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Navigating the Tightrope: When Charities Start to Resemble Businesses



The recent abrupt closure in Gloucester of two huge sports and leisure facilities at GL1 and Oxstalls Campus, both run by charitable trust Aspire on behalf of the City Council, has left many people stunned. The charity's financial woes, which has taken it into liquidation, shed light on a growing trend that has gripped the UK charity sector for the past two to three decades: the commercialisation of charities.



Female swimming instructor by the side of the pool smiling down at a group of learner swimmers. They are in the pool, leaning on their floats and smiling up at her.

The Allure of Public Services

Once upon a time, charities were happy to focus solely on their missions, whether that was alleviating poverty, supporting the disabled, or saving the planet. But over the past twenty or more years, we have seen government nudging charities into a new role - that of quasi-business entities delivering public services.


By encouraging charities to bid for public service contracts, the government offers them a tempting carrot: stable funding and an opportunity to grow. Yet this comes at a price. When charities start to resemble businesses, they suddenly find themselves in the uncharted territory of having to turn a profit and, as time goes by, often with dwindling government support.


When Charities Start to Resemble Businesses

Charities, buoyed by the idea that they can be as savvy as commercial businesses, have with mixed fortunes embarked on profit-making ventures. At first sight, this often looks like a brilliant way to bring in additional resources. But the issue is far more nuanced than it initially appears.


One charity leader describes how this theory of commercialising the voluntary sector can play out in practice. Their charity is commissioned by the local authority to provide assistive equipment to people in the community. The amount of money used to commission this service hasn't shifted in more than seven years, despite ever-rising costs for the organisation in energy bills, salaries and petrol. On the two occasions so far when the contract has come up for renewal, it is made clear that the option is to take it or leave it, because there is no more money on the table. That isn't to say the local authority is necessarily the bad guy here; the thread of under-investment in key services goes all the way back to central government.


To try and fill the growing gap in expenses, the charity developed the idea for an enterprise, of setting up an in-house shop of additional assistive equipment. Surely this would be a win-win, for the customer, for the charity, and for the local authority.


The local authority has a statutory duty to provide a very limited range of assistive equipment to people living with disability in the community, to help them stay independent. It does this through the charity, whose staff visit people at home, assess their needs and then install the items. The charity's idea for enterprise has been to set up an in-house shop at their centre, offering an additional range of assistive equipment on a "try before you buy" scheme.


The anticipated success of the enterprise has been based above all on one unique factor the charity can offer: a 1-1 free and unhurried consultation with one of their equipment experts, who themselves may rely on the same equipment and so have unparalleled knowledge of the products.


However, as the charity leader explains, blow me if this didn't unravel almost as soon as the enterprise started.


Here's what the charity has found. People do indeed book appointments, try all the products, and take advantage of the 1-1 consultation. The problem is that too many then quietly go off and order the same product online for a pound or two cheaper.


On rare occasions, a customer later calls the charity to complain about the fact that they have found the product cheaper online, with the inference being that the charity is somehow profiteering from its trusted position with the community. It isn't true of course. A small charity with its minuscule negotiating leverage with manufacturers, has no more chance of beating a giant online global retailer on price than a little corner shop has against a huge supermarket. Nonetheless, the problem for the charity is that the customer is no longer listening as they try to explain their business case and the USP. They've lost more than a price battle here. They've lost what every charity values more than anything, which is their client's trust.


This is the point I think we need to remind ourselves that charities really are usually the good guys. This is the inadvertent consequences of "professionalising" and commercialising the voluntary sector.


Pitfalls and Unintended Consequences


The shift towards a business model can cast a shadow over a charity's fundamental purpose - which is most often helping those in need. This is particularly concerning for charities aimed at assisting disadvantaged or vulnerable groups. By and large, the type of customers mentioned above are not mean spirited: they will usually come from communities that might not have the buying power to support a commercialised model.


In addition, let's not forget that charities often provide havens for employment and volunteering for those who find it tough to enter the mainstream job market. But a commercial focus often demands a level of efficiency that can easily sideline the vulnerable people the charity aims to serve. This shift means charities can find themselves inadvertently creating an environment where people feel under pressure to deliver and reach performance targets, at the expense of the compassionate, supportive approach that once defined them.


Conclusion


While there's nothing inherently wrong with charities adopting business methods to ensure sustainability, the issues arise when commercialisation starts to overshadow the charity's primary mission. The recent sudden closure of the sports and leisure facilities in Gloucester is not an isolated incident but a symptom of a broader trend that demands careful scrutiny.


We need to ask ourselves: What do we want our charities to look like in the future? The blending of charity and commerce is not necessarily a bad thing per se, but like anything in life, balance is key. When charities start to resemble businesses, which is the case for some today, that balance seems to be tipping in a direction that could undermine the very essence of what it means to be a charity.


As society evolves, it's crucial that we give our charities the space they need to carry out their essential work without pushing them into a commercial corner they might struggle to escape from. The balance between mission and commerce is delicate, and it's a balance we need to get right. Charities play an invaluable role in our society, so let's look after them.


Jenny Hopkins is the founder of The Boiling Frog. Having spent the earlier part of her career in publishing, she switched to the charity sector and became CEO of a local deaf charity. Over a period of ten years, she is credited with transforming it into an award-winning organisation and trusted partner of local health and social care statutory bodies. She has since stepped back from that role to embark on a PhD about the impact of marketisation on deaf charities, alongside mentoring other CEOs of small charities. She uses The Boiling Frog blog as a way to reflect and challenge her own experience and perceptions about the role of charities in society today. She also volunteers as a trustee for two charities.


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