreements

Payment of Partners Internal Payment Schedule

Costs Open book information

Revenues and profits Joint working agreement

Our RoleOur Role• Advice on suitable business models, organisational and legal

structures• Advice and support with governance issues• Business and financial planning advice and support• Finding finance and helping to access grant funding where

appropriate• Support with HR issues • Support with developing important equalities strategies and

environmental management systems • Training and mentoring