At a time of global, societal and political uncertainty, the Future Charity research has identified a number of systemic barriers to transformation within the sector, hindering its ability to meet a growing need. To address these challenges and start a journey towards sector-wide change, we’ve have developed a number of actions we call all take, to make a difference.”
The Future Charity report found that the sector is experiencing a crisis of confidence about the future. Rising inequality, an ageing population and already-happening climate change are combining to create a greater-than-ever need for the services of charitable organisations. But the ability of the sector to adapt to the changing expectations of supporters, keep pace with new technologies, and meet the increasing needs of beneficiaries is hindered by fear.
Our event during the summer, saw 60+ sector leaders come together to dive deeper into the findings of the Future Charity research and built on the actionable next steps identified in the report.
Attendees included CEOs, Directors, Trustees and change-makers at all levels of the sector’s rigid hierarchy.
The room buzzed with inspiration and, for some, a harsh realisation that things need to change, and now.
Much like many of the crises we are facing right now as a society, change isn’t going to be easy and will require huge action. A sixteen-year-old put it better than I ever could when she said:
“If solutions within this system are so impossible to find then maybe we should change the system itself,”Greta Thunberg
Perhaps we need to look at things completely differently.
But in the meantime, there’s so much within the system that could have a tangible impact if we can build the confidence to step outside of our boxes.
A group of sector leaders and consultants are working together to drive disruption across the sector before it is too late.
If you would like to be involved, get in touch email@example.com
1. (RE)DEFINING PURPOSE
Charities in the UK face multiple, converging crises. While the need for charities is greater than ever, trust is down, income is dwindling, and there is new competition from a purpose-driven commercial sector.
Purpose is more important than ever to remain relevant, regain public trust, fend off commercial competitors.
Growth at all costs
Charity organisations are locked within a framework which makes growth an imperative and prioritises financial indicators over other measures of success, so charities ‘chase pounds, not purpose’.
Market saturation, fragmentation of messaging, brand dilution are problems. According to the Charity Commission in 2018, there are 167,972 registered charities in England and Wales, and there could be as many as 400,000 charities in the UK.
Trying to do too much
An inability to measure real-world impact leads to a lack of focus. When we can’t measure success effectively, doing more becomes a proxy for doing better. This is less true in fundraising, which is why so many large charities are now focused on fundraising over delivering services and support.
It’s only natural that strong relationships and shared challenges mean that loyalties to colleagues, team, department and organisation often trump loyalty to the cause. Rigid hierarchies, silos and a lack of diversity among charity employees only compounds the problem.
With the competition so intense, is your charity’s purpose distinct enough from other organisations to avoid a duplication of efforts? If not, can your purpose be refined and focused to differentiate your charity from its nearest competitors in both the charity and commercial sectors?
If you can’t differentiate yourself from your nearest competitor, is it time to consider a merger?
Where purpose overlaps with another organisation, can you collaborate strategically to fulfil the purpose of both? Save the Children’s partnership with GSK has immunised nearly 100,000 children against preventable diseases and trained over 20,000 health workers.
Measuring more than just income
Can financial indicators be replaced with ones that align more closely with purpose? We’ll revisit this topic in our section on ‘Measurement’.
Quantify the need that the purpose is delivering against.
Check with stakeholders and beneficiaries to ensure they support and understand that need.
Pilot sharing and collaboration across charities
Identify charities to explore a collaborative pilot across their shared purpose, and work in partnership to deliver impact
2. BUILDING CONFIDENCE
We know that change is needed, that charities need to be brave and take risks. And yet a culture of inertia prevails among leaders. How can we find the confidence to deliver the bold leadership that’s needed?
Fear of failure
Making brave, bold choices to enable transformation necessarily comes with risk attached. It also requires a huge effort to bring everyone along with you – pockets of power within your organisation can disrupt your plans if you don’t do enough to win their backing.
Consequences of getting it wrong
In a climate prevails, taking risks which don’t pay off could see you labelled as unreliable,
irresponsible or negligent. Given the small size of the charity leadership job market, this could have disastrous personal consequences.
Isolation of leadership
Hierarchical structures leave the top isolated. Unpaid trustees aren’t sufficiently engaged, or don’t have time available, to provide support. Competition between charities leads to little support between peers.
Leadership capability gap
Most will acknowledge that leaders in the charity sector lag behind their counterparts in the commercial sector – both in terms of technical understanding and soft leadership skills. This is the consequence of a tendency to promote from within, often too early, leaving little time to develop these capabilities.
Finding the right people for leadership roles
Charities can do more to attract experienced agents of change from a wider variety of backgrounds, instead of just defaulting to the restricted talent pool that already exists within the sector.
Coaching and mentoring
To address the skill and confidence gap that exists in leadership positions, charities could provide coaching and mentoring for those who need it. Mentors should bring outside experience wherever possible.
Build appetite for risk at board level
Trustees have an important role to play, since their appetite for risk determines how bold and brave leadership can be. Now is the time to reassess policies and attitudes to risk management.
Ring fence resources for innovation
Successful innovation requires failure. Resources should be set aside for conducting experiments where no immediate return on investment is expected.
