Good Charity Leaders Deserve Business Support

Good Charity Leaders Deserve Business Support

When it comes to assessing good leadership in the voluntary and community sector, the qualities can be harder to gauge than for the private sector. 

The achievements of senior managers in the voluntary and community sector are often demonstrated quietly and modestly, but the demands are high: they need to deliver both financial return and social profit.

That small local charities are surviving in today’s very tough environment, is evidence of the sector’s ability to attract leaders with both talent and commitment.  The sector at this grassroots level deserves more recognition and support from their local business communities.

Peter McCann is our guest blogger

The value of social profit
Social profit is values driven: it’s about achieving lasting improvements to the well-being of people who are the subjects and beneficiaries of what is often specialist ‘caring and support services’ and delivery processes.

Charity leaders have to find a way to measure and prove social profit to funders and you need the right tools and access industry-specific training to do that; that’s a problem for smaller organisations especially, where resources are limited and you are in a constant battle for more funding.

Social outcomes should not be undervalued. They include the sometimes hidden and longer-term positive benefits of reducing, or avoiding altogether, costs on society that would otherwise need to be paid. That might be by vulnerable service users and their families; or the costs could fall back more directly on to the state, through agencies like the NHS and local authorities; or on government departments like the Department of Work and Pensions where housing and employment are concerned.

Commissioned services in place of grants
In recent years charities have been teased into the arena of competing for public service contracts. The system of outsourcing has in some cases been a win-win: it works well for local authorities and health trusts to offload some of their huge costs by outsourcing to a cheaper provider; and it works for charities which, if successful in their bids, could enjoy a period of steady income and financial sustainability.

To a degree, partnering with local charities to deliver services could also be viewed as a sort of compensation for what else has been happening: a very sharp reduction in local authority grants, which historically have helped to sustain the frontline work of smaller charities.

Unfortunately, today the tide seems to be turning against smaller charities when it comes to commissioned services. The public sector is becoming more risk averse. Even when local charities are able to demonstrate outstanding service delivery, they find themselves increasingly on the back foot when trying to prove financial sustainability, on-going value and scalability. Their traditional income streams simply don’t allow for that business model.

Against a background of fewer grants and risk-averse procurement, it is little wonder more and more small charities are now struggling.

Recognising social return on investment
The situation needs to change if the important frontline work of smaller charities is going to survive. The solution has to be in helping these organisations and their senior managers to invest in tools and training which can help them measure social outcomes, and for commissioners to give greater recognition to the value of social return on investment. We see a lot of good intentions set out in public sector strategy papers, but not enough put into action.

If commissioners and other funders continue in this failure to reward social profit, or can’t or won’t begin to invest again to support the sustainability of the 160,000-plus charities providing vital local services, we will continue in this country to have declining social profit in a time of increasing social need.

The case for charity collaboration and mergers
Of course, responsibility should fall on both sides. Charity collaboration and mergers will become more important in the future to demonstrate scaleability and lower perceived risk.

And what of larger charities? Fortunately, these organisations enjoy the advantage of national visibility and, according to a recent Civil Society Report, the top 100 raised over £5.6bn in 2016/2017 from donations alone. This was up 0.7%, although interestingly income from activities was down 2% and from statutory sources down 1.7% to £1bn. (Figures courtesy of Cathy Pharaoh’s Report, Cass Business School). The truth is, unlike their smaller counterparts, most of our larger charities have over the years built healthy reserves through their donations,  and so in these more challenging times can invest on promotion to maintain their position and continue their good work.

Charities blessed with talented and dedicated leaders
CEOs of smaller charities which demonstrate resilience deserve society’s appreciation and recognition.  Indeed, they may be demonstrating greater leadership than can be seen sometimes in the private sector where regular income can be, though is not always of course, the norm.

Moreover, the vast majority of these smaller local charity leaders (not to mention their staff and volunteers) often demonstrate exemplary self-sacrifice and self-control when it comes to their own, often paltry, financial reward. What an example for us all, and to some of those for-profit leaders.

The need for an alternative source of funding
But to whom can small charity leaders turn to for their organisations’ future funding when, after years of austerity, the NHS and local authorities are buckling under their own financial squeeze? And when grant-making bodies are having their doors knocked down too, swamped by more and more applications? The storm clouds are gathering over small charities up and down the country.

Using whatever talents or means we have at our disposal, our personal responsibility must be to help smaller charities reach out to the wider public.  And employers in private business could also lobby employees where possible too.

We hear a lot about corporate social responsibility; however, with more than four million small private UK companies employing some 20 million plus people, not nearly enough is being done to support local charities carry out their frontline work to support disadvantaged and vulnerable groups. They need more donations and real support from their local business communities.

A call to action
Virtually all small companies have employees and directors who, within their own families or those close to them, will be using the services of a local charity in one way or another, maybe through a day care centre or memory club, supported housing, youth services, mental health counselling, debt advice, information and service access for those with physical, sensory and/or learning disability. This is what we risk losing if we let small, local charities fail.

What price then in businesses giving more donations and funding to our local charities? What price from getting some increased recognition of the immense value provided to society by small charities? Let’s get our private sector leaders to stand up and be counted – reflecting the ethical values so many of our socially and environmentally aware younger people want to see.

Can for-profit business leaders become even better business leaders by example, and join the ‘real community’ – not just the financial one?

But, of course, firstly smaller charities have to tell local businesses who and where they are, what they do and how they can be supported. A good charity leader must find some way to cut some time away from operational involvement to ensure their charity addresses this potential source of support. There’s a vital role to be played here by local infrastructure charities (commonly called voluntary and community action groups or VCS Alliances) to give support to small charity leaders and raise awareness about the charities and voluntary groups in their area.

About the Author – Peter McCann is an independent Board level and senior manager mentor/coach, with a particular interest in supporting charities.

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