Cross sector support forums
The charity sector must build better support networks to combat the isolation of leaders, and help them share knowledge and experience of operating effectively within the charity governance structure.
Leaders acknowledge the urgent need for change
Build an honest, vulnerable and authentic dialogue. Start by sharing the report far and wide across all roles in the sector, whilst bravely sharing our own fears and vulnerabilities.
Prioritise time for coaching and self-understanding.
All leaders to understand and confidently share their personal mission, values and purpose
Build reverse mentoring schemes
Prioritise time for leaders to experience the reality of operations within their charity and welcome an uncensored experience, warts and all!
Invest time to build alliances
Build sustainable unconditional relationships, cross-organisation and cross-sector, and work together to down traditional ‘barriers’ such as legacy team divides and internal competition.
Increase diversity at board level immediately
Invest in coaching of trustees at a team and individual level. Welcome younger, female and minority trustees. Perhaps reward trustees to make the role more accessible to all.
Build confidence to take risks:
Educate trustees in their role in change. Encourage trustees to call for uncensored content from the organisation on the transformation opportunities and the impact of doing nothing.
Encourage individuals to ‘disrupt’ and challenge the status quo
Take recommendations and advice even if it jars with traditional culture and is hard to do. Build trust in external and internal disruptors and encourage new ways of thinking.
3. SECURING THE RIGHT PEOPLE
Charities are not delivering the compelling marketing that is increasingly important amidst competition. Culture, leadership, skills and investment stand in the way of opportunities from technologies.
Lack of diversity
Diversity of organisations doesn’t match that of wider society and is reflected in a lack of diversity of thinking.
Below market salaries
It is accepted as a rule in the charity sector that you will earn less than people doing equivalent jobs in the commercial and public sectors, and charities struggle to attract talented people from other sectors.
Lack of leadership follow through
It is demotivating to the wider organisation when leadership launches strategic initiatives but fail to follow through. Staff feel like they’re going through the same motions every few years.
It is difficult to fire under-performers and impossible to give bonuses to high-fliers. Over time, those who underperform see little point in improving and those who excel see little reward for their extra efforts.
Lack of proper management
Management practices fall far short of what is considered best practice in the commercial sector.
The unpaid trustee role may be a barrier to attracting trustees from diverse backgrounds, and can mean that trustees are taking on their duties in addition to a full-time job, so have limited time to invest.
Remote and flexible working
Now an essential part of the employer’s offering to potential new employees. Only 6% of employees in the UK now work a traditional 9 to 5 day and unions have recently made calls for a four-day working week.
Active recruitment strategies
We need new kinds of active recruitment. Particularly for senior appointments, candidate sourcing has to be active. Competition is too intense and passive strategies too time consuming.
Pay market rates
competition between the charity and purpose-driven commercials means that charities have to be able to draw from the same pool of talent, so need to pay more.
People want to work with inspiring leaders who can help them grow and develop. Coaching and performance management skills must be a priority.
A dual-track career path allows upward mobility for employees where they follow an increasingly specialist path, developing their skills to add value to the organisation.
Consider paid secondments every two years and reserve time for development and innovation
Improve salaries and reward
Increase space for competitive salaries by funded overheads separately from services and activities. Expose the impact of the salary problem
Pay interns to increase diversity and encourage input to strategy and decision making. Create apprenticeships in fundraising.
Encourage diversity of thinking and difference of opinion
Diversity is more than that which can be seen. Encourage and celebrate people who are different and challenge the norms
Inclusive recruitment strategies
Ditch competency based interviews and perform name/education blind selection to remove unconscious bias.
4. MEASURING MEANINGFULLY
Charities need to recognise that each individual wants or needs to relate to the cause in a different way, and the customer experience along with the impact of the change is what matters, above financial turnover.
Not knowing what to measure
Like many organisations in the digital age, charities can find themselves drowning in data, without any insight into what’s worth measuring and what’s irrelevant.
Too much emphasis on financial data
The charity model places an emphasis on the financial responsibilities of board members, so financial data takes precedence. It’s usually the easiest to gather and most familiar for audiences to digest, and so tends to serve as a proxy for other, non-financial performance indicators.
Only reporting the positive
A fear of exposing failure results in cherry picking data to fit a narrative of success, or retroactively changing the parameters of success to fit the data, which has the power to shift an organisation off course.
Neglecting impact measures (until the Annual Report)
Outside of annual reporting, or creating stories for marketing, it’s hard to build any focused engagement with developing measures of impact.
Build a data-savvy culture
Set out an organisational approach by deciding which data points are important for measuring progress towards strategic goals and then train everyone, including leadership, in how to use them.
Introduce honest reporting
When leaders own their failures, and show how those failures can be used as a learning opportunity (partially due to the data they generate), it encourages everyone else to do the same.
Set non-financial KPIs
Financial performance indicators must be accompanied by non-financial KPIs. The amount of money spent on a problem is not a measure of impact. Use creative approaches to measure new things.
Longer reporting periods for impact
The delay between funding an intervention and seeing its impact can be significant. The reporting basis should be adjusted accordingly.
Invest in data capabilities
Digital means it’s getting easier to track progress and gain behavioural insights, but harder to join it all up. Tool, people and external support can help you to make best use of them.
No more ‘penny in the pound’
The ‘x pence in every pound goes directly to the cause’ measure of charity effectiveness is not standardised and isn’t appropriate as a direct comparison between two charities with different operating models.
Work with trustees start using metrics for honest evaluation and learning, and stop using metrics to manage and control. It’s ok to not be ok.
Sector-wide key impact metrics
Collaborate to develop sector-wide key impact metrics for comparisons and learning, create a framework to promote sharing and honest evaluation.
5. COLLABORATING ACTIVELY
Only by working together can charities address the lack of trust and perceived lack of accountability across the sector. How can we consider sector consolidation, either through mergers or through forming alliances to free up resources for innovation in fundraising and service delivery?
Collaboration across the entire sector could address the issues of eroding trust, reinvigorate the culture of giving, and tackle the failing trustee model.
Reluctance to share information
Organisations tend to treat all data as confidential by default, even when that data isn’t commercially sensitive. Intense competition exacerbates this tendency, making it hard to gain an accurate picture of key features of the sector (and forcing a reliance on third-party surveys.
Internal reporting is unfit for purpose
There is a lack of confidence in the data generated internally by most charities. When two departments come up with different numbers, which would you share with external organisations? Or do you own up to the inconsistency, and make yourselves look foolish?
Can’t see the value of collaboration
The value of collaborative efforts across the entire sector, or even across sub-sectors, isn’t immediately apparent to individual charities wrestling with their day-to-day challenges. In addition, any such collaboration is likely to take some time to pay off.
Lack of joined-up thinking
Current efforts at collaboration between charities are ad hoc (e.g. Gradunique), small in scope and inconsistent. The lack of a sector-wide vision precludes the possibility of tackling strategic objectives over the long term.
Build consistent sharing
A framework needs to be established for the consistent sharing of non- commercially sensitive data across the whole sector. Understanding prevailing trends in giving, fundraising, volunteering and more are essential for confronting the challenges presented by new technologies and rapid social change.
Embrace the whole sector
The press often takes aim at the sector as a whole but responses come only from individual charities or organisations without the authority to speak for the whole-sector. Building a collective voice requires participation in long-term conversations and initiatives with other charities that have the potential for taking practical action.
Create a shared enterprise
One of the goals of a collective body could be to set up a social enterprise to provide charities with enterprise-level technology – a commercial venture that puts all its profits back into developing the capabilities of the sector and reducing its reliance on for-profit platforms.
Define what true collaboration looks and feels like internally, first. Then be bold and honest around what is getting in the way of effective collaboration.
Change the way we talk about competition and collaboration. Identify where language holds us back.
Build the urgency and essential need for collaboration to deliver our purpose. What will staying the same cost us?
Create a narrative and language that shows we’re all in this together. Build clarity of purpose of the sector and its role within society.
6. LOOKING BEYOND THE SECTOR
Improved partnerships with private sector could help charities ‘follow fast’ when it comes to keeping up with technological innovation.
Utilising the specialist skills, capabilities and access of commercial organisations would also help inject new energy into the sector and help it learn how to compete.
Perception of charities as difficult
There is a widespread perception in the commercial sector that charities are slow, weighed down by bureaucracy, saddled with incompetent staff and generally difficult to work with.
For may commercial companies, charity partnerships are more of a box- ticking exercise in corporate social responsibility than a strategic, purpose- driven effort to bring about real change.
Lack of purpose synergy
Not every commercial is suitable to partner with but ensuring that a large, multinational company with complex operations and diverse suppliers.
Focus on ‘corporate’ partnerships
An historic focus on corporate partnerships (i.e. donations from corporate entities in return for publicity) has left many unaware that strategic collaboration is even possible.
Fear of relinquishing control
Risk aversion leads to a fear of handing over strategically important functions to commercial partners, even where the value of doing so is clear.
Bake external partnerships into strategy
Charities should identify the big challenges that could be solved with help from the commercial sector and then make realising those partnerships a strategic imperative.
Shift innovation focus to include partnerships
Resources that are ring-fenced for innovation could come with a directive to seek external partnerships wherever possible. Successful small-scale experiments could have the potential to scale up.
Reduce barriers to participation
Often for-profit companies are excluded from sector events or charged prohibitive fees to participate. Removing these barriers would provide a greater diversity of potential partners (i.e. not just those with products and services already aimed at the charity sector).
Use partnerships strategically
Partnerships should be reframed as first and foremost an opportunity to cut costs or achieve things that otherwise couldn’t be done. Corporate partnerships should become an afterthought.
Gather insights from other industries
Gather insights and encourage discussion as to how they can apply what they’ve learnt, across all levels of the organisations.
Imagine we are commercial organisations
Charity leaders to imagine themselves as commercial organisations and define how they would develop themselves to be attractive “targets” for acquisition.
Create purpose driven partnerships
Start discussions around forming purpose driven partnerships to enrich each others’ work, not on a financial loss or gain basis.
Consider totally different models
Start by copying others outside the sector.
Giff Gaff – community run,
Amazon – speed,
JLP – partnership